Israeli media sources reported that Germany is to delay compensation payments for holocaust survivors until Israel halt its settlement building in the occupied West Bank.
The Israeli daily, Yedioth Ahronoth, reported Israeli government sources have conveyed their anger to the office of the German Chancellor, Angela Merkel. The sources refused the "deliberate delay" to pay the compensation for the holocaust survivors.
The sources, according to the newspaper, said that it is inappropriate to link between a "humanitarian issue, connected to survivors of the Nazi's crimes during the Second World War, and a political issue concerning Israel's relations with its neighbours."
"There is a senior official in Merkel's office working on the destruction of the smooth and sensitive relations between Israel and Germany," the newspaper claimed. "Since the time when this official took office, he has precluded meetings between Merkel and Israel's ambassador in Berlin, Jacob Hadas."
The newspaper reported that talks between the two sides took place in the middle of last December. Israel, the newspaper said, passed a message to German officials that "Germany has to accelerate payments to the holocaust survivors whose number is decreasing by death because of old-age."
The Israeli daily reported the history of the German-Israeli compensation agreements which started in 1952. By signing the first agreement, Germany pledged to pay DEM3 billion (£1,325b) to Israel and DEM 450 million (£198m) to Jewish organisations.
In wake of the fall of Berlin Wall in 1991, the agreement was updated and Germany paid DEM5000 (£2,200) to 522,000 survivors and pledged to pay DEM500 (£220) to 50,000 survivors monthly. In 2000, the Industrial German Sector set up the Jewish Compensation Fund and in 2007, the German government set up the Ghetto Compensation Fund.
Currently, negotiations are on-going for a German pledge to pay a monthly retirement salary of EU300 to Ghetto workers.
According to the Israeli newspaper, the total of German payments to Israel has been so far USD70 billion.