The Palestinian Authority on Tuesday lambasted an Israeli law allowing the government to financially penalize Ramallah for paying stipends to terrorists imprisoned in Israel and their families, by deducting a similar amount from the monthly tax revenues that Israel collects on behalf of the Palestinians under the 1993 Oslo Accords.
Lawmakers voted 87-15 in favor of the legislation that orders Israel to withhold part of the roughly $130 million in monthly tax revenues.
The stipends paid to terrorists total approximately $330 million, or roughly 7% of the Palestinian Authority's annual budget.
Palestinian Authority President Mahmoud Abbas' spokesman Nabil Abu Rudeineh said Israel's move "crossed a red line," and that the legislation amounted to a "declaration of war on the Palestinian people, on our soldiers, our dead and our prisoners, and we will not tolerate it under any circumstances."
He warned the legislation would have "serious repercussions," adding that the Palestinian leadership would convene soon to formulate a response "that would change the nature of the existing relations" between Israel and the Palestinian Authority.
"The Israeli occupation government must retract this dangerous decision before we reach a dead-end and the already destabilized situation in the region escalates further," he said.
Chief Palestinian Negotiator Saeb Erekat, who also serves as secretary general of the Palestine Liberation Organization, said the move threatened the existence of the cash-strapped Palestinian Authority.
"This is a very dangerous decision that amounts to the cancellation of the Palestinian Authority. It is an act of piracy and theft," Erekat told French news agency AFP.
"Israel is stealing the land and money of the Palestinian people and that is a result of the decisions of [U.S.] President [Donald] Trump, who supports Israel."
Defense Minister Avigdor Liberman on Tuesday hailed the passing of the new law, saying that "every shekel Mahmoud Abbas pays terrorists will be automatically withdrawn from the PA's budget. An effective war on terrorism also goes through the PA's pocket."
He further announced the formation of a new entity at the Defense Ministry, the National Bureau for Counter Terror Financing, to oversee the implementation of the law in Israel and worldwide.
Headed by Paul Landes, formerly head of Israel's Money Laundering and Terror Financing Prohibition Authority, the NBCTF will monitor the financial activity of terrorist organizations in Israel and around the world, coordinate and synchronize all government ministries and security bodies, and spearhead Israel's economic struggle against terrorism in the international arena.
At the end of each year, the NBCTF will present the government with a report on the PA's payments to terrorists and their families and based on this report, the state will deduct the funds from the tax revenues it collects on Ramallah's behalf.
"The war on terror is based is on two elements – security and economic," Lieberman noted.
"We are working to eliminate terrorism by military means and at the same time we are also working to dry up its sources of funding. The NBCTF that I set up will lead this combined effort against terrorists and their sponsors."
Also on Tuesday, Prime Minister Benjamin Netanyahu attended an event marking the United States' Independence Day. The event was hosted by U.S. Ambassador to Israel David Friedman.
Speaking in the event Friedman spoke of the Taylor Force Act, named after U.S. veteran killed by a Palestinian terrorist while visiting Israel in 2016, which curbs U.S. aid to Palestinian Authority unless it stops supporting terrorists and their families.
The law, he stressed, makes sure American money will never again fund terrorism.
