Financial crisis hits Palestinians as Israel, US moves

Palestinian Authority is currently facing a suffocating financial crisis after deep US aid cuts and an Israeli move to withhold tax transfers, sparking fears for the stability of the West Bank, TOPNAIJA.NG can confirm.

The authority, headed by President Mahmud Abbas, announced a package of emergency measures on March 10, including halving the salaries of many civil servants.

The United States has cut more than $500 million in Palestinian aid in the last year, though only a fraction of that went directly to the PA.

The PA has decided to refuse what little US aid remains on offer for fear of civil suits under new legislation passed by Congress.

Israel has also announced it intends to deduct around $10 million a month in taxes it collects for the PA in a dispute over payments to the families of prisoners in Israeli jails.

In response, Abbas has refused to receive any funds at all, labelling the Israeli reductions theft. That will leave his government with a monthly shortfall of around $190 million for the length of the crisis.

The money makes up more than 50 percent of the PA’s monthly revenues, with other funds coming from local taxes and foreign aid.

While the impact of the cuts is still being assessed, analysts fear it could affect the stability of the occupied West Bank.

“If the economic situation remains so difficult and the PA is unable to pay salaries and provide services, in addition to continuing (Israeli) settlement expansion it will lead to an explosion,” political analyst Jihad Harb said.

Abbas cut off relations with the US administration after President Donald Trump declared the disputed city of Jerusalem Israel’s capital in December 2017.

The right-wing Israeli government, strongly backed by the US, has since sought to squeeze Abbas.

After a deadly anti-Israeli attack last month, Prime Minister Benjamin Netanyahu said he would withhold $138 million (123 million euros) in Palestinian revenues over the course of a year.

Israel collects around $190 million a month in customs duties levied on goods destined for Palestinian markets that transit through its ports, and then transfers the money to the PA.

Israel said the amount it intended to withhold was equal to what is paid by the PA to the families of prisoners, or prisoners themselves, jailed for attacks on Israelis last year.

Many Palestinians view prisoners and those killed while carrying out attacks as heroes of the fight against Israeli occupation.

Israel says the payments encourage further violence.