Israeli security and defence officials believe that the Palestinian Authority (PA) “has only two to three months to go before a process of economic collapse begins”, reported Haaretz.
The main reason for the crisis is Israel’s decision to withhold millions of dollars of tax revenues a month collected on behalf of the PA. The move, made in February, is intended to pressure the PA to stop support payments for Palestinian prisoners and their families.
Because of that context, the PA has refused to accept any of the (reduced) tax revenues, meaning that the authority’s revenues have “plummeted by some 600 million shekels [$166 million] a month, around half its total budget”, Haaretz reported. Civil servants have seen their salaries slashed by 40-50 per cent.
Although Qatari financial aid has been promised, it will not be enough to cover the shortfall; thus, “absent more aid”, and if the PA refuses to budge over the tax transfers, “the PA will face an economic crisis it will have trouble surviving for long”.
Meanwhile, Israeli military officials also believe that the PA “isn’t likely to retreat from its absolute rejection of the Trump administration’s ‘deal of the century’”, an assessment “the army recently gave the government”.
The Israeli army believes that Abbas “sees himself under a three-pronged attack, from Israel, Hamas and the United States”, and that in response, the 84-year-old “is clinging to his own approach”.
“Abbas is also bolstering his domestic position by appointing Mohammed Shtayyeh as the new prime minister,” Haaretz added, “tightening ties among the various organisations under his authority (the PA, the PLO and the Fatah party) and ratcheting up tensions with Hamas.”