In the latest of a series of provocations this week, the Israeli government has withheld part of the monthly funding of the Palestinian Authority – taxes collected from the Palestinian population by the Israeli occupying forces, then paid to the Palestinian government at the discretion of the Israeli occupying forces. The tax revenues normally paid to the Palestinian Authority provide salaries for government employees, medical care, retirement pensions and stipends to disabled Palestinians. The Palestinian Authority has long begged the Israeli authorities to allow them to collect and distribute their own tax monies, but te Israeli occupying authority has always refused. At times of tension, the Israeli government often refuses to pass along the Palestinian people's tax payments to the Palestinian government, as a form of punishment of the Palestinian government for diplomatic or policy decisions that are not agreeable to Israel.

In this case, the monthly $75 million in revenues were withheld by the Israeli government after Palestinian Prime Minister Salam Fayyad called for an end to the expansion of Israeli Jewish-only settlements on illegally-seized Palestinian land in the West Bank. Fayyad wrote a letter to the Prime Ministers of European Union ministers urging them to refuse admission of Israel into the European Union until Israel ceases to “flout its international obligations” to end settlement expansion on Palestinian land.

The Israeli government accused Fayyad, who has widespread respect among Western governments, of trying to “undermine” Israeli relations with the European Union. So, in response, Israeli Firnance Minister Ronni Bar-On decided to punish all Palestinian government employees, retired pensioners, and those living on disability, by refusing to hand over the Palestinian people's tax revenues. The Finance Minister relented somewhat after an outcry, and has agreed to hand over a portion of the tax revenues, while still withholding most of the money.

The move marks a new low in the relations between the current Israeli government and the unelected government of Palestinian President Mahmoud Abbas. Abbas appointed his government under pressure from Israel, after the Israeli government refused to accept the results of a 2006 Palestinian legislative election that put the Islamic movement, Hamas, into power in the Palestinian Authority.