The Palestinians and the Arab financial safety net

The financial crisis affecting the Palestinian people is getting worse. It is ever more suffocating month by month due to the financial siege imposed by Israel and the US on the Palestinian Authority, which directly affects its employees. The signs of suffering have also started to show on the situation of all Palestinian citizens, of every class, due to the PA employees’ salaries being cut by 50 per cent, which may be cut even more in the months ahead. This is reflected across all sectors of the Palestinian market as a result of the sharp decline in purchasing power and the overall dire economic situation.

In the midst of this economic suffocation is Israel’s refusal to hand over the tax revenues it collects on behalf of the PA; the Israeli pretext is that such money is given to the families of Palestinian prisoners and martyrs. In addition, the US has stopped providing aid, which formed a large part of the PA’s annual budget, in order to force the leadership to accept the “deal of the century” aimed at liquidating the Palestinian cause.

It is known that the PA’s financial resources depend mainly on Arab and foreign aid, as well as the tax revenues collected by the occupation authorities and given to the PA. Hence, the only alternative option at the moment is to obtain financial assistance from the Arab countries — as promised in successive summits — the Arab League and the Arab finance ministers’ meeting held last month at the League’s headquarters in Cairo. They promised to provide an Arab financial safety net for the PA amounting to $100 million a month to boost its budget and compensate for the aid that has been cut and tax revenues being withheld by Israel. However, this has not materialised. The financial blockade on the PA as well as the delay in the Arab states providing aid have flagged up an impending crisis of unknown proportions in the occupied Palestinian territories.

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Such support from the Arab world would help to strengthen the Palestinians’ political, economic and financial rights and ensure some degree of independence for everyone. This increases the significance of Arab backing and challenges Israel’s hijacking of what rightfully belongs to the Palestinian people.

If the current situation is allowed to continue, Palestinian employees are at risk of either receiving a very small percentage of their salaries or not receiving any at all. This requires immediate Arab intervention beyond verbal promises. The Palestinians have resisted all of the efforts to force them to accept the “deal of the century”, especially its economic aspects.

The responsibility for providing a safety net to the Palestinians falls on everyone’s shoulders without exception, including Arab finance ministries, Arab investment funds and funding institutions, and Arab banks. They could provide loans to the PA in coordination with concerned Palestinian parties, in the context of a bilateral agreement with Palestine. This was called for by the Arab finance ministers at their last meeting in Cairo.

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