G7 leaders warn Israel over withholding Palestinian revenues, endorse PA rule in Gaza after war's end

The Group of Seven (G-7) leaders have asked Israel to not withhold tax revenues from the Palestinian Authority (PA) and not take steps that weaken it.

The G-7 leaders have further endorsed the PA’s rule in the Gaza Strip once the Israel-Hamas War has come to an end.

In the joint statement issued at the end of the G-7 Summit in Italy, the group’s leaders said Gaza and West Bank must be unified under the control of the PA. They also reiterated their commitment to the end of the war under the peace plan announced by US President Joe Biden and endorsed by Israel.

The G-7 includes the United States, the United Kingdom, France, Germany, Italy, Canada, and Japan.

The PA is the de facto administration of the Palestinians that partially governs the West Bank with its seat at Ramallah. During 2005-07, it also governed Gaza until it was driven out by the terrorist group Hamas in intra-Palestinian conflict. Since 2007, Hamas has controlled and run the administration in Gaza.

‘Actions that weaken PA must stop’

In a reference to Israeli government’s decision to withhold tax revenues of the PA, the G-7 leaders said actions weakening the PA must stop.

Israel’s far-right Finance Minister Bezalel Smotrich has not just frozen the tax revenues of the PA but has also said that he would transfer a portion of those taxes to victims of terrorism within Israel.

As per the terms of the Oslo Accords of 1990, Israel collects tax revenue on behalf of the PA and then transfer it to the Palestinian administration. Smotrich has now frozen the transfer of these revenues which has put the PA at the risk of bankruptcy as it’s running out of funds to run its affairs.

The G-7 joint statement said, “Actions that weaken the Palestinian Authority must stop, including the withholding of clearance revenues by the Israeli Government. Maintaining economic stability in the West Bank is critical for regional security. We call on Israel to take the necessary measures to ensure that correspondent banking services between Israeli and Palestinian banks remain in place, so that vital financial transactions and critical trade in services continue; to release withheld clearance revenues to the Palestinian authority, in view of its urgent fiscal needs; and to remove or relax other measures to avoid further exacerbating the economic situation in the West Bank.”

G-7 commits to 2-state solution

The G-7 leaders committed to the realisation of the two-state solution and the eventual unification of Gaza and West Bank under PA’s rule.

The two-state solution refers to the proposed resolution of the long-running Israeli-Palestinian conflict in which a Jewish State of Israel and an Arab State of Palestine come up side-by-side in a way that neither threatens the security of the other and both recognise each-other.

“We reiterate our unwavering commitment to the vision of the two-state solution where two democratic States, Israel and Palestine, live side by side in peace within secure and recognized borders, consistent with international law and relevant UN resolutions, and in this regard stress the importance of unifying the Gaza strip with the West Bank under the Palestinian Authority. We note that mutual recognition, to include the recognition of a Palestinian state, at the appropriate time, would be a crucial component of that political process,” said the G-7 leaders in the joint statement.

The G-7 leaders also said they stood behind the peace plan for the war in Gaza that Biden announced late last month. The plane, which has been endorsed by Israel, is stuck as Hamas has not yet said yes to it.

As per the plan, the war would end in three stages starting from a six-week ceasefire and ending with the withdrawal of all Israeli soldiers from Gaza, the release of all hostages, and the beginning of the reconstruction of Gaza devastated from months of war.