After U.N. vote, Israel cuts off cash to Palestinians

Ramallah, West Bank • The Palestinian president returned triumphantly to the West Bank on Sunday, receiving a boisterous welcome from thousands of cheering supporters at a rally celebrating his people's new acceptance to the United Nations.

An Israeli decision to cut off a cash transfer to the financially troubled Palestinian Authority, following an earlier decision to build thousands of new homes in Jewish settlements, failed to put a damper on the celebrations.

But Palestinian officials said they were undecided on what to do with their newfound status and were waiting for upcoming Israeli elections and new ideas from President Barack Obama before deciding how to proceed.

Outside the headquarters of President Mahmoud Abbas in the West Bank city of Ramallah, 5,000 people thronged a square, hoisted Palestinian flags and cheered their leader's return from New York.

"We now have a state," Abbas said to wild applause. "The world has said loudly, 'Yes to the state of Palestine.'"

The U.N. General Assembly last week overwhelmingly endorsed an independent Palestinian state in the West Bank, east Jerusalem and the Gaza Strip, territories Israel captured in the 1967 war.

The move to upgrade the Palestinians to a nonmember observer state does not change much on the ground, but the vote amounted to an international endorsement of the Palestinian position on future border arrangements with Israel and an overwhelming condemnation of Israeli settlements in the areas claimed by the Palestinians.

Israeli Prime Minister Benjamin Netanyahu rejects a return to Israel's 1967 lines. Israel remains in control in parts of the West Bank and considers east Jerusalem, the Palestinians' hoped-for capital, an integral part of its capital.Israel also continues to restrict access to Gaza. Israel withdrew seven years ago from the coastal strip, and it is now ruled by Hamas militants who fire rockets at Israel.

Israel, backed by the U.S., campaigned strongly against the statehood measure, accusing the Palestinians of trying to bypass direct peace negotiations. The Israeli lobbying efforts failed miserably. Just eight other countries voted with Israel, and even its closest allies in Europe, including Germany, Italy, France and Britain, either abstained or voted with the Palestinians.

Israel responded the next day by saying it would start drawing up plans to build thousands of settlement homes, including the first-ever development on a crucial corridor east of Jerusalem. The project is likely years away. Building in the area, known as E1, would sever the link between the West Bank and east Jerusalem, which the Palestinians claim for a future capital, and cut off the northern part of the West Bank from its southern flank. The Palestinians claim such a scenario would essentially kill any hope for the creation of a viable state.

The U.S., Britain, France and other European states all denounced the plan. The European Union has repeatedly stated that all settlement construction is illegal under international law and constitutes an obstacle to peace.

On Sunday, the Israeli government delivered another blow, saying it would withhold more than $100 million in funds it transfers to the Palestinians each month.