Israel to withhold tax revenue from Palestinian Authority

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JERUSALEM -- Israel said Sunday that it would withhold more than $100 million in tax revenue this month from the cash-strapped Palestinian Authority in reaction to last week's United Nations vote recognizing the Palestinian territories as a "nonmember observer state."

Israeli Finance Minister Yuval Steinitz said he would use the money to repay part of an outstanding Palestinian debt -- estimated to be about $180 million -- to Israel's electricity company for power supplied to parts of the West Bank.

The action was expected since Israel previously halted the transfer of monthly tax payments in response to a similar UN bid by the Palestinians last year. The money is collected on behalf of the Palestinian Authority from West Bank importers using Israeli ports.

Though Israeli officials hinted the move might be temporary, it will likely intensify the financial crisis facing the authority, which is suffering from large budget deficits and has been unable to pay full salaries for months.

On Friday, Israel announced that it would build 3,000 more units of Jewish housing in the West Bank and the Jerusalem area on land it seized during the 1967 Six Day War. Most nations consider such construction illegal under international law, and Palestinians have refused to resume peace talks until Israel stops it.

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Meanwhile, in Ramallah, West Bank, thousands of people gave a hero's welcome to Palestinian Authority President Mahmoud Abbas upon his return from Manhattan. The authority's government headquarters was decked out in the flags of the 138 countries that voted in favor of Thursday's UN General Assembly resolution.

"One day, a young Palestinian will raise the Palestinian flag over Jerusalem, the eternal capital of the state of Palestine," Abbas told the jubilant crowds, echoing a phrase the Israeli leaders often use to describe Jerusalem. "Palestine has succeeded in something historic at the United Nations. The recognition of Palestine as a country changes everything. It highlights new realities."

The United States and Israel were among nine nations that voted against the measure, arguing that the only way for Palestinians to achieve statehood is through direct negotiations with Israel. Though largely symbolic, the resolution may allow Palestinians to file complaints against Israel in the International Criminal Court or other world forums.

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