Ramallah (Palestinian Territories) (AFP) - The Palestinian Authority, in deep financial crisis since Israel froze tax transfers in February, said Thursday it had accepted a partial payment of just over half a billion dollars.
"An agreement was reached a few days ago with the Israeli side for transferring duties on oil and fuel which the Palestinian Authority bought in Israel to the amount of around two billion shekels ($568 million, 512 million euros)," Civil Affairs Minister Hussein al-Sheikh told AFP.
Israel in February decided to withhold around $10 million per month from revenues of some $190 million per month it collects on the PA's behalf, triggering Palestinian president Mahmud Abbas to say he would accept either all or nothing.
"Recovering this money will solve part of the financial crisis caused by the Israeli government's freezing of Palestinian funds," said Sheikh, while stressing that it was only part of the arrears due from Israel.
Israel says the money it has been withholding corresponds to what the PA pays Palestinian prisoners in Israeli jails, or their families.
Prisoners who have carried out attacks on Israelis are among those receiving the payments, and Israel says the policy encourages further violence.
Sheikh said the underlying political dispute had not been resolved, as the PA insisted that it would continue to pay allowances for Palestinian prisoners and the families of those killed in conflict with Israel down to the "last cent".
He said that representatives of Israel's defence ministry were present during the recent negotiations.
Israel sees the stability of the West Bank -- which it occupied in the 1967 Six Day war -- as essential to its own security.
Observers are concerned that economic distress in the territory could feed radicalisation of young Palestinians, already embittered by the lack of visible prospects for peace.
Official Palestinian figures show that about 30 percent of the West Bank population is aged 15-29.
Such considerations will be key in the calculations of the Israeli government as it heads for what will probably be a tough fight for reelection in a September 17 poll.
World Bank data shows that Gross Domestic Product "barely" grew at all in 2018 in the West Bank and the Gaza Strip -- a Palestinian enclave ruled by Islamist group Hamas -- with unemployment at around 30 percent in the occupied territory and as high as 50 percent in the strip.
- Salaries slashed -
Abbas had accused Israel of blackmail through its withholding of funds, insisting on the full amount, which accounts for around 65 percent of PA revenues.
The money comes from customs duties levied on goods destined for Palestinian markets that transit through Israeli ports.
On Monday Abbas fired all of his advisers amid a financial crisis in the occupied West Bank that has prompted deep salary cuts.
Palestinians view prisoners as fighting against Israel's occupation and say the tax funds support families that have lost their main breadwinners.
The PA has cut salaries for most of its tens of thousands of employees by half to keep the government afloat.
On top of the tax dispute with Israel, the United States has cut more than $500 million in aid to Palestinians via various programmes.
That came after Abbas announced a freeze in relations with Washington in protest at US recognition of Jerusalem as Israel's capital.