By The Washington Post

Published: Sunday, December 2, 2012, 9:02 p.m.
Updated: Tuesday, February 19, 2013

RAMALLAH, West Bank — Returning to a hero's welcome Sunday after gaining limited recognition of statehood at the United Nations, Palestinian Authority President Mahmoud Abbas faced fresh punitive action by Israel, which froze the transfer of more than $100 million in tax revenue collected for his cash-strapped government.

The Israeli step was the second response to the vote last week at the U.N. General Assembly, which granted the Palestinians the status of a “non-member observer state.” On Friday, Israel said it would build 3,000 homes in West Bank settlements and in East Jerusalem, and would advance controversial settlement plans near the city in an area deemed critical for the territorial contiguity of a Palestinian state.

Israeli Finance Minister Yuval Steinitz announced that he was halting the transfer of tax and customs revenues collected by Israel for the Palestinian Authority. A spokeswoman for Steinitz said that a monthly tax transfer of about $120 million due to be made this week would not be carried out because of “the unilateral step taken by the Palestinians.” The funds would be diverted to meet a debt of some $200 million to the Israel Electric Corp., the spokeswoman said.

Still, the mood at the presidential compound in Ramallah was euphoric. A flag-waving crowd of thousands erupted when Abbas declared: “We now have a state.

“The world has said loudly: ‘Yes to the State of Palestine. . . . No to aggression, settlement and occupation,' “ he added.

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