JERUSALEM -- Israeli cabinet ministers decided yesterday to hold on to some $100 million in taxes owed to the Palestinians, an official said, despite warnings from Israel's Defense Ministry that the measure could threaten the stability of the Palestinian government in the West Bank.
Israel stopped transfer of tax funds as punishment for the Palestinians' successful bid for admission to the United Nations' cultural agency, UNESCO, which was part of a larger effort to gain admission as a state in the world body.
Israel believes creation of a Palestinian state must be achieved through negotiations, and charges that the UN bid is one of a series of steps to put unwarranted pressure on the Jewish state.
An Israeli official said the government did not change its policy, despite media predictions that Israel would give in to criticism of the move from the UN and others.
The official did not explain the rationale. He spoke on condition of anonymity because he was not authorized to disclose the contents of the closed meeting of ministers, including Prime Minister Benjamin Netanyahu, with security responsibilities.
Israeli defense officials have said funding cutoffs threaten Abbas' moderate Palestinian Authority, which employs tens of thousands of people, including security forces whose work at preventing attacks on Israelis has won praise from Israel and the United States in the past.
In accordance with interim peace deals, Israel collects customs, border and some income taxes on behalf of the Palestinians and relays them monthly to their West Bank government. The transfers were suspended on Nov. 3 in reaction to the UNESCO admission.
The statehood bid has stalled, as the Palestinians have been unable to muster the required support of nine of the Security Council's 15 members. That leaves the Palestinians with an option of seeking a lesser upgrade to nonmember observer state.
Israel, backed by the United States, opposed the statehood bid and suspended funding for UNESCO after it admitted the Palestinians.
The decision on the funding came shortly after another failed effort by international peace mediators to get both sides back to the negotiating table. Representatives of the "Quartet" of Mideast negotiators met separately with the two sides yesterday.