Israel collects the customs and VAT that make up about two-thirds of PA revenue, and since May 2025 has transferred none, per the World Bank. The PA says it needs about NIS 1.5bn a month and has NIS 800–850m; salaries run months late. Pressure on PA institutions is plausible, not established.
Written for geopolitical-risk and economic-exposure work: it traces a mechanism, not a market view.
How to read the grades
- Confirmed Documented as having occurred, with sources.
- Plausible exposure A mechanism Vigil assesses as likely; not documented as having occurred.
- Unconfirmed scenario Named because it is worth watching. Not asserted.
A step can never be graded more firmly than the step it depends on: a consequence cannot be better established than its cause. That rule is enforced when this site is built, not applied by hand — a chain that broke it would fail the build rather than publish.
- Trigger
Israeli withholding and deduction of PA clearance revenue
- Affected asset, route or regionConfirmed
Under the 1994 Paris Protocol Israel collects VAT, customs and purchase tax on goods bound for the Palestinian territories and transfers them monthly to the PA as clearance revenue, less a 3 per cent handling fee (MAS, July 2026, restating the Protocol; the Protocol text was not re-read in this pass). Clearance is the PA's largest revenue stream: "around two-thirds" of public revenue according to MAS (July 2026), and "about 70 per cent" of public income according to PA Finance Minister Estephan Salameh (12 February 2026). Salameh put 2025 clearance revenue collected at NIS 10.293bn, of which NIS 1.951bn was transferred, all in January–April 2025 — the PA's account.
Documented as having occurred, with sources.
- Operational disruptionConfirmed
Deductions have been layered on the transfer, each with its own basis. Under the 2018 Freezing Law, applied from 2019, Israel freezes each month one-twelfth of what it determines the PA paid the previous year to prisoners and their families; monthly freezes under it ranged NIS 39.3m–102.6m in 2023–2026 and were NIS 40.7m in May 2026 (MAS, citing PA Finance Ministry monthly reports). From November 2023 Israel has also withheld an amount equal to PA spending in Gaza, NIS 275m a month (MAS). The World Bank's May 2026 report states that clearance revenue has been "suspended completely since May 2025" (MAS dates it from June 2025; Vigil keeps the Bank's month). Israeli Finance Ministry statements continue to describe a monthly collect–deduct–freeze cycle: on 27 April 2026 it reported collecting more than NIS 740m that month, deducting about NIS 590m against PA debts to Israel Electric Corporation, water and environmental bodies, and freezing the remainder (Israeli statement as relayed by Anadolu reporting). On 8 June 2026 the Knesset passed an amendment to the 2018 Freezing Law (bill no. 1124, published 10 June 2026, per the Knesset Shkufa tracker; the English title is a translation) under which a ministerial committee sets an additional yearly deduction; no amount has yet been set under it. The PA Finance Ministry described September 2026 as the 17th consecutive month of withholding (WAFA, 27 September 2026).
Documented as having occurred, with sources.
- Exposed sector or commodityConfirmed
What is exposed is PA liquidity and, through it, public salaries and payments to suppliers and banks. Salameh said on 27 September 2026 that the PA needs about NIS 1.5bn a month and has NIS 800–850m available for partial salaries and basic services. The World Bank records wages paid at 50–70 per cent of the commitment basis through 2025 and a flat NIS 2,000 for January 2026, paid three months late. The June 2026 salary was paid on 23 September 2026 with a NIS 2,000 minimum, per the PA Finance Ministry via WAFA. The World Bank put end-2025 arrears at $2.85bn to employees and $1.82bn to suppliers and public debt at $4.8bn; MAS, citing the PA Finance Ministry's May 2026 accounts, gives arrears of about NIS 20.5bn and public debt of about NIS 14.2bn, mostly owed to Palestinian banks. The two series use different bases and dates and are not combined.
Documented as having occurred, with sources.
- Broader economic significancePlausible exposure
Vigil's assessment is that prolonged withholding places sustained pressure on the PA's capacity to function as an institution — to pay the security services, teachers and health workers it employs, and to service the domestic banks that hold its debt. This is graded plausible, not confirmed: partial salaries measure fiscal stress, not institutional failure, and the PA continues to operate on donor support the World Bank put at $938m in 2025. The decisions that would change the mechanism — the first yearly deduction under the June 2026 amendment, and any resumption of transfers — fall to the Israeli government formed after the 27 October 2026 election. The standing relationship is levant-pa-israel-clearance-dependency.
A mechanism Vigil assesses as likely; not documented as having occurred.
Sectors and commodities exposed
Named as plain labels rather than a controlled vocabulary, so this list cannot drift from the commodity names the module's economy section already uses.
What remains unknown
- The withheld totals are not reconciled and are not comparable: about NIS 13bn (Salameh, 12 February 2026); about NIS 14bn (Haaretz, 6 May 2026); net withholding above NIS 13bn by May 2026, excluding separate deductions, with about NIS 2.7bn withheld January–May 2026 (MAS calculation on PA data, July 2026); about $7bn (PLO Executive Committee, 10 October 2026). The World Bank publishes no total.
- The amendment's bill reference and provisions come from the Knesset Shkufa tracker, a civic presentation of Knesset data; the Reshumot text has not been read, and the English title is a translation.
- The PA Finance Ministry's announcement of the June 2026 salary gives the percentage paid inconsistently (headline and body differ); only the payment date and the NIS 2,000 minimum are used.
- Whether the Norwegian holding arrangement for the Gaza share still operates after the January 2025 transfer is not established.
Readings the evidence also supports
- Israel's Finance Ministry presents the deductions and freezes as responses to PA payments to prisoners' families and to its moves in international institutions; the PA and donors describe them as collective financial pressure. The PA abolished sentence-linked payments in February 2025, which Israel and the United States called insufficient. Both readings are attributed.
- How much of the PA's shortfall is due to withholding is itself contested. Salameh put the 2025 deficit at more than NIS 4.5bn against under NIS 400m had clearance flowed (12 February 2026) — the PA's attribution of nearly all of it to withholding. The World Bank states its 2025 financing gap after Israeli deductions and does not apportion causes.
Listed because the record's own assessment is not the only one its sources permit — not as a hedge on the assessment above.
Any month with a non-zero clearance transfer to PA accounts
The only observable that would show the suspension reported by the World Bank since May 2025 has ended — a PA or Israeli Finance Ministry statement of an actual transfer, not a collection or deduction figure.
The first yearly deduction set under the June 2026 amendment
The amendment creates the mechanism but no amount; the first determination falls to the next Israeli government.
The share and lag of each PA salary payment
Announced by the PA Finance Ministry through WAFA; the most frequent public measure of the liquidity squeeze.
Watch questions this chain bears on
Standing analytical questions whose evidence runs through this chain, each with its latest review. Derived from the Watch object, never restated here.
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Assessed as of — 2026-10-10 Last reviewed — 2026-10-12