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The Palestinian Authority will be forced to “stop and reconsider everything” it does in as little as two to three weeks if Israel continues to withhold its revenues, the Palestinian finance minister has warned.
Under the Oslo Accords — interim peace agreements signed between the Israelis and Palestinians in the 1990s — Israel collects various taxes on behalf of the Palestinians and transfers them each month to the PA, which exercises limited self-governance in the occupied West Bank.
However, since the war with Hamas erupted in October, Israel has sharply increased the amounts it deducts from those transfers, crippling the PA’s finances, and prompting warnings from diplomats that Israel is undermining the stability of the West Bank.
“Israel has distorted this arrangement into yet another tool of occupation of equal importance and value to them as the Israel Defense Forces,” Shoukry Bishara said in an interview.
“I do not want to be a prophet of doom — but unless there is a major breakthrough, then we will have to stop and reconsider everything . . . I would say the time horizon is the next two to three weeks.”
Shoukry said that in November and December Israel deducted Sh600mn ($164mn) a month of the Sh750mn in revenues to be transferred after hardliners in Benjamin Netanyahu’s far-right government demanded Israel stop transferring the portion of the revenues that would have paid salaries and pensions to PA officials in Gaza.
The total deductions in 2023, he added, had amounted to 25 per cent of the PA’s revenues. “I do not know of a single entity that is a non-petrodollar entity that can survive with this sort and magnitude of abusive deductions,” he said. “We are talking about approximately $1.5bn of cash siphoned away from the Palestinian economy [in total in 2023].”
Western and Arab officials have also criticised the Israeli deductions, which come as countries including the US have been looking for ways to bolster the PA so that it can play a role in the postwar governance of Gaza as well as the West Bank.
Diplomats also see strengthening the PA as crucial to containing unrest in the West Bank. Last year was the deadliest in the territory since the UN began collecting data in 2005. The instability was compounded by a rise in attacks on Palestinians by Jewish settlers after the start of the war.
Antony Blinken, US secretary of state, said last year that the PA was “doing everything it can to keep security and stability in the West Bank”, but that its lack of resources was “another aspect of the problem”.
In recent weeks, diplomats have been attempting to find a way to break the deadlock, such as by transferring the money to Norway, but the negotiations have so far failed to bear fruit.
Bishara said that if Israel continued to withhold the funds, the PA would be forced to reduce the salaries it paid the roughly 144,000 people on its payroll. In December, it paid just 60 per cent of salaries.
“We do not want to compound the [economic] disaster. We would have to try to find means of paying partially, however minor [an] amount of salaries, to keep the system surviving,” he said.
Since Hamas’s October 7 assault on Israel that triggered the war, Israel has imposed swingeing restrictions on movement in the West Bank, preventing labourers living in the territory from entering Israel to work, choking off the flow of Palestinian citizens of Israel entering the West Bank to shop, and restricting movement between the territory’s cities.
In combination with its withholding of tax revenues, the measures have delivered a huge blow to the West Bank’s economy.
The International Labour Organization estimated in December that 32 per cent of employment — or 276,000 jobs — had been lost in the West Bank since the start of the war as a result of the pressures, and that the territory suffered economic losses of $500mn a month in October and November.