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JERUSALEM —Israel's cabinet approved a plan for frozen tax funds earmarked for the Hamas-run Gaza Strip to be held by Norway instead of transferred to the Palestinian Authority (PA), officials said Sunday.
Under interim peace accords reached in the 1990s, Israel's finance ministry collects tax on behalf of the Palestinians and makes monthly transfers to the Western-backed PA, which exercises limited self-rule in the Israeli-occupied West Bank.
But there have been constant wrangles over the arrangement, including Israel's demand that the funds do not reach Hamas, which it and most of the West deem a terrorist group.
Hamas seized control of Gaza from the Western-backed PA in 2007 after a brief civil war, and two years after Israel withdrew settlers and military forces. Despite the Hamas takeover, many PA public sector employees in Gaza kept their jobs and continued to be paid with transferred tax revenues.
Israel is now at war in Gaza to wipe out Hamas after a cross-border terror attack by militants of the Palestinian Islamist movement on Oct. 7.
Prime Minister Benjamin Netanyahu said the cabinet decision on the tax funds was supported by Norway and the United States, which will be a guarantor that the framework holds.
Netanyahu's offices said the money, or any equivalent, will not be transferred "in any situation, except with the approval of the Israeli finance minister, and also not through a third party."
The Palestine Liberation Organization said Sunday it wanted the money in full and would not accept conditions that prevent it from paying its staff, including in Gaza.
"Any deductions from our financial rights or any conditions imposed by Israel that prevent the PA from paying our people in the Gaza Strip are rejected by us," Hussein Al-Sheikh, secretary-general of the executive committee of the PLO, said on social media platform X, formerly Twitter.
A spokesperson for Israeli Finance Minister Bezalel Smotrich, who heads a far-right, pro-settlement party, confirmed that Norway would hold the funds under the arrangement.
"Not one shekel will go to Gaza," said Smotrich, who has long been opposed to transferring funds to the PA.