The Palestinian Authority is careening toward a major financial crisis that has been categorized by many as possibly its worst ever.
With the PA refusing to accept tax revenues collected for it by Israel and with support from the Arab world nearly drying up, the PA is in danger of collapse.
Palestinian municipal workers have not been paid or have received only a partial salary since May due to a decision by the Palestinian Authority to cut off all ties with Israel bringing the economy to the brink of a serious crisis. Teachers are in the midst of a two-week strike.
A source in the PA told All Arab News that Ramallah is awaiting the outcome of the American elections on Tuesday to decide whether to accept the much needed funds from Israel which now stand at $750 million being held by the Israeli treasury.
Palestinians are pinning their hopes on a Joe Biden victory in America. Biden has said he opposes Israeli annexation of land Palestinians want for a future. A Biden victory would provide Abbas with “a ladder to climb down from the tree,” and start accepting the tax payments again, Jehad Harb, a Palestinian political analyst told The New York Times.
In May, the PA decided to cut off all ties with the Israeli government including refusing to accept tax revenues collected on its behalf by Israel — some $150 million a month. The decision was taken by Palestinian Authority President Mahmoud Abbas in response to Israel pursuing annexation of parts of the West Bank. But talk of annexing any land has long been dropped since Israel signed a normalization deal with both the United Arab Emirates and Bahrain in September.
Instead of asking for its money, the PA has been petitioning the European Union and other countries to cover its deficit. The EU — one the PA’s biggest donors — has refused to provide additional aid and is pressuring the PA to just accept its own money.
“We are encouraging them to again accept the transfers of their own tax revenues because this is their own money, but this is where it stops,” spokesman Peter Stano said. “The EU will continue to be the largest international supporter of the Palestinians and a firm supporter of the PA.”
Further exacerbating the crisis is that support from the Arab world has fallen by 82 percent in the first eight months of 2020, the Shehab news agency reported last month. The PA has received $38.1 million this year compared to $198.33 million during the same period last year.
Saudi support is down by 77.2 percent, while Algerian support fell to zero compared to $26.1 million during the first eight months last year, for example.
Jordan and Egypt have also been urging Abbas to accept its money and avoid a financial crisis, according to a report in Axios.
Without outside hope, the PA has few options.
“If the Palestinian Authority succeeds in obtaining an Arab loan, then it will not need the tax revenues that are collected by Israel, but if it does not succeed, then the option of receiving the revenues will be its last resort to solve its financial crisis,” Economist Ayman Abu Aisha said.
The PA uses the money, which makes up about 60 percent of its budget, to pay 136,000 employees in the West Bank and Gaza Strip, according to Al-Monitor.
Meanwhile, frustration is growing among the Palestinian people — many of who haven’t seen a full salary for months. Teachers have been protesting and some have been arrested.
Khaled Shabita, a teacher and activists who was arrested, said teachers had a right to strike.
“We want a free country, and we want a decent life. Employees face a difficult choice. Do they not have the right to live in dignity, just as much as having the right to fight for the freedom of their country from occupation?” he told Arab News.
Ismail Muslimani, who writes on education, said workers should not be “obliged to pay the price of failed policies.”
However, Palestinian Prime Minister Mohammed Ishtayeh, has previously threatened public servants, “Do you want a homeland or money?”