Israel's Finance Ministry has successfully cleared the Palestinian Authority's (PA) decade-old electricity debt of 1.1 billion shekels ($310 million), while simultaneously repurposing funds held in a Norwegian account earmarked for Gaza.
This historic financial maneuver, led by Finance Minister Bezalel Smotrich, marks the resolution of a debt that originally stood at 1.9 billion shekels ($515 million) and had lingered unresolved for over a decade.
In a briefing to the Diplomatic-Security Cabinet on Sunday, Smotrich detailed the process, which included negotiations with U.S. officials and the PA. The Norwegian fund, where Israel had deposited deductions from PA payments intended for Gaza (275 million shekels monthly, or $74 million), held approximately 1.4 billion shekels ($379 million) as of May. Half of these funds will now cover the PA’s fuel debts, while the other half will settle outstanding payments to the Israel Electric Corporation.
The move follows Norway's unilateral recognition of a Palestinian state last year, which prompted Smotrich to halt further fund transfers to the Norwegian account and redirect them within Israel. This accumulation strategy allowed the Finance Ministry to recover the full amount owed without compromising on late payment interest, a common point of contention in past negotiations.
The resolution of the debt involved significant behind-the-scenes coordination, including discussions with U.S. Ambassador Thomas Nides. Despite pressure from American officials to discount interest fees, Israel’s Finance Ministry refused to reduce the amount owed, asserting the principle that no Israeli citizen would receive such a concession.
* Israel Hayom contributed to this article.
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