Washington Moves to Fund Peace Council with Palestinian Funds

Washington  is  considering the possibility of asking Israel to transfer part of the Palestinian tax revenues it has been holding for months to the peace council set up by US President Donald Trump, US sources said, in a move aimed at funding his post-war plan in Gaza, sources familiar with the talks said.

The sources added that the Trump administration has not made a final decision on whether to submit an official request to Israel, while two informed Palestinian sources revealed that the proposal includes allocating part of the funds to a U.S.-backed transitional government in Gaza, and another part to the Palestinian Authority in the event of implementing reforms demanded by Washington, and the  Palestinian Authority estimates the value of the withheld funds at about $5 billion.

Diplomatic sources have warned that redirecting these funds toward Trump's Gaza reconstruction plan — which the PA has not been involved in preparing — could further marginalize the PA in the West Bank, at a time when Israel's withholding of these revenues has triggered a crippling financial crisis that has prompted the PA to cut the salaries of thousands of employees.

For months, Israel has been refusing to transfer the tax revenues it collects on behalf of the Palestinian Authority, as part of punitive measures related to the file of prisoners and martyrs' payments, despite the PA's announcement in February 2025 of its intention to amend the payment system, an amendment that Washington considered "insufficient."

Council: Proposal under consideration

The peace council declined to comment on whether the use of Palestinian funds was under consideration, but a council official said all parties had asked it to "harness resources to support Trump's $70 billion reconstruction plan," adding: "Depositing the money in a bank does not contribute to pushing the president's 20-point plan forward."

Trump's plan calls for the formation of a national committee to administer Gaza from technocrats to take control of the Strip after Hamas has given up its arms. During a press conference in Jerusalem, the council's envoy to Gaza, Nikolai Mladenov, said reconstruction plans were "in advanced stages," stressing that the team was "ready to start as soon as the conditions are right."

The sources did not disclose how much Washington might ask Israel to transfer to the council, while the US State Department, the Israeli government and the Palestinian Authority declined to comment.