The Knesset Approves a Law Expanding Deductions from Palestinian Clearing Funds

SadaNews - The Israeli Knesset's plenum has approved, in its second and third readings, a draft law that stipulates the freezing and deduction of funds from the entitlements of the Palestinian Authority, based on what "Israel" describes as "terrorism," and transferring these funds to the Israeli state's treasury or using them to compensate families of Israeli victims who were killed in Palestinian operations against the occupation. The draft law received the support of 29 Knesset members, with 5 members opposing.

The law mandates an annual deduction from the clearing funds transferred to the Palestinian Authority, the amount of which will be determined by the Israeli ministerial committee for national security.

The deduction is based on an annual report submitted by the Israeli Minister of Finance, which includes the value of the allowances paid by the Israeli National Insurance Institute during the previous year to families of Israeli victims, in addition to the compensations paid from the property tax compensation fund for damages caused by the war.

According to the law, this occurs in light of operations carried out by Palestinians against the occupation, for which the Palestinian Authority or their families receive financial allowances.

The report will also include compensation amounts approved by Israeli courts in favor of "victims" from Palestinian operations, including compensations stipulated in the "model compensation law," along with unpaid compensatory debts owed.

The law stipulates that the deducted funds will be transferred to the "Israeli state treasury." However, if there are financial obligations resulting from unpaid compensations to the families of the victims, or if the funds frozen under current laws are insufficient to cover the compensations adjudicated against the Palestinian Authority according to the "model compensation law," the deducted funds will first be used to settle those obligations, with any remaining funds then transferred to the treasury.

The plenum of the Knesset had approved the draft law in its first reading in May 2025. At that time, the Maariv newspaper confirmed that the draft law does not serve as an alternative to existing legislations that allow for freezing Palestinian funds, but rather represents an addition that deepens the annual deductions. The newspaper stated that "Abu Mazen can forget about the money," referring to the sharp direction that the political establishment in "Israel" has taken towards the Palestinian Authority.