The family of a Palestinian high school dropout who killed a 13-year-old Jewish settler girl in her sleep last month before being shot dead is now eligible for $350 a month from a Palestinian fund for "martyrs."

Israel argues that such stipends for families of Palestinians killed or wounded in the conflict promote violence by rewarding attacks, and has stepped up a campaign against the fund after a series of killings of West Bank settlers.

Prime Minister Benjamin Netanyahu called the payments "an incentive for murder," and a government spokesman said that starting next month, Israel would deduct those sums from monthly transfers of taxes and customs it collects on behalf of the Palestinians.

Palestinians scoff at the idea that money, along with alleged anti-Israel incitement, is a key motive for a nearly year-long rash of stabbing, shooting and vehicular attacks on Israelis. They say attackers are driven by despair over the chokehold of half a century of Israeli occupation or a desire to avenge others killed by Israeli troops or armed civilians.

"I don't think anyone is willing to sacrifice his life for money. And for us as a family, all the money in the world won't replace my son," said Nasser Tarayreh, a well-to-do merchant from the West Bank town of Bani Naim whose 17-year-old son Mohammed killed a sleeping Israeli girl in the Kiryat Arba settlement on June 30.

The elder Tarayreh said that rather than profiting from the attack, as Israel claims, the family will pay dearly. It has received a notice ordering the demolition of its two-story villa. Such demolitions of family homes are standard Israeli retribution for attacks.

The clashing views over the fund are further poisoning a toxic atmosphere, at a time when France and Egypt are both making long-shot attempts to restart Israeli-Palestinian negotiations after a decade of paralysis.

The fund makes monthly payments to about 35,000 families of Palestinians killed and wounded in the long-running conflict with Israel, with a budget of $170 million this year, according to Palestinian figures. These include families of Palestinian suicide bombers.

By comparison, Israel transfers about $125 million a month, or $1.5 billion a year, to the Palestinian Authority in tax and customs rebates, money that belongs to the Palestinians. The transfers are a key revenue source for the cash-strapped autonomy government, and Israel has withheld payment in the past over political disagreements.

The martyrs' fund was set up in 1967 by the Palestine Liberation Organization, the group that formally represents all Palestinians. The PLO has been sidelined since the establishment of the Palestinian Authority autonomy government as a result of interim peace deals with Israel in the 1990s.

The "martyrs' fund" and another fund supporting families of Palestinians imprisoned by Israel are nominally PLO institutions, but are funded by the Palestinian Authority.

The fund for families of several thousand Palestinians held for alleged anti-Israeli activities, from stone-throwing to shooting attacks, has a 2016 budget of $125 million, according to the website of the Palestinian Authority's Finance Ministry.

Palestinian officials say welfare payments help victims of Israel's occupation — providing stipends to families, scholarships to university students and assistance to widows.

"This is a kind of social protection for the family," said Qadora Fares, who heads the Palestinian prisoners' association. "The children of the prisoners and martyrs and wounded have the right to go to schools, hospitals and get food."

Israel says the payments glorify terrorism, part of what it sees as a broader trend of "incitement" blamed for fueling renewed violence over the past year.

It argues that fiery speeches by Palestinian leaders, venomous posts on social media networks and the naming of public squares after Palestinians who killed Israelis have created a hate-filled climate. Palestinian President Mahmoud Abbas has spoken out against violence, but Israel says his condemnations of recent attacks have been half-hearted.

"Terror has become a comfortable business for families," said Israeli Foreign Ministry spokesman Emmanuel Nahshon. "This encourages violence."

The next battleground could involve international assistance, as Israel argues that the martyrs' fund is inadvertently subsidized by Western and Arab aid to the Palestinian Authority. The self-rule government receives several hundred million dollars a year in foreign aid.

The U.S., a key donor, has passed legislation meant to keep its aid from reaching the fund.

As a safeguard, U.S. money is earmarked for specific purposes, and the legislation "requires us to deduct from our own development assistance to the Palestinian Authority amounts equal to payments to individuals for acts of terrorism," said the U.S. Consulate in Jerusalem, in a statement.

The debate came into focus after the killing of the Kiryat Arba girl.

Tarayreh, the assailant, had written on Facebook he hoped to become a "martyr," a term widely used by Palestinians for anyone killed in violent conflict with Israel.

Posters in his hometown praised him as a "heroic martyr." They reflect broad social approval for those seen as willing to sacrifice their lives in the struggle against occupation, regardless of the circumstances — in this case the killing of a sleeping girl.

Revenge can also provide a motive — though it's not clear if it played a role in Tarayreh's case. Two others from Bani Naim, including a cousin of Mohammed, were killed by Israeli soldiers in separate attempts to ram their cars into troops guarding Kiryat Arba.

In principle, Tarayreh's parents are now eligible for support from the "martyrs' fund."

Each family of a Palestinian killed by Israel receives a base monthly payment of 1,400 shekels ($350), said the head of the fund, Intisar al-Wazir, the widow of PLO military chief Khalil al-Wazir, who was assassinated by Israeli commandos in 1988.

If they were married, the amount increases by $100, and $50 is added for each child, she said. Children of those killed by Israel receive support until age 18, or until they begin working. Those attending university receive support until graduation.

For some, it's a main source of income.

Malehah Awwad, 56, receives about $700 a month for the loss of her two children. Her son Mahmoud was shot dead in 2013 during clashes between Israeli troops and Palestinian stone throwers. Last November, her daughter Hadeel, 14, apparently seeking revenge, was shot dead as she tried to stab Israelis with scissors in Jerusalem.

"I have lost my mind," said Awwad. "No one can stand the loss of their daughter or son."

Those qualifying for assistance from the fund include people killed during two Palestinian uprisings against occupation, three wars in Gaza and Israel's war in Lebanon in the 1980s. Relatives of about 200 Palestinians killed in the current fighting are also eligible.

"They are victims of the occupation," al-Wazir said.