Iran's ambassador to Lebanon, Mohammad Fathali, said yesterday that Tehran would offer USD 7,000 to the families of each Palestinian killed in what he called the "Jerusalem intifada".
Iran will also give USD 30,000 to Palestinian families whose homes have been destroyed by Israel because a member is accused of carrying out an anti-Israeli attack, he told a news conference in Beirut.
According to Iran's official news agency IRNA, representatives of the Palestinian militant movements Hamas and Islamic Jihad, as well as Lebanese Shiite militia Hezbollah, met with Fathali during his visit.
"This shows again that Iran encourages terrorism," said Israeli foreign ministry spokesman Emmanuel Nahshon.
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"Following the conclusion of the nuclear agreement (with world powers), Iran remains a major player in international terrorism," he added.
Israel's ambassador to the United Nations, Danny Danon, has written to UN Secretary General Ban Ki-moon urging condemnation of the Iranian initiative, Israel public radio reported.
A wave of Palestinian knife, gun and car-ramming assaults that erupted in October has claimed the lives of 28 Israelis, as well as an American, a Sudanese and an Eritrean.
Israeli Prime Minister Benjamin Netanyahu, under political pressure to halt the violence, has moved to expedite demolitions of alleged attackers' homes as a punitive measure.
Iran and Israel are ardent foes. Netanyahu was one of the most vociferous critics of the nuclear deal that was implemented in January, leading to the lifting of international sanctions on Tehran.
The oil-flush Islamic republic is expected to reap an economic reward worth billions of dollars following the landmark accord.
Israel fears the money will be used to finance Iranian misdeeds in the region and to support groups hostile to the Jewish state such as Hamas, Islamic Jihad and Hezbollah.