US renews funding pledge to Palestinians, as PA economy shrinks by 11.5%

Shtayyeh outlined a grim picture of how the already-fraught Palestinian economy, had been hard hit by the pandemic causing the PA deficit to double in two years. It now stands at $1.2 billion.

Palestinian money changers 370 (photo credit: REUTERS/Mohamad Torokman)
Palestinian money changers 370
(photo credit: REUTERS/Mohamad Torokman)
The US has pledged to renew financial assistance to the Palestinians at an international donor meeting that grappled with the impact of the COVID-19 pandemic on the fragile Palestinian economy.
The dramatic 11.5% shrink last year was one of “the biggest annual contractions since the establishment of the Palestinian Authority,” PA Prime Minister Mohammad Shtayyeh told the virtual gathering of the Ad Hoc Liaison Committee (AHLC), which facilitates donor funding to the Palestinians.
Shtayyeh outlined a grim picture of how the already fraught Palestinian economy had been hard hit by the pandemic, causing the PA deficit to double in two years. It now stands at $1.2 billion.
“We cannot finance our deficit by borrowing from international markets or by printing money. This means that we lack the economic shock absorbers that have helped other countries deal with the economic consequences of COVID-19,” Shtayyeh said.
AHLC members who gathered Tuesday had already been well briefed on the situation with reports, including from the UN and the World Bank. The latter said unemployment in the fourth quarter of 2020 stood at 15% in the West Bank and 43% in Gaza, and it estimated that the poverty rate was around 30%, amounting to approximately 1.4 million.
In addition to extra funding to handle the population’s increased health needs because of the pandemic, and to make up for lower tax revenue, the PA has sought $30 million for its $55m. program to ensure that 60% of its population is vaccinated.
It does this in a climate where donor funding has dropped by 20% in one year, down to $488m., which according to the World Bank was the lowest amount in decades.
Among the contributing factors to the crisis had been former US president Donald Trump’s decision to cut all financial assistance to the Palestinians, a measure that the new Biden administration has said it would overturn.
Hady Amr, deputy assistant secretary for Israeli and Palestinian affairs in the Bureau of Near Eastern Affairs within the US State Department, renewed that pledge at the meeting, with State Department spokesman Ned Price issuing a statement to that effect after the gathering.
“The United States underscored the commitment to supporting economic and humanitarian assistance and the need to see progress on outstanding projects that will improve the lives of the Palestinian people, while urging all parties to avoid unilateral steps that make a two-state solution more difficult to achieve,” Price said.
But he did not pledge any money, nor did he set a date for when US financial assistance to the PA would be resumed.
The European Union was more forthcoming and pledged to raise €20m. to help the PA with purchase vaccines. Oliver Varhelyi, the commissioner for neighborhood and enlargement, tweeted “At #AHLC meeting today I confirmed #EU continues to stand in firm solidarity with the Palestinians in fight against #COVID19.”
He added that this would provide “significant support to tackle health emergency&economic impact. Ready to mobilise additional funding of up to €20m to help with vaccination.”
The AHLC last convened in June, when Israel was on the verge of annexing West Bank settlements. The PA, in protest, halted all coordination with Israel and, from May to November, refused to accept the transfer of $1.08b. in tax revenues that Israel had collected on its behalf.
Seven months later, the atmosphere was markedly different at the 15-member gathering, which includes, Russia, Norway, Japan, Saudi Arabia, Canada, Jordan, Egypt, and Tunisia, as well as the US, the EU, the UN, Israel, the PA, the World Bank and the International Monetary Fund.
Among the many contributing factors was Israel’s decision to suspend annexation and the Biden administration move to resume the US’s contact with the AHLC and the Palestinians.
A certain portion of the meeting dealt with the provision of vaccines for the Palestinians. According to the UN, the World Health Organization is providing 443,940 vaccines for an essential 20% of the population. They are due to arrive possibly as early as next month.
Israel also explained its efforts to help the Palestinians and provide 5,000 vaccine doses, of which 2,000 have already been given to the PA. It is also looking at vaccinating 100,000 Palestinian workers in Israel, and promised to facilitate the delivery of vaccines to Palestinians in the West Bank and Gaza, noting that this is an Israeli priority.
It also reminded the gathering that some of the Palestinians’ financial issues were a direct result of that PA’s decision to send monthly payments to terrorists in Israeli jails and to family members of terrorists who had been killed.
Israel also spoke of the need to ensure that Hamas release the remains of the two soldiers believed killed in the 2014 Gaza war and the two citizens believed to be alive. It also raised the difficulty of the PA’s pursuit of a war crimes suit before the International Criminal Court.
Israel was represented at the meeting by the Office of the Coordinator of Government Activities in the Territories and Haim Regev, the Foreign Ministry’s deputy director-general of Middle Eastern Affairs.
Regev said that the forum could not resolve the political dispute between his country and the Palestinians, so it was important to use the forum to focus on economic measures to help the Palestinians.
“During this pandemic Israel acts in the way that we believe neighbors should act in helping the Palestinians deal with the virus,” Regev said.