Israeli Prime Minister Benjamin Netanyahu (second left) heads the weekly cabinet meeting at the Defence Ministry in Tel Aviv on Jan 7, 2024. (PHOTO / POOL VIA AFP)

JERUSALEM- Israel approved a plan on Sunday to grant Norway the right to hold frozen Palestinian tax funds as a third party, while at the same time maintaining Israel's prerogative to decide the time of fund transfer to the Palestinian Authority (PA).

Under the Paris Protocol, an economic treaty between Israel and the Palestinians, Israel collects the taxes from the Palestinian trade and transfers them to the PA. However, Israel has frequently withheld the funds as leverage against the PA or as a punitive response to the Palestinian side over political developments, disputes, or security concerns.

Israeli Prime Minister Benjamin Netanyahu's office said in a statement that the new outline is supported by Norway and the United States, with the US guaranteeing its implementation

In November last year, Israel decided to deduct funds allocated to the Gaza Strip from Palestinian tax revenues following the Oct 7 Hamas assault on Israeli communities. The PA has refused this partial tax transfer and rejected any conditions that restrict payment to the public sector and its employees in Gaza.

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Israeli Prime Minister Benjamin Netanyahu's office said in a statement that the new outline is supported by Norway and the United States, with the US guaranteeing its implementation.

Hussein Al-Sheikh, secretary-general of the Palestine Liberation Organization's Executive Committee, wrote on the social media platform X on Sunday that "any deductions from our financial rights or any conditions imposed by Israel that prevent the PA from paying our people in Gaza are rejected".

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He urged the international community "to stop this behavior based on piracy and stealing the money of the Palestinian people and force Israel to transfer all of our money".