Israel’s Security Cabinet on Sunday froze nearly $200 million in tax transfers to the Palestinians, which it said was the amount of money they paid to families of alleged attackers last year.
Under interim peace agreements, Israel collects hundreds of millions of dollars in taxes for the Palestinian Authority. The tax transfers are a key source of funding for the cash-strapped Palestinians.
Israel has long objected to the Palestinian “martyrs' fund", which provides stipends to thousands of families who have had relatives killed, wounded or imprisoned in the conflict with Israel.
The Palestinians say the payments are a type of welfare system meant to assist families affected by the conflict. But Israel says such payments serve as rewards and incentives for violence.
In its decision, the Security Cabinet approved a recommendation by Defence Minister Benny Gantz to freeze about 597m shekels ($181.9m) for what it called “indirect support of terrorism” in 2020.
It said the funds would be frozen on a monthly basis out of payments that Israel transfers to the Palestinians.
The Palestinians regard the families of attackers as victims of a half century of Israeli occupation.
They say that many Palestinians are unfairly held by Israel and that the number of prisoners involved in deadly attacks is a small percentage of those helped by the fund.
Qadri Abu Bakr, head of the Palestinian commission for detainees’ affairs, accused Israel of stealing Palestinians funds, calling the decision a “crime and piracy".
President Mahmoud Abbas spoke by phone on Sunday with Israel’s new President, Isaac Herzog, the official Palestinian news agency Wafa reported.
It said Mr Abbas called for a “comprehensive calm” in Gaza, the West Bank and Jerusalem, and called for steps that would create conditions for a “achieving a just and comprehensive peace".
The report did not mention the frozen tax transfers.