WASHINGTON : The U.S. State Department has formally concluded that the Palestinian Authority continued to finance payments to individuals convicted of terrorism and to families of deceased attackers throughout 2025, channeling more than $200 million through a rebranded welfare structure that U.S. officials say does not comply with American law.
The determination is contained in a nonpublic notification to Congress transmitted in late January 2026. According to officials briefed on the document, the assessment states that the Ramallah-based leadership preserved the substance of its long-standing prisoner and “martyr” payment system, despite public claims that it had been abolished and replaced with a neutral social assistance program.
Findings of the State Department Review
The notification concludes that the Palestinian Authority took administrative steps in early 2025 to transfer responsibility for the payments from the long-criticized “Martyrs Fund” to a newly created entity, the Palestinian National Foundation for Economic Empowerment (PNEEI). U.S. officials determined that this restructuring did not sever the link between financial benefits and acts of political violence.
According to the State Department review, eligibility for assistance under PNEEI remained primarily tied to security-related status, including imprisonment by Israel for security offenses or death during an attack, rather than household income, employment status, or other standard welfare indicators. Payment levels showed no meaningful reduction, and in many cases mirrored the previous stipend structure.
The department further assessed that beneficiaries experienced no interruption in payments during the transition from the older mechanism to the new foundation, indicating that the change was administrative rather than substantive.
Financial Scope of the Program
The findings outline the financial scale of the payments during a period of acute fiscal strain for the Palestinian Authority. In 2024, the PA allocated an estimated $144 million to stipends for imprisoned militants and families of deceased attackers. In 2025, that amount increased to at least $214 million, according to the State Department’s assessment.
U.S. officials noted that these expenditures accounted for a significant share of discretionary spending, even as the PA faced salary delays for civil servants and security personnel, alongside growing arrears to private-sector suppliers.
Political and Diplomatic Implications
The determination comes amid intensive policy discussions in Washington over post-war governance and reconstruction arrangements for Gaza. U.S. officials involved in those deliberations have indicated that the continued operation of the payment system, even under a new institutional name, presents a major obstacle to assigning the Palestinian Authority any role involving international reconstruction funding or security responsibilities.
Compliance with the Taylor Force Act remains a statutory requirement for U.S. economic engagement. Officials familiar with the congressional notification said the State Department did not certify compliance, thereby maintaining existing restrictions on U.S. assistance.
Israeli officials have issued parallel assessments. In public remarks in late 2025, Gideon Sa’ar said Israeli intelligence concluded that the PA was continuing to finance convicted attackers, while presenting the payments as pensions or security-related salaries.
Background to the Dispute
The payment system dates back several decades and has been a persistent point of friction between the Palestinian Authority and international donors. Under the original framework, monthly stipends were provided to Palestinians imprisoned for security offenses and to families of those killed during attacks. Payments were scaled to the length of prison sentences, a structure critics say rewarded more severe acts of violence.
In 2018, the U.S. Congress passed the Taylor Force Act, named after an American citizen killed in a 2016 stabbing attack in Tel Aviv. The law requires the U.S. Secretary of State to certify that the Palestinian Authority has terminated all such payments and repealed the legal provisions authorizing them before most U.S. economic aid can resume.
In early 2025, PA President Mahmoud Abbas issued a decree announcing the abolition of the prisoner stipend system and its replacement with a needs-based welfare model. Palestinian officials said the move was intended to align the PA with international norms and restore foreign assistance.
The State Department’s latest findings conclude, however, that the underlying policy remained unchanged. According to the notification, U.S. officials assess that the PA leadership views the payments as a domestic political necessity, choosing to preserve them despite fiscal pressure and diplomatic consequences.
As of early 2026, U.S. officials say no further determination has been made regarding changes to the program, and U.S. legal restrictions remain in force.
——— End of Article ———
