The Palestinian Authority is facing imminent financial collapse over its refusal on principle to accept any tax revenues from Israel, and its dire call for help to the Arab world is mostly going unheeded.
If financial aid is not immediately forthcoming, the whole PA enterprise that has been in place since 1994 is likely to collapse.
The issue is the Israeli decision to withhold the sum of money that the PA gives monthly to terrorists in Israeli jails and their family members.
The PA feels so strongly about continuing payments to the people it holds to be martyrs on behalf of its cause, that it is willing to risk financial collapse.
“In the end, Israel will return our money in our way, and not in its way,” PA President Mahmoud Abbas said on Monday during a meeting of his government in Ramallah.
Abbas accused Israel of “stealing or deducting the money belonging to martyrs, the wounded and security prisoners.”
He pledged not to back down from the intense game of financial chicken that the PA is playing with Israel over the terrorist payments.
The PA will not be able to pay its employees full salaries because of the Israeli tax withholding, Abbas said, pointing out that in the past two months employees received only half of their salaries. He said that this month, because of the month of Ramadan, the employees will receive 60% of their salaries.
The PA will never accept Israel’s decision to deduct payments from the tax and tariff revenues, regardless of the price, Abbas said.
Israel is trying, by all means, to “legitimize the deductions” it makes from the tax and revenues it collects on behalf of the Palestinians.
He expressed hope that the Palestinians would display patience in face of the financial crisis resulting from Israel’s move.
“We’re talking with Israel about the financial issue,” Abbas said. He noted that PA Minister for Civilian Affairs Hussein Sheikh met with Finance Minister Moshe Kahlon to discuss the issue.
Abbas said he was not pinning high hopes on promises by Arab states to provide the Palestinians with a financial safety net in light of Israel’s measures. “We asked for $100 million each month,” he said, referring to his speech before the recent Arab League foreign ministers meeting in Egypt. “We told them to consider it a loan which will be returned. When we get our money back from Israel, we will pay the loan. But until now, we haven’t received an answer [from the Arab states].”
“At this stage, we have decided to go to the world to explain the situation,” he said.
Praising Europe’s support for the Palestinians, Abbas told his cabinet ministers: “As you know, Europe invented Zionism and Israel, and I know this bothers Israel. Let’s not fool ourselves. That’s what history says. If anyone can refute this, please come forward.”
At the United Nations Security Council meeting in New York, ambassadors and the UN’s Under-Secretary-General Rosemary A. DiCarlo warned of the PA’s potential collapse.
“Despite the austerity measures announced and the recent pledges of support by Arab states, the risk of a financial collapse of the Palestinian Authority is growing,” DiCarlo said.
“A sustainable resolution of the PA’s funding crisis is urgently required,” she said, as she urged both Israelis and Palestinians to find a resolution.
DiCarlo also called on the Ad Hoc Liaison Committee set to meet in Brussels on Tuesday to discuss donor support for the Palestinians to tackle the issue of the financial crisis that “threatens the viability of the PA.”
The committee is chaired by Norway and includes representation from the UN, the European Union, the United States, Israel and the Palestinian Authority. It is one of the few international forums where Israelis and Palestinians cooperatively interact.
A UN report published last week in advance of the meeting estimated that Israel planned to withhold $140 million in 2019 – approximately $11.5 m. a month – in tax revenues over the terrorist payment issues.
The sum Israel is withholding over the terrorist payments represents 6% of its tax revenues, the UN said. The overall tax revenues represent 65% of the PA’s budget, the UN added, explaining that this was equal to 15% of the PA’s GDP.
Likud MK Avi Dichter, who chaired the Knesset Foreign Affairs and Defense Committee during the 20th Knesset, told Reshet Bet that 8% of the PA budget went to the terrorist payments.
The UN noted that the tax crisis was only one of the economic factors effecting the PA, which was already weakened by the loss of close to half-a-billion dollars in annual US funding. This included $230m. in development money and $360m. for the UN Relief and Works Agency for Palestinian refugees.
“In January 2019, the PA returned to the US NIS448m. (US$123m.) in program funding to avoid liability under the US Anti-Terrorism Clarification Act, 2018,” the UN said.
The fiscal crisis comes in advance of the rollout of the Trump administration’s peace plan, which the PA has rejected.
Abbas criticized the US administration for violating “written agreements” with the Palestinians, especially by closing the PLO diplomatic mission in Washington, moving the US Embassy to Jerusalem and recognizing Jerusalem as Israel’s capital. “We talked with the Americans about these issues more than a year ago and agreed that they would not do these things,” he said. “We’re capable of saying and doing things in response [to these decisions]. We’re not challenging America, but we have dignity and rights.”
Referring to US President Donald Trump’s upcoming plan for peace in the Middle East, also known as the “deal of the century,” Abbas said there’s nothing left for the Palestinians to expect from the plan. “Many parties are telling us that we need to be patient and wait,” he said. “But wait for what? We’ve been patient for 70 years, and we are ready to wait another 10 and 20 years. But wait for what? We have already announced our position: we are against the deal of the century.”
The PA president said that despite the US administration’s decisions, he has not closed all doors with the Trump administration and Congress. “We’re not opposed to dialogue if they want it,” he said.
Abbas repeated his charge that Israel has failed to implement all the agreements signed with the Palestinians since the 1993 Oslo Accords. The Palestinians, he said, want to live with Israel in peace. “You don’t choose your neighbor,” he said. “These are my neighbors and I have to reach understandings with them – but not at any cost.”