Israel to freeze UNESCO funding over Palestinian membership

REUTERS - Israel said on Thursday it would freeze its funding to the United Nations cultural agency UNESCO following the group's decision to grant the Palestinians full membership.

A statement from Prime Minister Benjamin Netanyahu's office said UNESCO's decision this week damaged chances of reaching a peace deal with the Palestinians and that Israel would halt its annual payments of $2 million.

Israel's main ally, the United States, has also stopped its financing, which accounts for 22 percent of the agency's funds.

The UNESCO vote on Monday was a diplomatic victory for Palestinian President Mahmoud Abbas, who in the absence of peace talks has pushed for recognition of a Palestinian state at the United Nations, a move opposed by Israel and the United States.

A day after the vote, Israel announced it would speed up the building of some 2,000 housing units in the occupied West Bank and around Jerusalem, and freeze tax transfers to Abbas's Palestinian Authority.

"Steps like these do not promote peace but make it more distant," Netanyahu said of the UNESCO vote.

Netanyahu has called on Abbas to return without preconditions to peace negotiations that collapsed over a year ago in a dispute over Jewish settlement. Abbas says Israel must first freeze settlement activity.

The Palestinians are looking to establish a state in the West Bank, Gaza Strip and East Jerusalem, territories Israel captured in the 1967 Middle East War.

Israel later annexed East Jerusalem, a move that has not won international recognition. It withdrew from Gaza in 2005, and in 2007 the territory was taken over by Hamas Islamists, who are rivals to Western-backed Abbas and refuse to recognise Israel.