By Allyn Fisher-Ilan JERUSALEM (Reuters) - Israel will withhold critical tax revenue and seek ways to bring war crimes prosecutions against Palestinian leaders in retaliation for Palestinian moves to join the International Criminal Court (ICC), Israeli officials said on Saturday. On Friday, the Palestinians delivered documents to U.N. headquarters in New York on joining the Rome Statute of the ICC in The Hague and other global treaties with the aim of prosecuting Israelis for what they consider war crimes committed on their territory. In a first punitive response, Israeli Prime Minister Benjamin Netanyahu decided in consultation with senior ministers on Thursday to withhold the next monthly transfer of tax revenue, totaling some 500 million shekels ($125 million), an Israeli official said on Saturday. The ICC was set up to try war crimes and crimes against humanity such as genocide. Israel and the United States object to unilateral approaches by the Palestinians to world bodies, saying they undermine prospects for negotiating a peaceful settlement of the decades-old Middle East conflict. The tax revenues are critical to running the Palestinian Authority, which exercises limited self-rule, and paying public sector salaries. Israel took a similar step in December 2012, freezing revenue transfers for three months in anger at the Palestinians' launch of a campaign for recognition of statehood at the United Nations. "This is highway robbery. Not only is this illegal, they are adding money theft to land theft. The revenues belong to the Palestinian people, they go to pay salaries and support our economy. Israel has no business deciding to steal our funds," senior Palestinian negotiator Hanan Ashrawi told Reuters. Under interim peace deals from the 1990s, Israel collects at least $100 million a month in duties on behalf of the Palestinian Authority. "LARGE-SCALE PROSECUTION" In addition to the revenue freeze, an Israeli official said Israel was "weighing the possibilities for large-scale prosecution in the United States and elsewhere" of Palestinian President Mahmoud Abbas and other senior Palestinian officials. Israel would probably press these cases via non-governmental groups and pro-Israel legal organizations capable of filing lawsuits abroad, a second Israeli official said. Israel sees the heads of the Palestinian Authority in the occupied West Bank as collaborators with the Islamist militant group Hamas, which dominates Gaza, because of a unity deal they forged in April, the officials said. Netanyahu had previously warned that unilateral moves by the Palestinian Authority at the United Nations would expose its leaders to prosecution over support for Hamas, viewed by Israel and much of the West as a terrorist organization. Hamas "commits war crimes, shooting at civilians from civilian-populated areas", one official said, referring to the war in Gaza last summer in which more than 2,100 Palestinians and more than 70 Israelis died. Palestinians seek a state in Gaza, the West Bank and East Jerusalem, lands Israel captured in the 1967 Middle East War. Momentum to recognize a Palestinian state has been building since Abbas succeeded in a bid for de facto recognition at the U.N. General Assembly in 2012, which made Palestinians eligible to join the ICC. Abbas opted to join the ICC after losing a motion last week in the U.N. Security Council to set a 2017 deadline for a Palestinian state to be established in land occupied by Israel. The United States, Israel's main ally, supports an eventual independent Palestinian state, but has argued against unilateral moves like Friday's, saying they could damage the peace process. Washington sends about $400 million in economic support to the Palestinians every year. Under U.S. law, that aid would be cut off if the Palestinians used membership of the ICC to press claims against Israel. (Additional reporting by Noah Browning and Ali Sawafta in Ramallah; Writing by Allyn Fisher-Ilan; Editing by Mark Trevelyan and Kevin Liffey)
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