Prime Minister Benjamin Netanyahu hinted Monday that Israel might soon release tens of millions of dollars owed to the Palestinians, according to officials who heard him testify before an influential parliamentary panel.
Israel has refused to transfer the money to punish the Palestinians for their attempts to join the United Nations. The Palestinians recently were accepted to the U.N. cultural agency, UNESCO, as part of a broader effort for recognition as a full U.N. member state.
Western donor nations, and even Israel's own Defense Ministry, have urged Netanyahu to release the money, but he faces opposition from within his own hard-line coalition. His foreign minister accusing the Palestinians of using the money to reward terrorists.
In a closed hearing, Netanyahu told the parliament's foreign affairs and defense committee on Monday that Israel was "considering the possibility of renewing the transfer of money to the Palestinians" because they appear to have suspended their efforts at the U.N., the officials said. That would change if the Palestinians revive those efforts, one official said.
The officials spoke on condition of anonymity because the meeting was closed.
The Palestinians applied for U.N. membership in September, but the statehood bid has stalled after they failed to marshal the required support of nine of the Security Council's 15 members.
The Palestinians have said that as a backup plan, they will seek a lesser upgrade to nonmember observer status, but so far have not taken any action. Netanyahu said it appears the Palestinians have put these efforts on hold, since they have not approached the General Assembly or any additional U.N. agencies about membership.
Israel believes creation of a Palestinian state must be achieved through negotiations and charges the U.N. bid is one of a series of steps to bring unwarranted pressure on the Jewish state.
The Palestinians say they desperately need the money to keep their government afloat. Without it, they have to borrow from banks to pay monthly salaries of tens of thousands of civil servants.
In accordance with interim peace deals, Israel collects some $100 million in customs, border and some income taxes each month on behalf of the Palestinians and relays them to the West Bank government. The transfers were suspended on Nov. 3 in reaction to the UNESCO admission.
The Palestinian Authority employs tens of thousands of people, including security forces whose work at preventing attacks on Israelis has won praise from Israel and the United States.
The Palestinian prime minister, Salam Fayyad, warned this week that he would not be able to pay the coming month's salaries and said the withholding of the money is causing grave damage to the Palestinian economy. The Palestinian Authority is the largest single employer in the Palestinian territories.
Speaking to reporters Monday, Fayyad said he had not heard from Israel on whether it would soon release the money. He said he hoped the money would come "not a day too soon" because of the crisis. The Palestinian Authority has complained that Arab nations have not sent all the aid they promised.
Netanyahu told the committee on Monday that "Israel has no interest in bringing about the collapse of the Palestinian Authority," the officials said.
Top Cabinet ministers would have to approve the release of the money, and no date has been set for a vote.
Foreign Minister Avigdor Lieberman signaled he would vote against it. He disputed the notion that the money was needed to pay police salaries, noting that Palestinian President Mahmoud Abbas recently paid stipends to prisoners released in exchange for an Israeli soldier. Many of the prisoners were convicted of killing Israelis.
"They say this money is to pay salaries for security personnel. That is an out and out lie. This money is going to terrorist murders," Lieberman told his Yisrael Beiteinu Party.
Peace talks between Israel and the Palestinians have been frozen for three years. The Palestinians demand that Israel first stop building in the West Bank and east Jerusalem, occupied areas the Palestinians want for a future state. Israel rejects any preconditions for talks.
Also Monday, an Israeli military court convicted a Palestinian in the gruesome murders of five members of an Israeli family, including a baby, earlier this year.
A military spokesman, speaking on condition of anonymity according to protocol, said the military prosecutor recommended that Amjad Awad, a Palestinian from the West Bank, be sentenced to five life terms.
Israeli TV showed Awad laughing in court.
In March, two Palestinians, sneaked into the West Bank settlement of Itamar and stabbed five members of the Fogel family to death as they slept. Among the victims was a 3-month-old baby girl and two other children.