RAMALLAH, West Bank (Reuters) ? Israel's punitive responses to a successful Palestinian bid to join UNESCO -- financial sanctions and a faster settlement drive in the occupied West Bank -- are unlikely to halt a Palestinian quest for recognition as a state at the United Nations.
A senior Palestinian official said on Wednesday that Israel was trying to undermine the Palestinian Authority (PA) through a decision on Tuesday to freeze temporarily transfers of PA funds after it won membership of the U.N. cultural agency.
The vote at UNESCO marked a success for the Palestinians in their broader push for recognition as a state in the U.N. system -- an initiative opposed by Israel and its U.S. ally.
In what the Palestinians saw as a reprisal, Israeli Prime Minister Benjamin Netanyahu's cabinet also decided to accelerate the building of Jewish settlements on land where the Palestinian Authority aims to establish an independent state next to Israel.
"It is very serious. Israel wants to strive to destroy the role of the Palestinian National Authority," Yasser Abed Rabbo, secretary-general of the Palestine Liberation Organization (PLO), told Voice of Palestine radio.
The revenues Israel has decided to withhold include duties on goods being imported to the Palestinian territories and which amount to around half of the PA's domestic revenue base.
In May, Israel temporarily withheld the revenues in response to a reconciliation pact between Abbas and the Hamas movement which governs the Gaza Strip and is deeply hostile to Israel.
That suspension meant the PA was unable to pay salaries to its 150,000 employees on time for the first time since 2007. A PA spokesman said it was too early to say whether Israel's latest action would disrupt PA salary payments this month.
While Israel may want to punish the Palestinian Authority for its pursuit of statehood at the United Nations, analysts question whether Israel has any interest in the PA's collapse, not least because of its role in policing the West Bank.
PA security forces currently cooperate with the Israelis.
"This is one point of strength the PA has," said George Giacaman, a political scientist at Birzeit University in the West Bank.
MORIBUND PEACE PROCESS
The Authority was set up in 1994 as a state-in-waiting at the outset of a peace process which the Palestinians hoped would yield their independence in the West Bank, East Jerusalem and the Gaza Strip, which were all captured by Israel in 1967.
That process, if it exists at all, is in deep crisis. The last round of direct peace talks broke down around a year ago because of a dispute over Israel's expansion of settlements in the West Bank and East Jerusalem -- construction which Abed Rabbo said aimed to kill any chance of Palestinian independence.
Israel said on Tuesday the areas where building would be accelerated would remain in its hands in any future peace deal.
"The Palestinians have no one but themselves to blame for the current impasse in the peace talks that stems directly from their refusal to negotiate peace, from their boycotting the negotiations and from their decision to attack Israel in international fora," Netanyahu spokesman Mark Regev said.
UNESCO was the first U.N. agency to admit the Palestinians as a full member since President Mahmoud Abbas applied for a full seat at the United Nations on September 23.
Israel and the United States both see the Palestinian policy as an attempt to bypass bilateral peace talks. Israel also says that the Palestinians are aiming to delegitimize it.
Saeb Erekat, another senior Palestinian official, said Israel's latest decisions would "not change our course of action," signaling the Palestinians will push ahead regardless in their U.N. initiative.
Palestinian analysts say Abbas' resolve has only been hardened by the recent success of his rivals in the Islamist Hamas movement, which last month scored points among Palestinians by brokering a prisoner swap with Israel.
The U.N. Security Council is expected to decide the fate of the Palestinian application for full membership around November 11. Washington has vowed to use its veto if it comes to a vote.
The Palestinians could then ask the General Assembly to upgrade their status to that of "a non-member state," an improvement on their current standing as an "observer entity."
They also have plans to apply for full membership of other U.N. agencies, regardless of the course of events in New York.
(Editing by Alistair Lyon)
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