Israel's Knesset on Wednesday passed the first reading of a new bill that would prevent the transfer of funds to the Palestinian Authority if the latter maintains its current boycott of Jewish-made goods and services.
The Palestinian boycott, which has made it illegal for average Palestinians to shop at Israeli grocery stores in Judea and Samaria, for instance, has already caused an increase in economic hardship for the Palestinians.
But Israeli lawmakers said it is hurting Jewish businesses in those areas, too. In order to convince the Palestinian Authority to reverse its policy, the Knesset agreed that Israel should stop transferring tax revenues and other funds to the Palestinian government.
The transfer of such funds is part of Israel's commitment under its signed peace agreements with the Palestinians. But, so are regular, undisturbed economic relations between Israel and the Palestinians. The Israelis argue that they are under no obligation to honor their commitments if the Palestinians first violate theirs.
The new bill would also provide compensation to businesses hurt by the Palestinian boycott or other boycotts regularly imposed on Israel by foreign elements.