Norway urges Israel to release full Palestinian tax transfer

FILE PHOTO: World leaders address the 77th Session of the United Nations General Assembly at U.N. Headquarters in New York City

By Gwladys Fouche

OSLO (Reuters) - Norwegian Prime Minister Jonas Gahr Stoere urged Israel on Monday to release the full tax transfer it is withholding from the Palestinian Authority (PA), saying the payment was "critical" for the welfare the Palestinian population.

Norway is the chair of the international donor group to the Palestinian territories, known as the Ad Hoc Liaison Committee. It was a facilitator in the 1992-93 talks between Israel and the Palestine Liberation Organization that led to the Oslo Accords providing for limited Palestinian self-rule.

On Nov. 2, Israel said it would proceed with a tax revenue transfer to the PA in the Israeli-occupied West Bank but would withhold funds bound for Hamas-ruled Gaza, where the PA helps cover public sector wages and pay for electricity.

Israel's decision came after an internal cabinet debate over whether to make the transfer as Israel battles Hamas militants that rule the Gaza Strip.

On Nov. 6, the PA said it would not accept a partial transfer from Israel. It is estimated to spend some 30% of its budget in Gaza, where it also pays for medicine and social assistance programmes.

"We call on Israel to maintain the agreed transfer of what is Palestinian value creation, because these are taxes and VAT and financial sources (of income)," Stoere told Reuters in an interview in Oslo.

The tax transfer helped deliver essential services in Gaza and in the West Bank, he said, so withholding it was "directly affecting the welfare and health of the Palestinian population".

"Norway has been very clear that any development towards (the) breakdown of the PA will only serve the extremist forces on the Palestinian side," he added.

Stoere did not say how much the withholding of money was worth but said it was "a substantial amount".

The Western-backed PA exercises limited self-rule in the West Bank but does not administer Gaza, where Islamist rival Hamas seized control in a brief civil war in 2007. The PA still has thousands of Gaza civil servants on its payroll.

(Reporting by Gwladys Fouche in Oslo; Editing by Christina Fincher)