Taken from France Palestine Solidarity. Photo: The Israeli army attacks and destroys the town of Jenin in the occupied West Bank, accompanied by numerous bulldozers, May 30, 2024 © Quds News Network
On May 22, following the rulings of the International Court of Justice against Israel and the recognition of Palestine by three European countries, far-right Israeli Finance Minister Bezalel Smotrich took “severe punitive measures” against the Palestinian Authority. In particular, he blocked the transfer of tax revenues collected by Israel on behalf of the Palestinian Authority, which could lead to the collapse of the latter.
Since its creation under the 1993 Oslo Accords, the Palestinian Authority has been constrained by political, economic and security arrangements imposed by Israel and its allies. One of the most important is the 1994 Paris Economic Agreement, which was supposed to be temporary and last five years. It established the dependence of the Palestinian economy on the Israeli economy and gave the occupying state the means to make this temporary agreement permanent. Essentially, the agreement integrated the Palestinian economy into that of Israel through a customs union, with Israel controlling all borders, its own and those of the Palestinian Authority. This means that Palestine remains without independent gateways to the global economy.
This means that Palestine remains without independent entry points into the global economy. Under the agreement, the Israeli government is responsible for collecting taxes on goods imported into the West Bank and Gaza Strip, which it transfers to the Palestinian Authority treasury in exchange for a 3 percent commission.
It is assumed that this money will be transferred smoothly to the Palestinian Authority, at an average of 190-220 million US dollars per month. The PA relies on these funds to pay the salaries of its employees and meet its obligations for operating expenses of its institutions.
Mr. Smotrich’s decision is not the first that the Israeli government has taken against the Palestinian Authority and the Palestinian economy in general. It is a continuation of a series of declared and undeclared measures aimed at undermining authority. Indeed, the PA represents the potential government of a future Palestinian state which successive Israeli governments, whether right or left, have always opposed.
Israel has historically used tax revenues to pressure the Palestinian Authority and undermine the Palestinian economy; this is not a response to October 7.
Transfers have been blocked under numerous pretexts, including punishing the PA for any political moves it takes, such as joining the International Criminal Court in 2015, for example. Indeed, the occupation state has systematically deducted part of the funds since 2019, under the pretext that the PA pays allowances to the families of Palestinian prisoners and martyrs, which Israel describes as “support for terrorism”.
Since October 7, the Israeli occupation government has also deducted from tax revenues the amount that the PA normally pays to its institutions in the Gaza Strip, which amounts to approximately $75 million per month, resulting in led to a major economic crisis. It is clear that Israel wants to completely separate the West Bank from Gaza, although both are occupied Palestinian territories and part of the envisioned independent Palestinian state.
In September last year, Palestinian Finance Minister Shukri Bishara announced that Israel was withholding $800 million from the Palestinian Authority. According to data from the Finance Ministry in Ramallah last month, the total amount of tax revenue withheld by Israel amounted to $1.6 billion, equivalent to 25 to 30 percent of the Authority’s total annual budget. Palestinian.
This situation has led to an unprecedented financial shortfall in the Palestinian Authority’s treasury, threatening its ability to provide basic services such as health, education and security, and to pay the salaries of civil servants who receive salaries partial for years. Due to these deductions, the Palestinian government has not been able to pay the full salaries of its employees since November 2021, although it had committed to paying 80-85% until the start of the war against the Palestinians in Gaza. This percentage has gradually decreased to 50% over the past two months. Civil servants are now unable to meet their monthly financial obligations to banks and schools.
Palestinian public institutions have reduced working hours in order to save money, leading to a reduction in services, particularly in health and education in schools and universities. Teaching is mainly done online.
Palestinian civil servants – including myself – have not received full salaries since 2021, and the total arrears owed are equivalent to six months’ full salaries. Collectively, this amounts to approximately $750 million, plus another $800 million in debt to the private sector, which has had a major impact on private hospitals and pharmaceutical companies. Unable to meet its own financial obligations, and with reduced purchasing power for goods and services, the private trade and services sector has been crippled.
In addition to government spending, particularly the salaries of 147,000 civil servants, the Palestinian economy relies on two other pillars that have been severely damaged since October 7: the Israeli labor market and the private sector. Israel has prevented Palestinian workers from entering the occupation state, meaning that 200,000 of them have lost their only or main source of income and are unemployed.
This situation has reduced the purchasing power of Palestinian families, which has had a knock-on effect on private businesses and increased unemployment. An estimated 500,000 Palestinians are unemployed in the occupied West Bank, with thousands of jobs lost.
Unemployment reaches unprecedented level
The decline in financial support given to the Palestinian Authority by Arab States has further aggravated the situation. Additionally, the Authority has reached its borrowing limit from banks, which has made it even more difficult to pay employees’ salaries, and so the spending cycle continues to collapse.
All this has led to the near paralysis of the Palestinian economy and great pressure on ordinary citizens who can no longer find jobs and have little or no savings to cover basic needs. This situation risks triggering major social, political and economic crises.
Add to all this the fact that Israel has killed more than 500 Palestinians in the West Bank since October and arrested 9,000, most without charge or trial. Refugee camps and towns in the occupied territory have seen their vital infrastructure destroyed in vicious acts of collective punishment aimed at undermining legitimate anti-occupation activities.
We, Palestinians in the occupied West Bank, are ashamed to speak about our situation because of the horror of the unprecedented genocide taking place before our eyes in Gaza. We prefer to remain silent so as not to distract attention from what is happening there. We understand that Israel seeks to separate Gaza from the West Bank in order to destroy any level of solidarity within a united Palestinian society. The fact is that we in the West Bank would rather starve to death with our brothers in the Gaza Strip than see the Palestinian Authority stop fulfilling its obligations to them and to the families of the martyrs and the injured.
A Palestinian journalist living in Ramallah, Fareed is a farmer and political and environmental activist.
Translation: AFPS
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