The state of the Palestinian Authority was already on precarious grounds when the Australian government this week announced that it will end direct assistance to Ramallah over its so-called “pay-for-slay” policy of disbursing stipends to Palestinian prisoners and to the families of those killed in clashes with Israeli forces. The news was widely welcomed in Israel, a large portion of whose populace is repulsed by the PA’s allocation of seven percent of its budget to what is widely viewed as an initiative that promotes terrorism.While Canberra’s decision will have little tangible impact given the aid in question — which will now be redirected through the United Nations to humanitarian projects primarily in the Hamas-ruled Gaza Strip — amounts to only $10 million, it is representative of a wider trend that could have significant implications.In March, the US Congress passed the Taylor Force Act — named after an American citizen killed in a Palestinian terror attack in Tel Aviv — which, if approved by the Senate and signed into law by President Donald Trump, will cut off hundreds of millions of dollars in American financial support to the PA.And now, the Israeli parliament has passed into law similar legislation that will immediately begin deducting portions of the estimated $400 million the PA pays out annually to terrorists and their relatives from the taxes Jerusalem collects on Ramallah’s behalf, as stipulated by the 1993 Oslo Accords.The PA is thus staring directly in the face of a major crisis that, barring intervention, has the potential to lead to its total collapse (a predicament that obviously could be averted at the stroke of Abbas’ pen were he to choose to stop paying these “salaries”). Nevertheless, the PA is likely to weather the storm over the short-term, with other countries, particularly those in Europe, liable to step in to fill the budgetary shortfall.The second reason Abbas’ regime will probably stay afloat is somewhat counter-intuitive; namely, that the prevailing assessment within the Israeli political and military establishments is that the PA’s breakdown would have substantial adverse effects.In this respect, while Abbas is widely regarded as no friend of the Jewish state, he is the proverbial devil that Israel knows, whose tenure — with the exception of the 2015-16 “Stabbing Intifada” — has not been marred by the type of mass-casualty violence that characterized the final years of his predecessor Yasser Arafat’s reign.Moreover, security cooperation between Israel and the PA remains robust and is a primary bulwark against Hamas’ ongoing efforts to enhance its operations in the West Bank. To this end, it must be highlighted that Abbas is not acting out of the goodness of his heart, but, rather, out of self-interest, if not self-preservation, as Hamas poses an existential threat to his rule.According to Professor Boaz Ganor, Founder and Executive Director of the International Policy Institute for Counter-Terrorism at the Interdisciplinary Center-Herzliya, there is “no doubt” that the “pay-for-slay” scheme encourages violence. “There is usually a combination of a few factors leading to the co-called 'rational decision' to conduct a terrorist attack,” he explained to The Media Line, “[ranging] from the ideological to incitement to personal considerations. But the fact that [Palestinian perpetrators] know that if they are killed or arrested their families will be rewarded for life is certainly part of the consideration. That there is a correlation between the amount of money disbursed and the intensity of the act also serves to promote more severe attacks.”Nevertheless, Dr. Ganor qualified, “Abbas, unlike Arafat, understands that terrorism is counter-productive for Palestinian national aspirations. He is by no means a Zionist but knows that Israel is not going anywhere. From this perspective, Abbas needs to change the policy and given that he previously broke from Arafat's strategy, which was not easy, it is possible that he could do the same now.”By contrast, Ashraf al Ajrami, previously a Palestinian Minister of Prisoners Affairs, noted that "the first government established under [former PA prime minister] Salam Fayyad started issuing these payments in 2007 and since then the amount of terrorism decreased by a huge margin. There is no proven connection between the money and violence," he contended to The Media Line, adding that “this is just an excuse to withhold Palestinian funds and use them for Israeli projects in the West Bank.”In addition to the new law being misguided, Al Ajrami expressed the belief that it will have no bearing on the PA's calculus. "The conflict contains four or five main issues that are very important for Palestinians such as borders, Jerusalem, refugees and, as well, the matter of prisoners. Hundreds of thousands of Palestinians have been arrested by Israel so we are speaking about almost every person affected. Because of that no Palestinian leadership can do anything in this regard."In fact, most analysts who spoke to The Media Line agreed that the PA is both unlikely to fall or even reverse course, thus begging the question: what, then, is the purpose of the pressure being applied?Aside from the moral implications, the most-often cited reason was to force Abbas back to the negotiating table once the Trump administration unveils its much-anticipated peace plan. And while the PA chief has boycotted the White House since its recognition in December of Jerusalem as Israel’s capital, the prospect of financial meltdown might induce him to play ball, at least superficially.More fundamentally, many are construing the seemingly coordinated move as a message to the Palestinian leadership that the longstanding status quo is being upended and therefore the PA needs to alter its collective mindset. As regards terrorism, specifically, countries are making clear that this route is a dead-end for the Palestinians; and with respect to statehood, generally, a signal is being sent that the PA must drop its maximalist positions as the geopolitical conditions that a decade ago compelled then-Israeli premier Ehud Olmert to offer Abbas a deal containing virtually every Palestinian demand no longer exist.But to every action there is an equal and opposite reaction, with the age-old Chinese adage — be careful what you wish for — seemingly applying in this case. Despite his back being up against a wall, Abbas retains a multitude of options, including following through on previous threats to dismantle the PA; attempting, once again, to reconcile with Hamas in order to forge a united Palestinian front; or even taking the middle path of reducing or deferring “pay-for-slay” funding to some 36,000 Palestinian families, whose ire might then be redirected towards Israel.Given the uncertainty, Jerusalem is in need of a comprehensive strategy that addresses the full spectrum of potential outcomes of its evolving relationship with the PA. As the Israeli government just contributed to fast-tracking the changing dynamics, one can only assume that a multitude of contingency plans have already, or are in the advanced stages of, being devised.