IAEA Director General Yukiya Amano and Palestinian Ambassador to Vienna Salah Abdul Shafi signed an agreement on Tuesday that lets IAEA inspectors carry out safety checks on radioactive materials and fissile nuclear materials, such as uranium, that are stored in Palestine, presstv.ir reported.
Palestine has no nuclear reactors, but there are medical equipment components of nuclear materials in physics departments in some hospitals and universities, according to reports by Israeli media.
Israeli Foreign Ministry spokesman Emmanuel Nahshon said the move by the IAEA amounted to a "violation of international conventions."
"This is another attempt by the Palestinian Authority to join international organizations in order to exploit them for political purposes," he said. "Israel does not recognize the attempts of the Palestinian Authority to join such organizations and such institutions as a state, and Israel views this as a violation of international agreements."
The agreement is expected to stir tensions between Israel and the Palestinian Authority, because in Tel Aviv's view the territory and borders of a Palestinian state is unclear.
Israel has never signed the nuclear Non-Proliferation Treaty (NPT), an international treaty which has been endorsed by most governments in the world with the goal of preventing the spread of nuclear weapons.
Israel has not revealed the size of its nuclear arsenal, even though a new report by the Stockholm International Peace Research Institute (SIPRI) the Israeli regime is in possession of approximately 100 atomic warheads.
As a result, Israel only allows the IAEA inspectors to visit a limited number of designated areas across the occupied Palestinian lands with full supervision.
Israel has been operating a nuclear facility outside the southern city of Dimona. Reports suggest that Israel produces fissile materials - highly enriched uranium and plutonium- for nuclear weapons using the reactor, which is off-limits for inspectors.
Israeli media have compared the situation to the United Nations Educational, Scientific and Cultural Organization's 2011 recognition of Palestine as a member.
Back then, the US pulled its annual funding of the UN organization. The US government is required by a 1990's law to refrain from funding any UN organization that gives full membership to entities that don't have “internationally recognized attributes” of statehood, according to Reuters.
The IAEA is an autonomous organization but it still reports to the UN. Data by the Congressional Research Service shows that the US contributed $200 million annually in assessed and voluntary contributions to the IAEA as of 2016.
An IAEA spokesperson told Israeli media that the agreement "does not in any way imply an expression of a position regarding the legal status of any state or territory or its powers or demarcation of its borders."
The move comes as the administration of US President Donald Trump is preparing to unveil its so-called "Deal of the Century" to resolve the Israeli-Palestinian conflict in the coming weeks.
The deal, which has already been rejected by Palestinians and many governments in the region and around the world, seeks to do away with Palestine's right to statehood in exchange for some economic initiatives as well as limited autonomy.