No reason to fear PA economic collapse

Abbas will soon be facing the “deal of the century” proposed by an American administration that is very critical of Palestinian policies.

May 2, 2019 22:07
3 minute read.
PALESTINIAN PRESIDENT Mahmoud Abbas – not saying anything about the elections, but working behind th

PALESTINIAN PRESIDENT Mahmoud Abbas – not saying anything about the elections, but working behind the scenes?. (photo credit: MOHAMAD TOROKMAN/REUTERS)


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The Palestinian Authority is refusing to accept any funds transferred from Israel because Israel has begun deducting the value of stipends the PA pays to terrorists and their families, commonly known as “pay for slay.”

The PA’s refusal has added to its chronic budget crisis. International financial support to the PA has declined in recent years, and the Palestinian economy has deteriorated accordingly. As a result, the PA is now telling the world it faces economic collapse.

The Palestinian strategy is clear. PA President Mahmoud Abbas is trying to scare Israel and the world community into believing the relative stability in the West Bank will come to an end, leading to chaos and terror. The PA leadership is emulating Hamas’s behavior by threatening that a humanitarian disaster will ensue unless more financial aid is rendered. Hamas has been playing this same game for years in Gaza. Israel and other international actors (the United States is a sober exception) seem to fall repeatedly for these Palestinians schemes.

It is true that a certain level of economic prosperity in the PA is conducive to stability. Hungry neighbors always pose trouble. Unfortunately, poverty is often cynically employed by authoritarian regimes such as Hamas and the PA as a foreign policy tool to gain attention and financial aid. In fact, the Palestinian leadership needs a certain number of hungry subjects as a precondition for continuous international support. And Palestinian leaders are far less susceptible to economic difficulty than responsible leaders are. Palestinian elites eat well in any case.

Abbas will soon be facing the “deal of the century” proposed by an American administration that is very critical of Palestinian policies. Washington has reduced its financial support for the PA and eliminated all aid to UNWRA. In response, the Palestinians have announced their rejection of any plan coming from the Trump administration. One way to reject the American peace proposal and yet not be blamed for its failure is to engineer an economic crisis that diverts attention from continuous Palestinian intransigence regarding any and every attempt at peacemaking.

Fortunately for the PA, the economic crisis can always be attributed to Israel, which serves as a constant and historic villain in the Palestinian narrative. Attention to Palestinian economic ineptitude and corruption can also be diverted by blaming the high-handed Israelis. And finally, Israel’s insistence on not financing terrorist activities can mobilize some much-needed political support at home for the unpopular Abbas. All polls show a gradual loss of legitimacy for Abbas among Palestinians.

Fears of an imminent collapse of the PA – long a darling of the international community – also serves to force the Palestinian issue back to the top of the world’s agenda. For a while the world has been busy with other more burning issues, such as Iran. Indeed, the Iranian threat has lowered the interest of most Arab states in the Palestinian issue, as well, and brought them closer to the Israeli position – which basically considers the Palestinians a strategic nuisance. The conclusion reached by many Arab and other actors is that in the absence of a Palestinian leadership ready to make difficult decisions, the Palestinian-Israeli conflict can, at best, be managed for the medium term.

It should be noted that Israel is doing more than its share to bolster the Palestinian economy – providing jobs to Palestinians in the Israeli work market; supplying water, electricity and health services to Palestinians; and keeping Hamas from overthrowing Abbas’s PA. Moreover, it is active in raising funds internationally for the PA.

And thus, nobody should cave to Palestinian blackmail. While it is best for all concerned to ensure a decent standard of living for Palestinians in the West Bank and Gaza, it is highly unlikely that the PA will economically collapse. After all, the PA is a very good business for the kleptocratic leaders of the regime in Ramallah. Marked by corruption and nepotism, the PA is source of significant income for Abbas and his coterie. This gang will not kill the goose that lays golden eggs. As dysfunctional as the Palestinian national movement has become, it has excelled in perpetuating the pork barrel born in Oslo.

The writer is president of the Jerusalem Institute for Strategy and Security ( and a fellow at the Middle East Forum.

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