Israel has frozen about $125 million in tax revenues it collects for the Palestinians, in response to Palestinian efforts to join the International Criminal Court, an Israeli official said Saturday.
The action was taken a day after Palestinian officials submitted documents to join The Hague-based court, a move that will enable them to seek war crimes charges against Israel.
The Palestinians rely on the monthly revenue transfer to run their government and pay the salaries of civil servants.
A senior Palestinian negotiator, Saeb Erekat, condemned the Israeli action and said it would not deter the Palestinians from their bid to join the ICC.
An Israeli government official, speaking on condition of anonymity to Reuters and The Associated Press, confirmed the decision to halt the transfers.
Palestinian President Mahmoud Abbas signed the documents to join the ICC after the U.N. Security Council rejected a draft resolution on establishing a Palestinian state. The resolution set a three-year deadline to set up a state on lands occupied by Israel after the 1967 war.
Israeli Prime Minister Benjamin Netanyahu had threatened unspecified retaliation for the Palestinians' efforts.
The Palestinian ambassador to the U.N., Riyad Mansour, said Friday that the Palestinians would also seek retroactive jurisdiction from the ICC for crimes committed during last year's Gaza conflict.
A U.S. State Department spokesman said the move does nothing to further Palestinian aspirations for an independent state. And a top U.S. official told Reuters the Palestinian actions could have implications for U.S. aid to the Palestinian Authority.
By becoming members of the ICC, the Palestinians could also open themselves up to counter-charges of war crimes from others.
Israel is not a member of the court.
The court, which is independent of the United Nations, was formed by international treaty in 2002 to prosecute suspects accused of genocide, war crimes and other crimes against humanity.
It has no power to make arrests but does have the authority to issue arrest warrants, which could make it a problem for suspects to travel.