Norway brokers deal to help Palestinian Authority avoid financial collapse

In a statement, the Norwegian government said the parties had agreed on a temporary solution, under which Oslo would act as a custodian to hold the tax money that Israel has not paid to the PA since the Hamas-Israel conflict broke out on October 7 last year.

The Norwegian government statement said the PA welcomed the agreement and thanked the PA for its efforts to find a temporary solution to the current exceptional situation. Under the agreement, Israel will transfer the tax money collected on behalf of the PA to an account in Norway, which will hold the money. Norway also said the PA is ready to accept other money later.

Norwegian Prime Minister Jonas Gahr Store stressed that with this solution, the PA will be able to pay salaries, thereby ensuring essential services for the Palestinian people, including education and health care. He also stressed the importance of the agreement in promoting stability in the region, as well as for the PA to gain legitimacy among its own people.

Under a 1994 agreement, Israel collects taxes on behalf of the PA in the West Bank and transfers the proceeds to the PA on a monthly basis. Some of the money is used by the PA to pay for expenses in the Gaza Strip, including salaries for medical staff. However, after the outbreak of the Hamas-Israel conflict, Israel announced that it would transfer tax revenues to the PA in the West Bank, but withheld payments to public administration employees in the Hamas-controlled Gaza Strip, saying the money could end up in Hamas’ hands. The PA later announced that it would only accept the entire tax revenue from both the West Bank and Gaza Strip and would not accept conditions that were said to hinder the payment of PA salaries. It is estimated that salaries and services in the Gaza Strip account for about 30% of the PA’s budget.