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Is the PA really suffering from a financial crisis?

Palestinians, in Gaza City, wait in a queue to withdraw money from cash points after the decision of cutting the salaries by 30% was taken by the government officials on 10 May, 2017 [Mustafa Hassona/Anadolu Agency]
Palestinians wait in a queue to withdraw money from cash points on 10 May 2017 [Mustafa Hassona/Anadolu Agency]

The Palestinian Authority (PA) is under pressure from American President Donald Trump and his administration, is increasing isolated in the Arab world and is running out of money, the New York Times columnist David M Halbfinger wrote last week.

In his article, Halbfinger quoted Prime Minister Mohammad Shtayyeh saying: “We are in a collapsing situation.”

Shtayyeh, along with the PA President Mahmoud Abbas and many other PA and Fatah officials have long claimed that the PA is experiencing a financial crisis and it is heading to bankruptcy. For the third consecutive month, the PA is paying 50 per cent or less of its employees’ salaries in the West Bank and the Gaza Strip. The PA claims that the crisis is a result of its rejection of tax revenues collected by Israel on its behalf as a result of an Tel Aviv’s decision to deduct the salaries of Palestinians killed, wounded or imprisoned by Israel.

Abbas and many of his PA affiliates have several times said that “martyrs and prisoners” are a “redline” and they have returned the tax money three times.

Real crisis, but illogical reactions

“There is a financial crisis hitting the PA,” economic expert at the Gaza Chamber of Commerce Maher Al-Tabba said. “But the PA reaction is questionable,” he added, referring to reports that the Palestinian Authority has raised the salaries of former and current ministers in the PA government. “The PA has been following illogical measures in its attempt to deal with the crisis.”

Another reason which raises doubts regarding the financial crisis, Al-Tabba told MEMO, is the delay in announcing the PA’s budget. “The PA’s 2019 budget is still secret,” he said. “So that, nothing is known about the income and expenses of the PA and this makes it difficult to monitor the government’s financial action.”

READ: Arab League pledges $100m per month to Palestinian Authority

There may be a crisis, he continued, but “it is political”.

“The reduction of salary payments is a measure taken to deal with the crisis, but the different rates of reduction between the salaries of the employees in the Gaza Strip and the West Bank proves that political motivations are part of the crisis,” he explained.

Economic expert and journalist Mohammad Abu-Jayyab does not believe the “media propaganda” around the PA’s refusal to receive tax revenues.

“I do not believe that the PA is suffering a financial crisis because I have information that it received the deducted tax revenues over the past three months. Otherwise, how could it pay 60 per cent of the salaries, raise the salaries of former and current ministers, pay for the running and administrative fees for its institutions?” he told MEMO.

READ: Palestinian Authority in ‘financial crisis’ following moves by US and Israel

International donations made to the PA have sharply decreased, he explained, but the authority’s largest donor, the US, “is still paying a lot of money for the PA, including thousands of US dollars in salaries for the security services in the occupied West Bank.”

Deal of the century

The notion that the martyrs and prisoners are a “redline” is a “very big lie”, according to Abu-Jayyab.

Abbas has been paying half or less than half of the salaries for the PA employees in Gaza for about two years. He cut the salaries of hundreds of martyrs, wounded and prisoners from Gaza and some even from the occupied West Bank. Do you believe that he is crying for them? No, this is part of a plan aimed to push the Palestinian people to accept the deal of the century!

This plan, he said, includes putting pressure on the Palestinians in the occupied West Bank “exactly” as has been happening in Gaza.

To this end, he explains, the PA is not officially attending the US peace conference being held in Bahrain at the end of the month, but “many Palestinian businessmen who are attending the conference from Hebron, Nablus and Ramallah to represent the PA”, he explained.

“Neither Israel nor the US are ready to let the PA collapse,” Israeli affairs expert Walid Al-Agha told MEMO. “The PA is there just to serve Israeli interests as stipulated by the American plans.”

The “strong” security cooperation between the PA and Israel is “clear proof” that Israel does not want the collapse of the authority. This is further evidenced by the US’ continued payments to PA security personnel.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.

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