Israeli Finance Minister Bezalel Smotrich announced Monday that Israel is withholding 590 million shekels, about $198 million, in taxes and customs duties it collected on behalf of the Palestinian Authority, as cross-border military operations continue in Lebanon despite a cease-fire that went into effect 19 days ago.
According to a ministry statement, 590 million shekels of the 740 million shekels, about $248 million, in funds to be transferred from Israel to the PA this month were diverted under Smotrich's direction to cover what Israel described as the authority's debts to the electric company, water and environmental corporations. Israel also said some of the funds were earmarked by the PA for "terror groups."
Fiscal Pressure on Palestinian Authority
Smotrich said, "We will not transfer funds that ultimately reach terrorists who harm Israeli citizens. Our policy is clear: every shekel intended to encourage terrorism or hostile activity will be deducted and stopped." Israel has withheld funds from the PA intermittently since 2019, but has tightened its restrictions since Smotrich began his tenure as finance minister, and more so since October 7, 2023.
In February, Palestinian Finance and Planning Minister Estephan Salameh warned the PA would face extreme fiscal difficulties throughout 2026 and was confronting the most severe economic crisis since its establishment. According to Salameh, the authority's dire financial situation is a result of the Israeli authorities' continued refusal to transfer tax revenues and customs duties collected on their behalf.
Security Operations in Lebanon
The Israeli military said Monday that forces operating in the Israeli buffer zone in Lebanon were targeted by an "explosive drone" launched by Hezbollah. According to the statement, the drone detonated adjacent to the soldiers, and no injuries were reported.
In a separate update, the Israeli military said an Israeli soldier and three reservists entered southern Lebanon's Bint Jbeil for non-operational purposes, and that the commander of the Givati Brigade facilitated their entry without authorization from the appropriate command levels. The incident is under investigation.
The military also said its forces killed armed militants while operating in the Israeli buffer zone in Lebanon, saying Golani Brigade troops engaged in "close-quarters combat" before a drone struck and killed them. The Israeli military began carrying out strikes in Lebanon's east on Monday, saying it was striking Hezbollah infrastructure in Lebanon's eastern Beqaa Valley as well as areas in southern Lebanon. Security sources said strikes hit near the town of Nabi Chit, near Lebanon's eastern border with Syria.
Hezbollah Tactical Shift
A senior Hezbollah military official said in an interview with Al Jazeera that the group intends to "use 1980s-era tactics" and deploy squads of "suicide fighters" to prevent, as he described it, Israel's entrenchment in the area. He said, "large groups of suicide fighters are deployed in the occupied area according to pre-prepared plans," and that their mission is to "confront officers and soldiers of the enemy in the occupied Lebanese villages."
Lebanon's president said, "what we are doing is not betrayal, but the real betrayal is by those who lead their country to war for external interests." He said his goal is to end the state of war with Israel, similar to a cease-fire agreement, while emphasizing that any deal should include an Israeli commitment not to carry out military strikes against targets in Lebanon.
Israel continued to strike Lebanon, including airstrikes in the Al-Shaara area in the eastern Beqaa Valley and in the village of Toulin in southern Lebanon, and Lebanon's National News Agency reported an additional Israeli strike in the Tyre region.
West Bank Incident
A Palestinian report said Israeli settlers attacked a home on the outskirts of the central West Bank village of Jalud on Monday, with reports and footage indicating casualties at the scene. The house is near the illegal outposts of Esh Kodesh and Ahiya. Earlier in the day, settlers broke through a wall of the home and tried to enter it, and on Saturday settlers attempted to break into the home, assaulting and wounding a Palestinian man. Several weeks ago, settlers, some of them armed with rifles, entered the property freely and set fire to the entrance of the home.
Why This Matters:
Israel's decision to withhold $198 million in PA funds reflects ongoing concerns about fiscal accountability and the prevention of funds reaching militant groups, a policy that has intensified since October 7, 2023. The PA's deepening financial crisis, described by its own finance minister as the most severe since its establishment, raises questions about institutional stability in the West Bank and the sustainability of existing governance structures. Simultaneously, continued military operations in Lebanon 19 days after a cease-fire went into effect, combined with Hezbollah's stated intention to deploy suicide fighters using 1980s-era tactics, signal persistent security challenges along Israel's northern border. The unauthorized entry of Israeli soldiers into Lebanese territory highlights command and control issues that could complicate diplomatic efforts. These developments underscore the interplay between fiscal policy, security operations, and regional stability.