Israel halted the transfer of millions of dollars in tax rebates and customs payments to the Palestinian Authority, The Associated Press reported.
A spokesman for acting Israeli Prime Minister Ehud Olmert, Ranaan Gissin, said that the payments would be suspended because the Palestinian resistance group, Hamas, won last week’s parliamentary elections.
A payment of about $55m in tax and customs revenues, urgently needed to pay the salaries of 130,000 Palestinian civil servants, was due to be given to the Palestinian Authority on Wednesday.
But Gissin said that the Israeli government would cease the payments as Hamas was a “terrorist group”.
He added that the payments will resume when a policy review ordered by Olmert has been completed. Until then, the tax revenues will be held in trust.
Palestinian Economy Minister Mazen Sunnuqrut criticized the “irresponsible” Israeli decision, saying that it amounted to collective punishment.
"This is our money and Israel is not a donor country," he told Reuters news agency. "Israel should immediately release the money because it belongs to the Palestinian people."
The Oslo accords obliges Israel and the Palestinian Authority to pay each other for several services.
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