Palestinians Rejected Tax Money to Slap Israel. It’s Not Israel That’s Hurting.

RAMALLAH, West Bank — Furious that Israel was about to annex large swaths of the West Bank, the Palestinian Authority president, Mahmoud Abbas, took the painful step in June of refusing to accept taxes collected by Israel that account for more than 60 percent of the authority’s budget.

Then last month, Israel suspended the annexation plan as part of its agreement to normalize relations with the United Arab Emirates. Because annexation remains a possibility, though, Mr. Abbas is still refusing to accept the money, in what some Palestinian officials privately say is more an attempt to save face than to force further changes in Israeli policy.

So while Mr. Abbas looks for some kind of gesture from Israel that he can hold up as a victory, and Israel refuses to commit to dropping annexation permanently, salaries in the territory are not being paid, families are enduring hardships, and the Palestinian Authority is careering toward bankruptcy.

Late Friday, the Palestinian leader suffered another setback when a second Gulf state, Bahrain, announced it, too, would normalize relations with Israel. With this, Bahrain defied Mr. Abbas’s longstanding demand that Arab countries normalize ties with Israel only after the establishment of a Palestinian state.