As Israel announced that it was withholding tax payments to the Palestinian Authority on Sunday, an Israeli official told Al-Monitor that Israel considers its 2009 understanding with the Americans that it would not build in the sensitive E1 zone of East Jerusalem “no longer relevant.”

“The Palestinians want to use the peace process in order to bring about the end of the state of Israel,” Israeli Prime Minister Benjamin Netanyahu charged on Sunday, as the Israeli government said it was withholding some $100 million in tax funds to the Palestinian entity. Palestinian Authority President Mahmoud Abbas returned home to a hero’s welcome in Ramallah Sunday, following his successful bid to get the United Nations to vote to grant the Palestinian Authority upgraded status in the world body last week.

Angered by the United Nations vote, Israel on Friday announced that it was building 3,000 new settlement homes in East Jerusalem and the West Bank, and allowing zoning and building planning to go forward in the E1 zone, that if pursued would effectively divide the West Bank.

“I understand there was some agreement with the Americans in 2009 … at the start of this government’s term of office not to build in E1,” the Israeli official, speaking not for attribution, told Al-Monitor on Sunday by email. “That commitment has been kept in full.”