US slams 'wrongheaded' Israeli move to redirect Palestinian funds

The United States on Thursday condemned the Israeli finance minister's "wrongheaded" decision to redirect some $35 million in tax revenue collected on behalf of the Palestinian Authority (PA) to families of "victims of terrorism."

Minister Bezalel Smotrich's actions "are not appropriate. We have made quite clear to the Government of Israel that these funds belong to the Palestinian people," State Department spokesman Matthew Miller told journalists.

"They should be transferred to the Palestinian Authority immediately. They should not have been held. They should not be delayed," Miller said.

"We think it's an extraordinarily wrongheaded decision by that minister," he added.

Smotrich, a far-right politician, announced the move on social media earlier in the day, saying: "The Palestinian Authority encourages and favors terrorism by paying the families of terrorists, prisoners and released prisoners."

"In accordance with the judgments that awarded compensation to the victims of terrorism, we offset the same amounts from the PA's funds and transfer the awarded money to the families of the victims of terrorism," Smotrich added.

Under peace agreements brokered in part by Norway in the 1990s, Israel collects money for the Palestinian Authority, which exercises limited autonomy in parts of the West Bank.

But Israel has blocked transfers since the aftermath of the October 7 attacks by Hamas, which resulted in the deaths of 1,194 people, mostly civilians, according to an AFP tally based on Israeli official figures.

Israel's retaliatory military offensive has left at least 37,232 people dead in Gaza, also mostly civilians, according to the Hamas-ruled territory's health ministry.