Swedish Radio News reported that the prize would likely irritate already tense relations between Sweden and Israel, as the journalist Gideon Levy has been outspoken in support of the Scandinavian country when Israel has criticized it.
"The fact that Israel is attacking Sweden so often is the most unbelievable chutzpah, I use this word freshness, of Israel. How dare Israel! How dare an occupier criticize Sweden for recognizing Palestine!" Levy told Swedish Radio News.
Levy, whose parents fled Nazi-occupied Czechoslovakia, is a controversial journalist, author and columnist for the left-leaning Israeli newspaper Ha'aretz, and is lauded by the Olof Palme Memorial Fund's board for "working for peace and reconciliation by means of a passionate search for truth."
Meanwhile, Raheb is a Lutheran preacher and pastor who founded Dar al-Kalima University College of Arts and Culture in Bethlehem, and he is being recognized for his work to spread "a culture of life" among young people.
According to the Palme Prize website, Raheb and Levy "give a ray of hope to a conflict that has plagued and continues to plague millions of people and to endanger world peace."
The prize is awarded annually and consists of a diploma and 75,000 US dollars, which Raheb and Levy will split when it is bequeathed on Jaunary 29, at a ceremony at the Parliament.
The prize is granted in the spirit of the Swedish Social Democratic Prime Minister Olof Palme, who was assassinated in 1986. Previous winners have included Kofi Annan, Aung San Suu Kyi, Hans Blix and Amnesty International.