Israel Prepares for Post War Era With New Gaza Tax Revenue Framework and Rafah Strikes

As Ramadan nears, Israel and Palestine are looking to ease the Gaza crisis despite the Netanyahu government repeatedly rejecting all attempts at a two-state solution discussion.

Recently, senior security officials from the two countries met in Tel Aviv to discuss ways of easing tensions in the West Bank.

Ramadan is due in a month, and both sides are doing covert security meetings to calm down the situation, revealed senior diplomats to the Times of Israel.

The covert security meeting to discuss the Gaza crisis was attended by the Shin Bet chief Ronen Bar, National Security Council chairman Tzachi Hanegbi the Coordinator of Government Activities in the Ghassan Alian territories in Israel and Civil Affairs Minister Hussein al-Sheikh and intel chief Majed Faraj from the Palestinian side.

At the meeting, security officials from both regions discussed what measures can be taken by the Israeli government to diffuse tensions along the Gaza Strip including ways to address the economic crisis in Ramallah. Since the October 7 Hamas attack on Israel, the Netanyahu government has banned 150,000 Palestinian workers in the West Bank from returning to work which is further aided by Jerusalem withholding tax revenues worth millions of dollars.

Furthermore, the wartime ban on the movement of Arabs and Israelis is preventing them from entering Palestinian cities where many people shop, especially during Ramadan. There are many more additional checkpoints in the West Bank restricting movement and economic activity in the region which was the agenda of discussion in the meeting.

So far Israel has outlined some critical steps to address the issue before Ramadan which include reducing arrest raids and checkpoints and allowing workers above 45 years of age to return to work in Israel. Several Palestinian cities will also be opened to Arab Israelis.

The Israeli security officials are optimistic that the suggested measures in the covert security meeting will be approved by the Netanyahu government despite opposition from hardliners who equate Palestine with Hamas.

However, Israel hasn't revealed how they want to resolve the tax revenue issue although senior Israeli security officials say that Jerusalem might show some flexibility. At present, Israel is withholding £59 million ($75 million) in tax revenues collected on Ramallah's behalf. The amount is equivalent to what Palestine uses to pay workers along the Gaza Strip.

Earlier in November 2023, the Israeli cabinet voted to withhold the monthly money transfer of the Gaza portion citing the syphoning of money to the Hamas terror group. This forced the Palestine Authority to contact Abu Dhabi and Oslo for a monthly loan from the United Arab Emirates and Norway but Israel blocked it.

Israel has threatened the Palestine Authority with withholding the entire tax revenues which form the budget of Palestine. Although the Gaza portion of tax revenues is only 25 per cent of the monthly transfer, the amount has reduced since the Israel-Hamas war broke out, disrupting the ground economy of the region.

Senior diplomats in the security meeting revealed that Jerusalem could be lowering the withheld Gaza tax revenues every month. However, the Palestine Authority will not be allowed to use the money for paying workers and services along the Gaza Strip.

Israel has made it clear that Palestine has to rely on the tax revenues it independently collects in the West Bank to pay for services in Gaza.

Meanwhile, the US has called out Israel for withholding Gaza tax revenues saying it belongs to Ramallah.

Earlier in January, Netanyahu approved a framework which would be used by Israel to send the Gaza portion of tax revenues to Norway. As per the proposal Oslo will withhold the funds until far-right Finance Minister Bezalel Smotrich formulated a way to funnel it to Palestine. However, Norway has yet to accept it and remains non-committal.

Although the US backed the Israeli cabinet-adopted framework and asked the Palestinian Authority (PA) to accept it, Ramallah warned against giving too much power to Smotrich who had earlier called for dissolving the PA. Washington has also pressed Israel for major reforms in the PA after the Israel-Hamas war ends.

The US Secretary of State Antony Blinken has said that America is in support of more humanitarian aid in Gaza. This comes at a time when the Palestinian branch of the United Nations Relief and Works Agency (UNRWA) revealed that the US and its allies of over 12 nations have suspended funding in Gaza because of staffers' involvement in the October 7 Hamas attack on Israel.

Washington has explained that they are sending funds to Gaza through other aid agencies despite UNRWA alleging that they are the only ones equipped to deal with the distribution of aid in Gaza.

