That, in turn, has left Mahmoud Abbas, the Palestinian president, in an impossible position. He dare not be seen accepting an Israeli diktat that legitimises withholding Palestinian money, or one that defines as "terrorists" those who have sacrificed the most for the Palestinian cause. So he has refused the entire monthly tax transfer until the full amount is reinstated.
Now, just as these various blows against the PA finally threaten to topple it, the US Congress suddenly prepares to step in and bail out the Palestinian economy with $50m. What on earth is going on?'Money in return for quiet'
The small print is telling. The PA, the Palestinians' fledgling government, is not eligible for any of the US Congress's promised largesse.
If the legislation passes, the money will be handed to "Palestinian entrepreneurs and companies", as well as non-governmental organisations, willing to work with the US and Israel on "people-to-people peace-building" programmes and "reconciliation between Israelis and Palestinians".
In other words, the legislation is actually designed as another strike against the Palestinians' existing leadership. The PA is being bypassed yet again, as the US and Israel try to bolster an alternative economic, rather than political, leadership.
This move by US representatives is not occurring in a vacuum. Since the effective collapse of the Oslo accords nearly two decades ago, Washington has sought to downgrade a national conflict that needs a political solution into a humanitarian crisis that needs an economic one.
It is a variation on Netanyahu's long-standing goal to smash the Palestinian national struggle and replace it with so-called "economic peace".
Where once the goal of peacemaking was "land in exchange for peace" that is, a Palestinian state in return for an end to hostilities now the aim is "money in exchange for quiet". The US is now formally supporting Israel's efforts at economic pacification.Outrage at new elections
The Trump administration has devised a two-stage process for neutralising Palestinians.
Firstly, Trump's son-in-law, Jared Kushner, has been tasked with winning over Arab states, particularly those in the oil-rich Gulf, to stump up money for pacifying Palestinians and their neighbours.
This is the aim of an investment conference due to be held in Bahrain later this month the lynchpin of the "deal of the century", not simply a prelude to it.
That was why Trump himself was so visibly outraged at the delay caused by Netanyahu's decision to dissolve the Israeli parliament last month, a reflection of his political weakness as he faces imminent corruption trials. The new elections in Israel, Trump grumbled, were "ridiculous" and "messed up".
The intention of the Bahrain conference is to use tens of billions of dollars raised by Washington to buy off opposition to the Trump deal, chiefly from Egypt and Jordan, which are critical to the pacification programme's success.
Any refusal by the Palestinians to surrender, either in Gaza or the West Bank, could have major repercussions for these neighbouring states.Search for alternative leaders
Secondly, Friedman is at the centre of efforts to identify recipients for the Gulf-funded handouts. He has been seeking to forge a new alliance between the settlers, with whom he is closely aligned, and Palestinians who may be willing to help in the pacification project. Late last year, he attended a meeting of Palestinian and Israeli business leaders in the West Bank city of Ariel.
Afterwards he tweeted that the business community was "ready, willing and able to advance joint opportunity & peaceful coexistence. People want peace and we are ready to help! Is the Palestinian leadership listening?"