During a 45-minute call last Saturday, President Biden and Prime Minister Netanyahu discussed Israel's military operations in Gaza and a contentious issue involving Palestinian tax revenues.
The conversation, occurring amidst heightened tensions, centered on Israel withholding tax revenues it collects on behalf of the Palestinian Authority (PA). This decision, made by Israel's Finance Minister Smotrich, was in response to a Hamas attack. However, Israel agreed to transfer the non-Hamas-related funds.
The Biden administration expressed concern regarding the potential economic fallout for the PA, should Israel continue withholding funds. The PA, on its part, has refused to accept only a part of the funds, insisting on the full amount.
In a notable shift, President Biden proposed that the funds be transferred to Norway for safekeeping. This suggestion, initially raised by Netanyahu himself, was intended to provide a temporary solution until a more permanent arrangement could be reached.
The PA responded positively to this U.S.-proposed arrangement, agreeing to accept some non-withheld tax revenues under these terms, Axios reported.
However, Netanyahu, in a surprising turn, backtracked on his earlier proposal, citing mistrust towards Norway and insisting that the PA should accept the partial funds.
Reflecting the depth of the disagreement, President Biden countered Netanyahu's stance, emphasizing the U.S.'s trust in Norway and urging the Israeli leader to confront his internal opposition on this issue. The call, according to reports, ended abruptly with Biden expecting Netanyahu to resolve the matter.
This exchange underlines the growing rift between the two leaders, a relationship once characterized by closer alignment.
A U.S. official described the situation as President Biden being increasingly challenged by Netanyahu's reluctance to take political risks in return for U.S. support. This sentiment reflects the complexities in the U.S.-Israel dynamic, especially over sensitive issues like Palestinian taxation.
The same official, while acknowledging the tension, emphasized that the conversation between Biden and Netanyahu was "good and productive." This statement suggests efforts to maintain a balanced narrative amidst diplomatic strains.
Another U.S. official offered a more nuanced view, indicating that Netanyahu did not outright reject the Norway proposal but mentioned ongoing deliberations on the Israeli side. This perspective hints at a more intricate decision-making process within the Israeli government.
The recent meeting between Israeli Minister Dermer and U.S. National Security Advisor Sullivan also touched upon this issue. An official cited "good progress," suggesting ongoing diplomatic efforts to find a resolution.
The timeline of events provides context to this diplomatic impasse. In October 2022, Israel's decision to suspend transfer of tax revenues following a Hamas attack set the stage for the current predicament. The Biden administration's pressing concern over a potential economic collapse of the PA further complicated matters.
This tension was palpable during the recent phone call. Despite the primary focus on Gaza's ground operations, the tax revenue issue emerged as a critical point of contention towards the end of the discussion.
President Biden's abrupt end to the call, with an expectation for Netanyahu to address the issue, underscores the gravity of the situation. This moment is indicative of the challenges both leaders face in navigating their respective political landscapes while maintaining a crucial bilateral relationship.
This story reflects the ongoing complexities in U.S.-Israel relations. Key aspects include:
