• The U.S. is exploring a controversial proposal to redirect Palestinian tax revenues held by Israel to a new "Board of Peace" led by former President Donald Trump for Gaza reconstruction, according to people familiar with the matter.
  • The plan, still in early discussions, could reshape funding for the war-torn enclave, but faces significant political and legal hurdles.
  • Critics question the board's governance and accountability, while supporters argue it offers a fresh mechanism to bypass stalled international aid efforts.

Behind the Proposal

The idea, which has circulated among U.S. officials in recent weeks, would involve Israel transferring funds it collects on behalf of the Palestinian Authority to a yet-to-be-formed body chaired by Trump. The board would then oversee reconstruction projects in Gaza, where months of conflict have left much of the territory in ruins. Sources caution that the proposal is preliminary and has not been formally presented to Israeli or Palestinian leaders.

A U.S. official, speaking on condition of anonymity, said the move is part of broader efforts to find new avenues for Gaza rebuilding, which has been hampered by political divisions and donor fatigue. "Traditional mechanisms have not worked. This is an attempt to think outside the box," the official said.

Political and Legal Landmines

The plan immediately raises thorny questions. Palestinian tax revenues, estimated at over $200 million per month, are a critical source of funding for the Palestinian Authority, which operates in the West Bank. Redirecting them could cripple the PA, already weakened by years of fiscal crisis. Israeli officials have not publicly commented, but one Israeli diplomat noted that any such decision would require careful legal review under international agreements governing revenue transfers.

Trump's involvement adds another layer of complexity. His close ties to Israel and history of brokering Middle East deals, including the Abraham Accords, could lend credibility to the board. However, his polarizing reputation may alienate key international donors. The Trump team did not respond to requests for comment.

Gaza’s Staggering Needs

Reconstruction costs for Gaza are estimated at tens of billions of dollars. The UN has warned that without immediate funding, basic services like water, electricity, and healthcare could collapse. Current aid pledges have fallen short, and previous reconstruction efforts have been mired in disputes over Hamas's role and governance oversight.

"The scale of destruction is unprecedented," said a humanitarian official involved in Gaza relief. "Every dollar matters, but how it's spent and who controls it are equally important."

Implications for Peace Efforts

If implemented, the plan could bypass the Palestinian Authority, which many in Israel and the U.S. view as ineffective. But it risks undermining the PA's authority and further fragmenting Palestinian governance. Some analysts see the move as part of a broader U.S. strategy to sideline the PA and promote alternative leadership models.

"This is a high-risk, high-reward gambit," said a Middle East policy expert at a Washington think tank. "It could unlock funding and accelerate rebuilding, but it might also deepen divisions and create new governance challenges."

What’s Next

Diplomatic sources say the U.S. is expected to raise the proposal in upcoming talks with Israeli and Palestinian officials. No timeline has been set for a decision. Meanwhile, the Biden administration continues to push for a ceasefire and a broader political settlement, though progress remains elusive.

Correction: An earlier version of this article incorrectly stated that the Board of Peace had been formally established. It remains a proposal under discussion.