Israel and the United States are putting the financial squeeze on the Palestinian Authority, where opposition to a long-awaited US peace plan and anger over Israeli sanctions remain strong.
Analysts see steep cuts in US aid to the Palestinians over the past year as an attempt to draw them towards a blueprint that Washington promises will have economic benefits but which the PA predicts will fall short of endorsing Palestinian statehood.
And during Israeli Prime Minister Benjamin Netanyahu’s successful re-election campaign, his right-wing government imposed sanctions that have pushed the Authority towards financial crisis.
In February, Israel announced it would cut by 5 percent the approximately $190 million in tax revenues it transfers to the Palestinian Authority each month from imports that reach the occupied West Bank and Hamas-run Gaza Strip via Israeli ports.
The deducted sum represents the amount of money paid by the Authority, which exercises limited self-rule in the West Bank, to families of Palestinians convicted and jailed by Israel for security offences, including lethal attacks on Israelis.
Israel calls the stipends a “pay for slay” policy. Palestinians hail their jailed brethren as heroes in a struggle for an independent state and their families as deserving of support.
Palestinian President Mahmoud Abbas has refused to accept the partial tax remittances from Israel, saying the PA is entitled to all the money under interim peace deals.
Unless the issue is resolved, the World Bank says, the Palestinians’ financing gap could exceed $1 billion in 2019, putting further strain on an economy grappling with a 52 percent unemployment rate.
Already facing international donor fatigue, the Palestinians were dealt a heavy blow by the Trump administration’s cut last year of hundreds of millions of dollars of aid. In February, the US Agency for International Development announced it had ceased all assistance to the West Bank and Gaza.
While the United States and Israel are applying financial pressure to the Palestinian Authority for different reasons, it is happening just as the PA is being leant on to accept the US peace plan.
Palestinian suspicions over the still-secret US proposals, due to be announced in June, and defiance of Israeli sanctions continue to run deep despite the arm-twisting.
Salary Cuts
Khalid al-Asili, the Authority’s economy minister, told Reuters in an interview last week that it has been struggling to manage on just 36 percent of budgeted revenues.
The Authority slashed the salaries of government employees in February, March and April to weather the budget crisis, with some Palestinian public servants’ wages cut in half.
“Unless they find a solution … it will be a disaster for the Palestinian economy,” Asili said.
With Trump’s “deal of the century” about to be unveiled, ??Tareq Baconi??, an analyst with the International Crisis Group, questioned the wisdom of Washington’s financial pressure on the Palestinians.
Such a strategy, he said, stemmed from the “misguided belief that economic benefits could be sufficiently compelling for Palestinians to relinquish their political demands”.
One of the architects of the Trump plan, the president’s adviser and son-in-law Jared Kushner, declined to say in public remarks in Washington last week whether it called for a two-state solution, a goal of past efforts to end the Israeli-Palestinian dispute.
Abbas and his officials have refused to deal at a political level with the Trump administration since the US president’s recognition of Jerusalem as Israel’s capital in 2017 and his move of the US embassy to the holy city last May.
Palestinian Prime Minister Mohammed Shtayyeh has rejected out of hand “any political initiative that does not call for ending Israeli occupation and establishing an independent and sovereign Palestinian state with Jerusalem as its capital”. The Palestinians have long sought to set up a state in the West Bank and Gaza Strip, territory Israel captured in the 1967 Middle East War.