Finalizing the PA’s Prisoner and “Martyr” Payments Reform

In February 2025, the Palestinian Authority (PA) claimed to have reformed and effectively ended its prisoner and “martyr” payments program (often colloquially referred to as “pay-to-slay”). Nearly a year and a half later, the progress of the reform itself remains hotly debated. The PA claims the system has been reformed, while Israel and the U.S. outright deny any progress. The U.S. and Israel have reason to be skeptical: the PA has lied in the past about the reform of this program, and the current effort has been delayed and opaque. Yet the current impasse does not benefit PA and West Bank stability, improve Israeli security, or advance U.S. interests. The U.S. would benefit from getting actively involved in finalizing the reform, both in verifying the validity of the PA’s claimed reform and offering technical support to finalize progress if needed, especially in a way that could also satisfy Israeli concerns.

The most effective near-term intervention would be to accept the PA’s standing offer to audit the new payment system run by the Palestinian National Economic Empowerment Institute (PNEEI or “Tamkeen”), but to broaden the audit to other parts of the PA budget to ensure three things: 

1. That the old payment system is truly gone; 
2. The new system works as intended and is truly need-based; 
3. That no work-around has been set up to continue the old program through other means. 

The U.S. should also clarify for its own purposes what it considers to be part of the prisoner and “martyr” payments program, including where its definition might differ from the Israeli view, and create a clear target for the PA to meet. 

Finalizing the prisoner and “martyr” payments reform is a key step to restoring critical funding streams to the PA and alleviating its fiscal crisis, as well as an entry point to working out other persistent Israeli-Palestinian financial disputes. This would aid the Trump administration’s desire to stabilize the West Bank, unlock progress and Arab state support in Gaza, and advance its regional priorities. The U.S. should take this opportunity to lock in a high-priority Palestinian reform and ensure that a decades-old program that rewarded terrorism comes to an end.

Conflicting Narratives

Since the PA announced it would reform the prisoner and “martyr” payments system in February 2025, both the reform process and the debate over it have lacked details and clear definitions. 

The reform was rolled out only in December 2025 after significant delays, long after both the U.S. and Israel had already declared it to be a ruse. Disbursement of funds under the new needs-based PNEEI payment system was further complicated by the PA’s mounting fiscal crisis, driven largely by Israel’s blanket withholding of clearance revenues—taxes and customs fees collected by Israel on behalf of the PA and transferred to them monthly under the Paris Protocols of the Oslo Accords—which have made up over 60% of the PA budget since spring 2025. As of June 2026, only three disbursements of what were supposed to be monthly needs-based payments had taken place. 

Public indications of the reform’s progress (or falsity) have been limited and conflicting. A long-running sit-in by former beneficiaries of the old system outside the president’s office in Ramallah and repeated rounds of street protests from the powerful prisoners’ lobby over the reform lent credence to the idea that it was real. This aligns with reports that most applications to the need-based welfare system from former prisoners were rejected since they did not meet the new socioeconomic criteria, while a majority of applications from families of the deceased or injured were accepted. 

However, rumors abound on Palestinian social media about possible resumption of the prisoner and “martyr” payments. Prominent Palestinian officials have repeatedly stated that the prisoners and “martyrs” will not be abandoned, and the PA finance minister was fired in November 2025 for continuing a subset of payments under the old system. Both the U.S. and Israel have been clear that they do not believe prisoner and “martyr” payments have actually been discontinued. 

Definitional Disconnects

Complicating the blurry evidentiary picture, each party’s definition of the prisoner and “martyr” payments program differs significantly. The program as spelled out in PA law is much broader than a simple set of stipends: it also includes one-time release grants for prisoners who served long sentences, preferential hiring or guaranteed civil service jobs or military retiree pensions, and indirect benefits like tuition and health insurance waivers. However, the PA considers those who received non-monetary benefits like guaranteed or preferential hiring, whether to prisoners or the families of the deceased, to be outside the scope of the program and therefore the reform. In other words, if a PA civil servant received their job or pension as the result of having been in Israeli prisons, the PA does not consider them to remain a beneficiary of the program because they hold the job, nor their salary or pension to be part of the “pay-to-slay” program. Israel appears to take the opposite position and includes these sorts of benefits in its definition of the program. The U.S. position is unclear, but under the Trump administration, it appears to lean more towards the Israeli position. 

Another definitional dispute involves beneficiaries of the old system, where benefits were based on duration of prison sentence or the military rank given to someone after their death. The parties disagree on whether payments to such individuals who also qualify for the new need-based system represent a continuation of the old program. The U.S. position under the Biden administration, which was critical to securing the PA’s agreement to initiate the reform, was that anyone who qualified for a need-based welfare system, including former recipients of the prisoner and “martyr” payments program, would be able to receive the benefits. The Israeli government has hardened its position on this point and argues that any payment to someone who received a stipend under the old program, even if they qualify for the new need-based system, is still “pay-to-slay.” 

