Israel Responds to Move to Recognize Palestinian State by Withholding Funds

Israel will not transfer much-needed funds to the Palestinian Authority in the wake of the decision by three European countries to recognize a Palestinian state, the country’s finance minister said on Wednesday, as its foreign minister denounced the European moves as giving “a gold medal to Hamas terrorists.”

The decision by the finance minister, Bezalel Smotrich, a far-right leader who opposes Palestinian sovereignty, threatened to push the Palestinian government into a deeper fiscal crisis. He said in a statement that he had informed Prime Minister Benjamin Netanyahu that he would no longer send tax revenues to the authority, which administers parts of the Israeli-occupied West Bank in close cooperation with Israel.

Mr. Smotrich’s office signaled that the decision was at least partly a response to Spain, Norway and Ireland recognizing Palestinian statehood, and that the Palestinian leadership bore responsibility for campaigning for the move.

“They are acting against Israel legally, diplomatically and for unilateral recognition,” said Eytan Fuld, a spokesman for Mr. Smotrich, referring to the authority. “When they act against the state of Israel, there must be a response.”

The Palestinian Authority did not immediately respond, but Palestinian officials have previously condemned Israel’s withholding of Palestinian tax revenues it collects as “piracy.”

Israel also recalled its ambassadors from Spain, Ireland and Norway for consultations on Wednesday morning. Israel Katz, the Israeli foreign minister, said he had summoned the countries’ envoys to Israel for a “severe scolding” following “their governments’ decision to award a gold medal to Hamas terrorists.”