The PA's debts

The Israel Electric Company, in effect, is supplying the PA with free power.

January 31, 2006 21:38
3 minute read.
The PA's debts

electric company 88. (photo credit: )


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Since Hamas's landslide victory, a debate has ensued over whether Israel ought to continue to remit taxes it has been collecting on behalf of the Palestinian Authority, even though the PA will now be controlled by a terrorist organization openly committed to Israel's destruction. For just the payment scheduled for this month, some NIS 200 million has been collected, and for now the government seems to have decided not to transfer the funds to the PA. Unmentioned in our public discourse, however, are the vast funds owed by the PA to Israel. This situation antedates all recent upheavals. No sooner was the Israeli-Palestinian Interim Agreement signed in September 1995 did PA violations of economic relations protocols began to appear. Over time these breaches only grew until they reached anarchic proportions. The Israel Electric Corporation's case, though not unique, is perhaps the most glaring. IEC supplies power to the PA both in the Gaza Strip and in Judea and Samaria. Its crews were assured safe passage throughout the territories in the 1995 protocols, but this was not guaranteed in practice. Hence IEC maintains the grid up to the entrance to Palestinian cities, and from there PA crews take over. Local officials are likewise responsible for directly billing customers. Most Palestinians don't pay their bills and the PA doesn't pay IEC. The bottom line is that IEC, in effect, supplies power for free, though this power - including fuel, equipment, manpower and services - is unquestionably expensive. At this juncture, the PA's debt to IEC alone is a whopping NIS 220 million - the highest ever. To understand how things have deteriorated, it serves to note that at the terror war's outset in 2000, the PA owed NIS 85 million to IEC. At that time, Gaza City's debt alone rose by a monthly NIS 15 million. These are sizable sums for even a large corporation to absorb. Over time some of the money had been deducted from the customs and VAT revenues Israel has been collecting for the PA. However, the full debt was never deducted so as not to bankrupt the grossly mismanaged PA regime. The PA's debts to Israeli companies were allowed to mushroom, while Israeli tax transfers continued. Above and beyond issues of the PA's hostile agenda, particularly under the aegis of its new Hamas overlords, it's patently unjust to dwell solely on Israel's obligations, while omitting mention of PA dereliction in honoring its most basic undertakings, like paying its bills. The current transfer Israel was due to make this month would not quite cover the Palestinian debt to IEC, but it would go a long way if what IEC is due was deducted from the transfer. The PA also owes Mekorot for much of its water, Bezeq for communications services, some of Israel's cellphone firms, many of the country's hospitals and numerous private Israeli suppliers and businessmen, who have little if any redress. In 2002, Yasser Arafat ordered his banks not to honor any checks to Israelis as part of his economic war. While the government did deduct some debts for IEC, Bezeq and the health system, it refused to intervene on behalf of ordinary citizens. IEC recently asked the Finance Ministry to read the proverbial riot act to the PA. Gaza City alone owes NIS 50m. for electricity. IEC insists that this anomaly cannot continue, having become a weighty liability for the corporation, while the very size of the debt makes repayment less likely, especially given the identity and nature of the PA's new powers-that-be. A fraction of such arrears within Israel would automatically lead to power cutoffs. Were this to be done to the PA, a hue and cry is sure to ensue about the humanitarian hardship imposed. Nevertheless, debts continue to be recklessly incurred by the PA, possibly under the impudent assumption that Israeli taxpayers are good for them. If the PA pleads poverty, perhaps it should call on its Arab sponsors to either clear its debts or to supply its utilities. But the Hamas-dominated PA cannot continue to count on the very Israelis it wants to ethnically cleanse to keep footing its bills. The PA funds should be held up in any case, but rather than simply being held in escrow, they should also be used pay off the PA's many unpaid bills.

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