An Israeli official, speaking on condition of anonymity, said on Thursday the regime would deduct debt payments from tax transfers which the Palestinian Authority routinely receives, and limit the self-rule government’s bank deposits in Israel.

Israel said Wednesday it was limiting its contacts with Palestinian officials, citing acting Palestinian Authority Chief Mahmoud Abbas’ signing of UN human rights conventions last week, seen as a Palestinian attempt to assume the trappings of statehood outside the framework of the US-backed negotiations.

Abbas, for his part, has accused Israel of violating a commitment to release two dozen prisoners at the end of March, the last group of about 100 Israel pledged to free.

The official said Israel had “decided this evening to deduct debts of the Palestinian Authority to Israel from tax revenue transfers,” but would not say what amounts were involved.

The revenues, which Israel collects on goods bound for the Palestinian market, amount to about $100 million a month and accounts for about two thirds of the Palestinian budget.

Israel also said it would suspend its participation in a gas exploration project off the coast of the Gaza Strip.

Senior Palestinian official Yasser Abed-Rabbo denounced the moves.

“These sanctions will not scare us and they’re evidence to the world that Israel is a racist occupation state that has resorted to the weapon of collective punishment in addition to other practices including settlements and their expansion and the denial of our most basic rights as a people,” he said.

BA/BA