Israeli Finance Minister Bezalel Smotrich cannot directly punish Spain, Ireland and Norway for recognizing a Palestinian state, so the extremist leader is punishing Palestinians living in the occupied West Bank instead.

The Biden administration on Wednesday criticized Smotrich’s call to expand illegal Israeli settlements in the West Bank and withhold critical tax revenues that support basic services and salaries for innocent Palestinians, a move that threatens extensive damage to local economies already ravaged by years of occupation, settler violence and the mass incarceration of civilians in Israeli military prisons.

Smotrich’s announcement came as Israeli leaders recalled ambassadors and lashed out at Spain, Ireland and Norway, where leaders announced their intention to recognize Palestinian statehood on Wednesday. The three nations join nine other European countries and dozens more around the globe in recognizing the Palestinian right to self-determination, and more countries could join as the world reacts to the humanitarian catastrophe caused by Israel’s war on the Gaza Strip.

In a letter to Israeli leadership, Smotrich signaled that the decision to withhold tax funding from the Palestinian Authority, which partially governs the occupied West Bank under Israel, is punishment for diplomatic efforts to assert Palestinian rights on the international stage.

In his letter, Smotrich made an “unequivocal demand for severe measures” against the Palestinian Authority for “unilateral actions against Israel,” including the diplomatic pursuit of Palestinian statehood at the United Nations. He also demands the immediate approval of 10,000 housing units for Israeli settlements in the West Bank, which are illegal under international law, with a threat to build three new settlements for every nation that unilaterally recognizes a Palestinian state.

The Palestinian Authority rivals Hamas politically and works with the Israeli state to police the West Bank. Yet Smotrich and others in his extremist........

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