Palestinian Authority President Mahmoud Abbas and the entire PLO leadership decided to take the Palestinian issue back to the United Nations. This was not an easy or a hasty decision. It was taken with a great deal of deliberation and after carefully weighing all of the possible consequences.

The Palestinian logic was soundly based on their assessment that there was no possibility of reaching a negotiated agreement with the current government of Israel. Every day, Israeli settlement building progressed, taking away more land from what they believe is part of the future Palestinian state. More than 18 years of failed peace processes convinced them that they need to create a “game changer” so that they could preserve the chances for creating a real Palestinian state in the future.

The weight of the parties is extremely asymmetrical – one side being a fully developed, recognized state with a giant economy, one of the strongest militaries in the world and possessing full control over all of the territories which Palestinians believe should become their sovereign state. In Palestinian eyes, the only power they have is the moral claim against the occupation of their land and the denial of their recognized rights for self determination, and the support that they have and could potentially increase in the international community.

Palestinians knew in advance that the United States and Israel would use their considerable power and influence to try to persuade the Palestinians not to go to the United Nations. They knew that the US might use its veto in the Security Council, and that Israel and the US would try to prevent a majority of nine votes in the Council in support of their statehood bid. They knew that the US Congress might freeze US financial aid to the Palestinian state-building effort.

Against all these odds the Palestinian leadership, with the support of a large majority of the Palestinian people, charged forward to the United Nations. President Abbas said you cannot buy Palestinian rights and honor for money, and that threats would not dissuade them from trying to achieve their rights and establish their state.

EVEN IF Israel is angry with Abbas for going to the UN, his position is consistent with Palestinian national interests. It is likely that if the situation was reversed, Israel would have done the same thing.

The US, with support of the Israeli government, is using a diplomatic “stick” against the Palestinian Authority. US Congresswoman Ileana Ros-Lehtinen, who chairs the House Committee on Foreign Relations, is using her prerogative to put a hold on more than $200 million already approved to be allocated to the Palestinians. Most of that money has already been authorized and contracted out through the auspices of the USAID mission in Tel Aviv responsible for supporting Palestinian state-building and economic development in the West Bank and Gaza.

The immediate impact of this is the firing of many young Palestinian academics working for various US contractors and for Palestinian nongovernmental institutions. The USAID mission is also in the process of immediately scaling down, and soon many of its staff are likely to receive notices that their employment is suspended or canceled.

A senior official from one of the largest American Jewish organizations told me that the government of Israel and friends of Israel in Congress want to send a strong message to Abbas. He told me that on a policy level they make a clear differentiation between the state-building activities of Prime Minister Salaam Fayyad and the political decisions of Abbas. I am not so sure that there is such a difference here, but if this is their intention, they have chosen the wrong “stick” to hit the Palestinians with.

The potential damage to the Palestinian side is far too great to risk merely to send a message. Firing hundreds of young, bright and ambitious Palestinian academics is a direct blow to the positive state-building efforts.

Furthermore, it can be assumed that at some point in the not too distant future the funds will be unfrozen, however by that time the damage will have been done. US contractors will receive their severance pay and compensation for losses (Palestinians will not). The direct costs of layoffs and sending people home, including those from the USAID mission in Tel Aviv, will draw a huge amount of funds from the programs’ running costs. If and when the programs are reinstated, there will be no money left the in the project budgets to implement their original aims.

These projects include infrastructure development such as building schools, water and sewage projects, building roads, supporting the legal system for training judges, and democracy and government capacity training programs.

The Palestinian economy is already in a fragile state. Losing over $200 million in one blow, with the extra burden of increased unemployment of young academics, could cause considerable social unrest.

There is an American proposal that US aid to the Palestinian security services should not be cut while the other economic support funds are.

This would be a disaster; it would make the Palestinian security services look entirely like an arm of the Israeli occupation, delegitimizing their very existence.

Here is where the law of unintended consequences comes most into play.

The US legislator holding back the funds to the Palestinian Authority is playing with fire that could easily erupt inside of Israel. There is no desire in the West Bank for a deterioration of the situation into another round of violence. President Abbas remains fully committed to a non-violent approach to achieving statehood. No, he does not do what Israel would like him to do, but he is acting as the Palestinian president in Palestine’s best interests, as he and his colleagues understand it. US and Israeli punishment of Abbas for not “behaving” is dangerous and foolish.

Prime Minister Binyamin Netanyahu, who scored such high points for making the right decision in bringing Gilad Schalit home, is falling into the pit of arrogance, which could have very dangerous and negative repercussions for Israel. I often told Hamas leaders the same thing that I am now saying to Prime Minister Netanyahu – when you play with fire you can easily get burned. Please be careful.

The writer is the founder and co-director of IPCRI, the Israel Palestine Center for Research and Information. He also hosts a weekly radio show in Hebrew on All for Peace radio