"Israel" announced on Wednesday that it is withholding Palestinian Authority funds allocated for Gaza from Norway's custody, terminating the escrow arrangement with Oslo. 

The decision was recently made by the Israeli Cabinet and remained confidential as retaliation to Norway's recognition of Palestinian statehood. 

Norweigan-Israeli relations have seen significant strains over the past 10 months since the occupation launched its onslaught in Gaza, prompting substantial criticism and condemnation from Oslo. 

On Tuesday, Norway addressed the International Criminal Court (ICC) in a written letter confirming the Oslo Accords would not impede or impact jurisdiction over the issuance of arrest warrants against Israeli Prime Minister Benjamin Netanyahu and Security Minister Yoav Gallant. 

Earlier in May, Norway's Foreign Minister Espen Barth Eide announced that should the ICC issue warrants, Norway would arrest Netanyahu and Gallant. This statement – made a day after the dramatic declaration by ICC prosecutor Karim Khan – positions Norway as the first European country to make such a commitment.

"If an arrest warrant is issued against Netanyahu and Gallant on behalf of the Hague Tribunal, we will be obliged to arrest them if they arrive in Norway," said Eide, adding that "it is the court that decides whether to issue an arrest warrant. If so, all the signatory countries must act on it." 

'Israel' wants to remove Norway from its escrow position

Israeli newspaper Ynet reported that the Israeli occupation, through the United States, was seeking to remove Norway and replace it with another country in the escrow agreement.

The occupation has taken a specific interest in Switzerland and has been pushing for its installation for the escrow role, with Israeli Foreign Minister Ron Dermer visiting Bern for talks with Swiss officials. 

However, Dermer's office did to disclose the nature of the visit but confirmed that the escrow issue was not discussed, adding that the Americans were taking the lead on the matter. 

The Israeli Foreign Ministry is preparing more actions against Norway. After Oslo recognized Palestinian statehood, Israeli Ambassador Avi Nir was recalled for consultations.

The Israeli embassy in Oslo remains open, managed by the chargé d'affaires. Although Norway still has an ambassador in "Israel", it is currently considered one of the most hostile European countries toward "Israel" by the occupation.

In July, Israeli Foreign Minister Israel Katz rejected a request from Norwegian Foreign Minister Espen Barth Eide to visit "Israel" following Norway's recognition of the Palestinian state.

Israeli Channel 7 reported that the rejection came even before the Norwegian minister contacted Katz, indicating that the Foreign Ministry in Norway tried to coordinate the visit, but the Israeli Foreign Ministry did not respond to the request, which left the Norwegian minister with no choice but to request the visit from Katz, the foreign minister, directly.