These disputes over what the prisoner and “martyr” program entails, separate from the debate over whether or not any payments continue to flow under the old system or in some sort of workaround, need to be clarified both for the U.S.’ own policy and between the U.S. and Israel in order to pursue a coherent approach to the reform.

Limitations of Verification Efforts to Date

The PA has tried to prove the validity of the reform through a series of measures, including engaging private auditing firm Alvarez & Marsal (A&M) to evaluate the PNEEI’s adherence to a need-based welfare program and professional standards, submitting to an EU Global Assessment, and inviting the U.S. to conduct its own audit. The results of the A&M audit, which the PA has released a summary of in July under U.S. pressure, largely support the contention that the PNEEI is operating a fully need-based welfare system. 

However, the audit flagged that payments under the old system totalling at least NIS 320 million ($105 million) were paid to Palestinian prisoners and the families of those killed or injured by Israel between the time the reform was announced in February and December 2025, when the first payment went out under PNEEI. The audit also noted that auditors did not review two later tranches of PNEEI payments in March and June 2026, and stated that auditors did not receive full access to PNEEI books or full and conclusive documentation from the PA Ministry of Finance. Though the audit did indicate that PNEEI is functioning according to need-based criteria, it recommended clearer documentation that the old Finance Ministry prisoner and “martyr” accounts were fully and irreversibly closed, as well as ongoing independent monitoring of PNEEI disbursements. 

The U.S. State Department, which appears to be relying entirely on open-source evidence and Israeli public statements in its assessment of the reform, has stated that the reform has not been implemented and declined to certify PA compliance with the Taylor Force Act in an April 2026 report. State Department spokespeople have reiterated that the external A&M audit was insufficient since it could not track illicit flows or workarounds. Israel has also rejected the idea that the PA has reformed the system and dismissed the external audit. Israeli officials have repeatedly said that funds are flowing through other institutions or fake civil service jobs, under-the-table cash handouts, or via other illicit channels that require a sophisticated surveillance operation to detect. 

The U.S. and Israel’s concerns are fundamentally accurate: reviews of the PNEEI, however serious and intensive, only address the second of three fundamental conditions to establish that the payments system is truly reformed: 1) that the old payment system is completely gone; 2) the new system works as intended and is truly need-based; and 3) that no work-around has been set up to continue the old program through other means. To sufficiently address the others, a broader audit of the PA budget and documentation, including the Ministry of Finance, the Ministry of Social Development, the Prisoner Affairs Authority, and continuous monitoring would be required.

Future Steps

The prisoner and “martyr” payments reform is mired in disputes over both definitions and facts. The U.S. has the opportunity to resolve these by: 

• Accepting the PA’s standing offer to audit the reformed program, but also demanding that the audit’s scope be much broader (as IPF has previously suggested) to decisively confirm that the old program is over and not being continued by other means, whether through the PNEEI or some other workaround
• Coordinating the terms and expectations of such an audit with Israel beforehand in an attempt to bring the American, Israeli, and PA definitions of the scope of the prisoner and “martyr” payments program—whether civil service jobs or pensions awarded under the old system count as “pay-to-slay” today, the eligibility of recipients of the old program who also qualify for the new need-based program, etc.—into alignment. 

Such an approach could have secondary benefits, even if it does not result in full U.S.-Israeli alignment. A full PA budget audit would provide much-needed transparency on PA spending, something long demanded by Palestinian civil governance watchdogs which would also assist in broader anti-corruption efforts. Moreover, narrowing the scope of the dispute between Israel and the PA could have immediate benefits. The U.S. needs to fully verify a set of conditions under Taylor Force, including the end of the prisoner and “martyr” payments program, to remove the legal prohibition on several forms of funding to the PA.There is no guarantee that Congress would reappropriate aid even if these conditions were satisfied. Israel’s Freeze Law, on the other hand, withholds the PA’s clearance revenues in direct proportion to what Israel assesses the PA spent on the prisoner and “martyr” payment program in the previous year. Even in the negative scenario where a U.S. audit reveals that most, but not all, payments under the old system have stopped, Israeli reductions based on the Freeze Law would also drop significantly and more money would be transferred to the PA.

Resolving the status of the prisoner and “martyr” payments reform is a key step to restoring critical funding streams to the PA and reducing the multifaceted fiscal and economic crisis in the West Bank. That aligns with the Trump administration’s interest in stabilizing the Israeli-Palestinian arena so the U.S. can advance its plans for Gaza, maintain its campaign against Iran, and redouble efforts at regional integration. The alternative is to continue a confused and muddy public debate while the PA stagnates and the fate of a program both the U.S. and Israel invested significant effort in ending remains unclear. This would be a missed opportunity for mutually beneficial progress for the U.S., Israel, and Palestinians alike.