In an apparent reaction to Palestine gaining a seat at UNESCO, Israeli Prime Minister Benjamin Netanyahu has ordered the construction of 2,000 new housing units for Israelis, in occupied areas of East Jerusalem and the West Bank.

1,650 new units, which are deemed illegal under international law, would be built in East Jerusalem, an area the Palestinians claim as the capital of their future state.

In addition, Israel has decided to withhold the transfer of tax revenues that it collects on behalf of the Palestinian Authority (PA), and a decision is pending on whether this will become permanent.

A 1994 agreement legally obliges Israel to hand over the collections, which amount to about £630m a year in VAT and customs revenues, making up roughly 70% of the PA’s total revenues. Without the income, the PA would find it difficult to pay salaries to government employees.

Nabil Abu Rdainah, a spokesman for Mahmoud Abbas, said Israel had “decided to speed up the destruction of the peace process” and labelled the latest moves as “inhumane” and said,

"The freezing of funds is stealing money from the Palestinian people."

Meanwhile, internet and telephone services have come under a “sustained attack” in the West Bank and Gaza.

Palestinian communications minister Mashur Abu Daqqa told AFP,

"I think from the manner of the attack and its intensity, that there is a state behind it. Israel could be involved as it announced yesterday it was considering the kind of sanctions."

See our earlier post: ‘US cuts funding to UNESCO as Palestine gains seat’ (Oct 2011)