Israel decided on Tuesday to remove economic sanctions against the Palestinian Authority, following U.S. and European pressure. The sanctions had been put in place in November after the Palestinian Authority successfully petitioned the United Nations to grant it a higher status as a nonmember observer state.

Jerusalem affected a number of measures against the Palestinian Authority, included the withholding of hundreds of millions of shekels in collected tax revenues. Israel also announced that it would plow ahead with residential construction projects in the area known as E1, which is between Jerusalem and Maaleh Adumim.

On Tuesday, the Israeli government decided to transfer the withheld tax revenues to the Palestinian Authority following requests from the U.S. and a meeting between Prime Minister Benjamin Netanyahu and Tony Blair, an envoy from the Quartet on the Middle East, who had also raised the issue with the prime minister.

The Palestinian Authority uses these funds, about 400 million shekels (around $100 million), inter alia, to pay Palestinian police officers stationed in the West Bank and their employees in the Gaza Strip.

Israel had originally vowed to maintain the restrictions for four months, but curtailed it at two months due to international pressure. A diplomatic source rejected claims on Tuesday that Israel waited until "after the elections" to release the customs duties.

"Due to the economic plight faced by the Palestinian Authority, Prime Minister Benjamin Netanyahu decided to go ahead with a one-time transfer of all of last month's tax revenues to the Palestinian Authority," an official of the Prime Minister's Office explained.