A US readout at the Tel Aviv meeting read: "Blinken reiterated the United States' support for the establishment of an independent Palestinian state as the best pathway to enduring peace and security for Palestinians and Israelis alike."

This is the seventh time the US Secretary of State has visited Israel since the Israel-Hamas war broke out.

This comes at a time when the UK Foreign Secretary David Cameron insisted on a permanent ceasefire as he visited Israel and announced fresh humanitarian aid to Gaza with the help of Qatar.

Meanwhile, Palestinian President Mahmoud Abbas has asked for the US recognition of the Palestinian state in the region of West Bank, East Jerusalem and Gaza along with a UN membership of the country. According to President Abbas, the two-state solution can be achieved through peace and security alone.

Abbas conveyed Palestine's disappointment regarding the ban on Palestine Liberation Organisation (PLO) members from entering the US along with Hamas and Palestinian Islamic Jihad terror groups as it could "affect the American role" in shaping the geopolitics of the region.

The ban has been approved by the US House of Representatives and set for voting in the Senate.

The Palestinian President has further urged the US to increase efforts to halt Israeli aggression which is displacing the Palestinians along the Gaza Strip and the West Bank. Abbas has specifically mentioned conflict in the Jordan Valley region calling for an immediate end to settler attacks against Palestinians.

The issue of Ramallah tax funds was also raised by the Palestinian President Mahmoud Abbas who asked the US Secretary of State Antony Blinken to pressurise the Israeli government to release the £59 million withhold funds.

Earlier on Wednesday (February 7), it was reported that the Palestinian President is planning to visit Qatar to talk to Hamas leaders including the Doha-based political leader Ismail Haniyeh. The post-Israel-Hamas war fate of Gaza and the forming of a unity government with Hamas is on the agenda.

President Abbas regards the Palestine Authority as a legitimate ruler in the Gaza region despite Hamas taking control from the PA in a bloody military coup back in 2007. The terror group has been a de facto power in the Palestinian territories in Gaza while the PA dominated by Abbas's Fatah party is a minority.

Israel has repeatedly stated that eliminating Hamas in Gaza is its primary objective. Although, it hasn't clarified what regime it wants once the Israel-Hamas war ends.

The Netanyahu government has rejected the PA saying it's ongoing incitement against Israel. Abbas had met Hamas leaders in Turkey six months ago, before the October 7 terror attack happened.

In December last year, Abbas had said that the problem is not "changing Palestinian politicians and forming a new government" but the policies of the Israeli government while Israel maintains the PA is unfit to govern Gaza as it refuses to condemn Hamas and continues to pay families of jailed Palestinian terrorists.

The US has been discussing names with President Abbas for a possible reform in the PA so that they can take charge of Gaza when the war ends. Ideas of appointing a deputy or handing over power to a prime minister who will be equipped to bring about reforms are on the cards including allowing "new blood" in the Fatah party that rules the PA and the PLO.

The PA is largely viewed as a corrupt group which has not held a general election or presidential election since 2006 and 2005 respectively.

Amidst these ongoing talks of easing tensions in Gaza ahead of Ramadan, the Israel Defense Forces (IDF) launched strikes in Rafah on Friday, February 9.

Rafah is the last major town along the Gaza Strip which Israel is yet to occupy and the Israeli Prime Minister Benjamin Netanyahu ordered forces to evacuate Palestinians ahead of the strike.

However, the US has called out the Israeli operation in Rafah with President Biden calling it "over the top".

As Netanyahu ordered troops to "prepare to operate" in Rafah, the US said civilians in southern Gaza should be protected but the UN is against forced mass displacement.

Meanwhile, the Israeli Army revealed on Friday that the strikes on Rafah helped them destroy the missile launcher used by Hezbollah in southern Lebanon and the southern village of Khiyam.

The Iraqi armed group, on the other hand, blamed the US for the Israeli strikes in Rafah which killed their senior commander.

A statement issued by Kateeb Hezbollah said: "For the blood of our commanders and fighters that was spilt, the responsibility lies with America and those who refuse or hinder the departure of its occupying forces from Iraq."

"Let them know that our nation will not forsake the blood of its martyrs and that its men remain determined for combat," the statement added.