UN Secretary General Ban Ki-moon is concerned that the Israelis and Palestinians are locked into a tit-for-tat exchange of actions and counter actions which are making existing divisions worse and peace impossible to achieve, according to a senior UN official.

The latest downward spiral comes after the Israelis withheld crucial tax revenue from the Palestinians, in retaliation for Palestinian attempts to the join the ICC.

“We call on Israel to immediately resume the transfer of tax revenues. The Israeli-Palestinian conflict is now entering unchartered territory, which, lamentably, seems to have dashed any immediate hope for a return to peace talks,” UN deputy political affairs chief Jens Anders Toyberg-Frandzen told the UN Security Council on Thursday, as quoted by Reuters.

READ MORE: Palestinians to become ICC member from April 1, UN confirms

Earlier Thursday, Palestinian President Mahmoud Abbas asked the Arab League during a meeting of Arab foreign ministers in Cairo to give him $100 million a month as a safety net to cover the withheld tax revenues.

Abbas also requested that a committee be set up in order to launch a new bid seeking a UN Security Council resolution to end the Israeli occupation by 2017. The request comes just one month after the UN threw out a similar proposal, which in any case would have been vetoed by the US.

The ICC bid was part of Abbas’ wider plan of trying to bring international pressure to Israel. Israeli Prime Minister Benjamin Netanyahu froze $120 million in taxes that it collects in the occupied territories, which forced the Palestinian Authority to stop paying 153,000 employees.

READ MORE: Israel’s Palestinian tax move violates Oslo Accords – EU foreign policy chief

Some have interpreted Abbas’ move as a desperate attempt to garner support from Palestinians after Hamas came out even stronger following Israel’s deadly Gaza war last summer.

Any application to the ICC takes 60 days to be processed. Even if Abbas decides to take Israel to court, there’s no guarantee the ICC would accept the cases. Meanwhile, Israel has opened cases of its own against the Palestinians.