Blinken meets Netanyahu
Blinken meets NetanyahuUS Embassy Jerusalem

US Secretary of State Antony Blinken pressured Prime Minister Benjamin Netanyahu to release Palestinian tax revenues frozen last month by Minister of Finance Bezalel Smotrich, Axios reported on Thursday citing three US and Israeli officials.

Smotrich made the decision in May after several European countries, including Spain, Ireland, and Norway unilaterally recognized a Palestinian state.

In his announcement, Smotrich said that he would take financial steps that would topple the Palestinian Authority in Judea and Samaria, where the European countries have declared they would recognize "Palestine."

Among these steps is a complete halt to the transfer of tax money to the Palestinian Authority, and no extension of the indemnity extended to banks that transfer money to banks in Judea and Samaria.

Smotrich also called on Prime Minister Benjamin Netanyahu to take a number of financial steps that will deal a critical blow to the Palestinian Authority and may cause its economic collapse within a matter of months.

On Wednesday, Finance Minister Smotrich ordered the Tax Authority to deduct a sum of 130 million NIS from funds transferred to the Palestinian Authority and transfer them instead to 28 families of terror victims.

According to Axios, the White House was furious about Smotrich's move not only because it further destabilized the Palestinian Authority and the security situation in Judea and Samaria, but also because he violated an agreement the US negotiated and was party to. A US official said that Blinken told Netanyahu during their meeting in Jerusalem on Monday that the tax revenue issue is highly important for the Biden administration and that he needs to fix it.

The American officials added that the suspension of the Palestinian tax revenues by Israel is hampering a US-Saudi Arabia attempt to mobilize an aid package for the Palestinian Authority from the Gulf states. They said that Saudi Arabia, the UAE, Kuwait, and Qatar would not agree to the $10 million-a-month package before Israel releases the Palestinian tax revenues.