Submarine deal frees Palestinian money

Employees of the Palestinian Authority will get their paychecks this month and Israel will get a German submarine in 2016 capable of launching nuclear missiles under a deal worked out between Berlin and Jerusalem.

German media have reported that Chancellor Angela Merkel told German politicians she had dropped her opposition to the subsidised sale of a submarine to Israel - the sixth in two decades - after Israel agreed last week to unfreeze the transfer of US$100 million ($128.3 million) a month in customs duties and other funds to the Palestinian Authority which it had been withholding.

The German-supplied Dolphin submarines are a key part of Israel's strategic defence, able to fire nuclear-armed Cruise missiles giving Israel a second-strike capability.

Iran or any other enemy would presumably be deterred from launching a nuclear strike knowing that even if Israel were laid waste, its submarines could respond in kind.

Having a sixth submarine would give Israel extra leeway for always having some of the fleet at sea while the others were in drydock.

Germany, a generous funder of the Jewish state because of its responsibility for the Holocaust, has heavily subsidised the five submarines ordered previously. When Israel sought a sixth, it asked Germany to cover one-third of the cost but Merkel and her Government, angered at Prime Minister Benjamin Netanyahu's behaviour towards the Palestinians, the lack of political movement and the construction in Israeli settlements and east Jerusalem, balked.

A month ago, tensions increased when Israel announced it would cease the transfer to the Palestinian Authority of US$100 million a month in customs and tax payments which account for two-thirds of the authority's revenue. Netanyahu's reason was the authority's attempts to achieve statehood unilaterally by appealing to the United Nations instead of negotiating directly with Israel as required by the Oslo accords. Israel also cited the authority's attempts at a political accord with Hamas in Gaza which Israel regards as a terrorist entity.

The money is collected by Israel at its ports for goods destined for the land-locked authority. Although the funds, belong to the Palestinians, Israel claims it can violate the Oslo accords because the Palestinians have also done so.

An Israeli Government spokesman said Netanyahu had approved the transfer of funds "for the time being" but might renew the ban if the authority "resumes taking unilateral steps".