Israel's parliament has passed a law to freeze money transferred to the Palestinian Authority over its payments to the families of Palestinians jailed for attacks on Israelis.
The legislation was approved late yesterday and gives the Israeli government powers to withhold an amount of money based on what is paid to the prisoners and their families.
Israel collects around $127 million a month in customs duties levied on goods destined for Palestinian markets that transit through Israeli ports and then transfers it to the Palestinian Authority.
A sponsor of the legislation says the PA pays around $330 million a year to prisoners and their families, amounting to seven per cent of its budget. Israel has withheld payments in the past, notably in response to the Palestinians' 2011 admission to the UN cultural agency UNESCO as a full member.
When Israeli ministers first backed the new legislation in February, the Palestinian government called it "piracy and theft" as well as a breach of international law.
Israel says the payments to the families of Palestinians jailed for security offences or killed by Israeli forces while carrying out attacks encourages further violence.
Many Palestinians view the prisoners and those killed while carrying out attacks as heroes or "martyrs" in the struggle against Israeli occupation.
The payments can be a key source of income for families, who have in many cases lost their main breadwinner.
Israeli Defence Minister Avigdor Lieberman hailed the passing of the new law saying: "Every shekel (president) Mahmud Abbas will pay for terrorists and assassins will be automatically withdrawn from the Palestinian Authority's budget. An effective war on terrorism also passes through the pocket -- of the terrorists, of their families and of Mahmud Abbas.
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