Norway has agreed to help facilitate the transfer of frozen tax funds earmarked for the Palestinian Authority (PA) that were collected by Israel, the Norwegian government said on Sunday, providing vital funding to the Western-backed entity.
Under interim peace accords reached in the 1990s, Israel's finance ministry collects tax on behalf of the Palestinians and makes monthly transfers to the PA, but a dispute broke out over payments in the wake of the Oct. 7 attack by Hamas.
The temporary solution will allow payments to resume and prevent a financial collapse for the PA, enabling it to pay salaries and provide essential services such as schools and healthcare, Norway said.
"This is critical to promoting stability in the region and for the Palestinian Authority to have legitimacy among its people," Norwegian Prime Minister Jonas Gahr Stoere said.
Under the solution agreed with Israel and Palestinian officials, Norway will serve as an intermediary for holding revenues that Israel has withheld since Oct. 7.
"The Palestinian Authority is then willing to accept the other funds," Norway said.
The portion of the revenue Norway will keep equals the portion that Israel estimates for Gaza, said a Norwegian foreign ministry spokesperson.
Accessing the revenue is key to the survival of the PA, which exercises limited self-rule in the Israeli-occupied West Bank.
Overseeing the Gaza Strip
Several Western countries, including the United States, also want the PA to play a role in the administration of the Gaza Strip should the war come to an end.
On Nov. 2, Israel said it would proceed with a tax revenue transfer to the PA in the West Bank but would withhold funds bound for Gaza, ruled by Hamas but where the PA helps cover public sector wages as well as medicine and social assistance programmes.
But on Nov. 6, the PA said it wanted the money in full and would not accept conditions that prevent it from paying its staff. It is estimated to spend some 30% of its budget in Gaza.
On Jan. 21, Israeli officials said the Israeli cabinet had approved a plan for frozen tax funds earmarked for the Gaza Strip to be held by Norway instead of transferred to the PA.