Israel to withhold $138 million in Palestinian funds

Israel says it will withhold over $138 million from the Palestinian Authority for payments given to families of Palestinians who carried out attacks against Israelis.

The government's security Cabinet said Sunday that it was implementing a law passed last year allowing Israel to withhold funds used to pay stipends to Palestinian attackers and their families from taxes Israel collects on the Palestinian Authority's behalf.

Israel says the payments encourage violence — a claim the Palestinians reject.

The freeze comes as the Palestinians face major budget cuts made last year after the United States slashed funding for the U.N.'s Palestinian refugee program UNRWA and for development programs in the Palestinian territories. The U.N.'s World Food Program also cut back services due to funding shortages.