The United States of America warned that Israel would witness a "huge" negative impact if the Palestinian Authority collapsed, at a time when Washington is once again pressuring its ally to back down from preventing the transfer of tax revenues to the Palestinians.

US State Department spokesman Matthew Miller told reporters on Thursday, “We made clear to the government of Israel in some direct conversations that there is nothing that could conflict with Israel’s strategic interests more than the collapse of the Palestinian Authority.”

He added, "The Ramallah-based Palestinian Authority helped maintain stability in the West Bank, even as the war raged in the Gaza Strip, which has been run by Hamas for years."

He continued, "If you see the Palestinian Authority collapsing and instability spreading throughout the West Bank, this not only poses a problem for the Palestinians," adding, "It also constitutes a tremendous security threat to the State of Israel."

Under peace agreements signed in the 1990s, Israel raises money for the Palestinian Authority, which exercises limited self-rule in parts of the West Bank. But Israel continues to prevent the transfer of revenues to the Authority since it launched the war on the Gaza Strip.

The Israeli Minister of Finance, Bezalel Smotrich, who belongs to the extreme right, is a defender of Jewish settlement in the West Bank.

Prime Minister Benjamin Netanyahu is also a long-time critic of the Palestinian Authority and its moves toward establishing an independent Palestinian state.

The World Bank recently warned that the financial situation of the Palestinian Authority has “deteriorated significantly” with the risk of complete collapse.