Israel is withholding 590 million shekels, about $198 million, in taxes and customs duties it collected on behalf of the Palestinian Authority, Israeli Finance Minister Bezalel Smotrich said Monday, as cross-border violence between Israel and Lebanon continued and Palestinian communities faced escalating settler attacks.
According to a ministry statement, 590 million shekels, about $198 million, 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."
Deepening Palestinian Fiscal Crisis
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. 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."
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.
Settler Violence Escalates in West Bank
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.
Lebanon Border Tensions Continue
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. 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. 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.
Unauthorized Military Entry Under Investigation
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.
Hezbollah Announces Tactical Shift
Meanwhile, 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."
Separately, 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.
Why This Matters:
The withholding of $198 million in Palestinian tax revenues deepens a fiscal crisis that Palestinian officials have described as the most severe since the PA's establishment, threatening essential services for millions of Palestinians whose own government cannot access funds collected on their behalf. The continued escalation of settler violence in the West Bank, including repeated attacks on a single family home near illegal outposts, illustrates the security vacuum facing Palestinian civilians. Meanwhile, ongoing cross-border strikes between Israel and Lebanon, despite recent cease-fire efforts, and Hezbollah's announced tactical shift toward guerrilla warfare tactics signal the potential for prolonged instability. The combination of financial strangulation, civilian attacks, and cross-border military operations reflects interconnected crises affecting Palestinian and Lebanese populations while diplomatic solutions remain elusive.