“Netanyahu is now stuck between the anvil and the hammer,” says former Israeli diplomat Ilan Baruch. “[He] is struggling to keep the right around him in one bloc and for that he needs to pay political currency, so he needs to make noises that sound like a commitment fulfilled to a very hawkish agenda.”
The financial punishment
As the custodian of PA tax revenues, Israel wields significant financial leverage over the PA thanks to an annex of the Oslo Accords known as the Paris Protocol.
The PA owes Israel roughly 800 million shekels ($210 million) in unpaid electricity bills and has yet to pay November salaries. It was counting on 460 million shekels ($120 million) in November tax revenues to meet payroll. But today Israel’s minister of Finance announced that rather than transfer the tax revenues to the PA, it would deduct that amount as a down payment on the PA’s overdue electricity bill.
While Israel had threatened to withhold tax revenues if the Palestinians pursued their UN bid, it also has expressed concern that the deep and chronic economic crisis in the West Bank could spark greater restlessness – and thus a potential threat to Israel’s security.
The territorial blow
On Friday, the day after the UN vote, Israel announced it was authorizing 3,000 new homes in East Jerusalem and the West Bank. Even before that announcement, Israel had already registered the highest number of building tenders issued in any year of the past decade, according to an analysis by Peace Now, which opposes settlement construction.
Netanyahu’s government had issued tenders for 3,046 new buildings in East Jerusalem and the West Bank, more than double the amount from last year, and five times the number in 2010.