Following commitments by the Israeli government to cover debts owed by the Palestinian Authority for basic services supplied in Palestinian areas by Israeli corporations, the Federation of Israeli Chambers of Commerce has appealed to Finance Minister Avraham Hirchson to extend those payments to smaller businesses being hurt by bad debt.
"The logic was that if those debts were not repaid then the supply of services, essential to the people there, would stop," said Uriel Lynn, President of the FICC. "I'm saying that we need to extend this logic and that the debts owed by different merchants and organizations within the PA will also be recognized for this method of settlement."
Such an arrangement, he added, would benefit of both sides as it would allow for the continuation of the flow of business to the PA and allow private Israeli suppliers to receive the payments due to them.
Earlier this year, the government agreed to use funds from taxes collected on behalf of the PA to pay debts owed to the Israel Electric Company, the Mekorot National Water Company, various hospitals and Israeli petroleum companies for services supplied to them.
Lynn said the FICC received a number of complaints from its members that checks they had received from their Palestinian partners had bounced and that a similar arrangement would be a good solution.
"These companies are not responsible for the worsening of relations with the PA since when they supplied the goods, it was under more a normal atmosphere with the PA," he said. "Since tensions have increased and the lines of communication are not as good as they were before, many [Palestinian companies] do not pay there debts."
While Lynn could not provide an exact figure for the extent of the damage affecting Israeli companies, he estimated that if approved, the government would pay between NIS 20 million and NIS 100m. to cover the debt.
Lynn said however that the proposal was to base the payment on bounced checks only and that the FICC would organize the consolidation of the checks, oversee the verification process and then pass them onto the government as one package for payment.