"As we stated immediately after the PA elections, upon the conclusion of the transitional government, Israel will immediately cease the transfer of funds to the Palestinian Authority," acting Prime Minister Ehud Olmert stated Sunday — a statement criticized by the United Nations envoy for Mid-East Peace.

As all imports and exports to and from the Palestinian Occupied Territories of West Bank and Gaza must go through Israel, Israel has, since 1967, had full control over Palestinian tax money.  Though the tax money belongs to the Palestinian Authority, Israeli Authorities have used their control of the funds as a coercive measure against the Palestinians, freezing and releasing the tax money at will through the years.

Now, since the Palestinian people’s election of the Hamas party in the January 25th legislative elections, Israeli authorities have frozen the Palestinian tax money once again.

The sanctions will permanently halt the monthly transfers of tax revenues that Israel seizes from the Palestinian Authority each month, worth around $50 million.

Special Envoy Alvaro de Soto called the decision unhelpful and premature.  "These are monies that belong to the Palestinians and should not be withheld," de Soto told Reuters on Sunday.

Palestinian President Mahmoud Abbas has noted that this freeze increases a budget shortfall that has become acute since the election Jan. 25th.  Some Palestinian economists estimate that the Palestinian budget shortfall is about $1 billion a year, and the Israel-collected funds would cover about half of that.

Dov Weisglass, a senior adviser to Israeli Acting Prime Minister Ehud Olmert, who helped draw up the economic sanctions, was quoted last week as saying Palestinians “will feel as if they have been on a visit to a dietician. They will become thinner, but they won’t starve to death.”

The tax freeze is in addition to further fund seizure and economic sanctions proposed by Israel, including a demand that other countries stop funding the Palestinian Authority — policies deemed by the United Nations to be counter-productive to any peace process, and a violation of international human rights agreements signed by Israel.

Meanwhile, Israeli government spokesman Ra’anan Gissin said the government "is conducting a survey of NGOs and quasi-NGOs to assess their effectiveness, the focus of their work, and whether they have any ties to Hamas or other terror organizations”.

The focus of the survey, Gissin said is two-fold: To ensure that “terrorist” entities and organizations do not receive financial support and to ensure that Palestinians who are not involved in terror continue to receive the necessary humanitarian aid.

“There will be changes in the disbursement of funding,” Gissin said, adding: “The rules of the game have changed, and that decision has been taken on principle.”  Israeli tax authorities seized 31 containers at the Ashdod port on suspicion that they contained merchandise worth millions of dollars that was being shipped to channel funds to Hamas and the Islamic Jihad group, both of which Israel, the Occupying Power, considers “terrorist organizations,” bloomberg.com reported Sunday.

The US Congress also voted last week to withhold its $400 million/year aid to the Palestinian Authority, and demanded the return of $50 million, which the Palestinian Authority immediately returned.  No cut in funding was proposed in the $6 billion/year given by the US to Israel, despite the fact that Israeli forces have killed four times more Palestinians in the current conflict than Palestinians have killed Israelis.