Israel is committed to the viability of a two-state resolution to the conflict with the Palestinians, Regional Cooperation Minister Esawi Frej told an international donor parley in Oslo.
"As long as it depends on Foreign Minister [Yair] Lapid and myself, the Israeli government will not take steps which will make it impossible to achieve an Israeli-Palestinian peace agreement, based on the 'two states for two peoples' formula," Frej told the Ad Hoc Liaison Committee. The 15-member body of representatives from international entities and governments meets twice a month to oversee donor funding for the Palestinians.
The AHLC is one of the forums in which Israelis and Palestinians engage cooperatively. Those interactions were more extensive this year, in light of the ones that have already taken place between Israeli and Palestinian officials in the last months.
Frej held meetings with both Palestinian Authority Prime Minister Mohammed Shtayyeh and Finance Minister Shuki Bishara.
US Deputy Assistant Secretary of State for Israeli and Palestinian Affairs Hady Amr, Jordanian Foreign Minister Ayman Safadi, European Union foreign affairs chief Josep Borrell and UN Special Coordinator for the Middle East Peace Process Tor Wennesland were among the participants.
Frej told the AHLC that he had a "distinctive" history. "I was born in Kfar Kasem, I am an Arab Muslim, and I am a member of a pro-peace party, Meretz.
"I support the two-state solution," he stated.
"My dream is to see my country in peace with my people," he emphasized. "Therefore, we must keep the road to negotiations open."
In the interim, he said, "while the conditions for a full diplomatic process maybe not be ripe yet, we should not, and cannot, sit still," he said. "We must seize the opportunity and lay the foundations in the present – for a better future."
FREJ SPOKE with the AHLC about the PA's dire financial crises. The authority is facing a deficit of $1.36 billion and may not be able to pay its civil servant salaries for the remainder of the year.
Part of the issue is an 85% drop in donor funding from $1.2b. in 2008 to $184m. this year.
Frej called on the international community to resume its funding to the PA.
“Unfortunately, due to ‘donor fatigue,’ contributions have fallen,” Frej said. “My friends, the risks are too great; the stakes are too high. We are in a state of emergency. Please continue and increase your support for the Palestinian people.”
To help improve the Palestinian economy, Frej told the committee, he is sure that Israel is open to adapting the 1994 Paris Protocol that governs its financial arrangements with the PA to better accommodate the situation in 2021.
It would be the first such change since the protocol was signed.
“Israel is ready to discuss, bilaterally with the PA, ways to update some of the elements of the Paris Protocol,” said Frej. As a first step, Israel is ready to convene the Joint Economic Committee in the next few months to discuss this option.
Other steps Israel would take to help the Palestinians could include direct salary transfers into the bank accounts of Palestinians who work in Israel, reducing handling fees on fuel, and creating a financial organ to “maintain correspondent banking relations between Israel and the PA,” Frej said.
“Reforms to boost the Palestinian private sector and create an environment that encourages innovation should also be made,” he said.
To help the Palestinians, Frej said that Israel provided them with 19,000 additional permits for jobs and opened the hi-tech sector to Palestinian workers.
It plans to launch an E-Vat pilot that would add $60 million to the PA budget. In addition, the Office of Government Activities in the Territories (COGAT) "is ready to advance the bonded warehouses project to facilitate Palestinian trade, which will increase PA tax collection while expanding the PA's customs control over the movement of goods to areas under its authority."
FREJ, HOWEVER, took issue with the PA's policy of providing monthly financial stipends to terrorists in Israeli jails and to the families of terrorists who died executing attacks against Israelis.
Israel financially penalizes the PA for the terrorism payments, which Israel has dubbed “pay-for-slay.”
Jerusalem withholds that sum – some NIS 50 million a month – from its transfer to Ramallah of the tax fees it collects on behalf of the PA. In August, Israel increased the sums it withholds to NIS 100 m. monthly. But in light of the PA’s financial distress, the Jewish state provided the PA in the fall with a NIS 500 m. loan to offset the money it had withheld.
In advance of the AHLC meeting, Frej had spoken of the possibility that the PA would abolish those payments. But no public progress was made on the issue, as the PA held firm its policy of financial stipends to the terrorists.
In Oslo, Shtayyeh called on the international community to pressure Israel to halt its punitive financial measures against the PA and to transfer the full sum of the tax fees.
"The current financial crisis is a structural one, and the occupation bears responsibility for it, as we collect taxes from very limited areas and undertake obligations toward our people in all their places of residence. And this coincides with a sharp decline in international aid and unjust Israeli cuts from our funds, in addition to the economic consequences of the coronavirus," Shtayyeh said.
Shtayyeh urged the donor countries to fulfill their financial commitments to the Palestinian Authority and to increase their aid. He blamed Israel for the PA's monetary crisis.
“We live in a daily deteriorating reality due to the continuing occupation, a difficult financial situation, a political vacuum and the consequences of the pandemic. Every day we witness more illegal settlement expansion, more barriers, more killings and arrests, land confiscations and settler violence.”
He welcomed any Israeli steps to improve the economic and living conditions of the Palestinian people, but considered them “useless if they are not within a political framework conducive to ending the occupation.”
Shtayyeh briefed the meeting participants on the steps taken by the Palestinian government to reduce expenditures, raise revenues and reform institutions.
“Israel is pushing us into a state of apartheid, and this is what the Human Rights Watch report clearly stated,” he said.
He also accused Israel of foiling the Palestinian general elections by preventing them from being held in Jerusalem.
Shtayyeh called for an end to Israeli measures that “systematically destroy the two-state solution.” He also called for recognition of the “State of Palestine.”