As Israel threatens to cut off electricity, how can Palestine pay its bills? | Israeli-Palestinian conflict News



The finances of the Palestinian Authority are at a “breaking point”, a United Nations official warned on October 20. But that didn’t stop the State of Israel Electricity Company from would have threatening a week later to cut electricity in the occupied West Bank if the Palestinian Authority did not pay $ 120 million in overdue bills.

The threat of plunging Palestine into darkness is recurring, but it has renewed attention to the increasingly dire state of the Palestinian Authority’s books, and the role Israel continues to play in further hampering it. the occupied West Bank’s already crippled economy when he can least afford it. .

Like all governments, the Palestinian Authority has had to contend with the economic fallout from COVID-19. But analysts are quick to note that the pandemic has only compounded long-standing structural problems resulting from the decades-long Israeli occupation and dependence on foreign aid.

“It seems like an acute crisis, but I think it fits exactly with the direction the Palestinian economy is heading,” Yara Asi, a member of the Al-Shabaka political network, a Palestinian think tank, told Al Jazeera.

The World Bank estimated in April that the Palestinian economy shrank 11.5 percent last year. And although he sees growth rebound to 2.9% this year, that rate still implies “near stagnation in real per capita income and worsening social conditions,” the development bank said.

In late October, Tor Wennesland, UN Special Coordinator for the Middle East Peace Process, sounded the alarm, warning that with a growing budget deficit, declining donor support and capacity to borrowing “exhausted”, the budgetary situation of the Palestinian Authority is approaching a “breaking point”.

Wennesland also released some pretty striking numbers: The Palestinian Authority’s budget deficit is expected to nearly double next year, reaching $ 800 million, and “structural hurdles” must be addressed to avert the looming crisis.

“Along with other long-standing tax evasion that contributes to the financial crisis, Israel continues to deduct millions of US dollars per month from customs clearance revenue transfers, in response to Palestinian payments to security prisoners, their families and to the families of those killed in the context of the attacks, ”he said.


Taxes collected by Israel on behalf of the Palestinian Authority, including tariffs, are a major source of income for the Palestinian economy – but unstable.

Israel often uses remittances as a bargaining chip in its volatile relationship with the Palestinian Authority.

More recently, in July, the Israeli government announced that it withhold $ 180 million in Palestinian tax revenues to offset PA allowances to the families of Palestinian prisoners and those killed by Israel.

Palestinians say the allowances are welfare payments, but Israel describes them as rewards for activists.

Like much of the relationship between the Palestinian Authority and Israel, financial ties are governed by the Oslo accords, in particular the Paris Protocol of 1994.

The agreements were intended as an interim framework for Israeli-Palestinian relations pending a final resolution of the conflict and the creation of a Palestinian state. But they remain in force almost 30 years later.

Asi said Israel implements the Oslo accord wherever it sees fit and violates it when it benefits its agenda.

“When you don’t know what the rules are and the rules are constantly changing, there is no development in that structure,” she told Al Jazeera. “You can’t plan for the next five years; you can’t even plan for next year. There is therefore no long-term capacity building. These are just constant infusions of money.

The flow of international aid to the Palestinian Authority has also been uneven.

Former US President Donald Trump has halted virtually all US aid to the Palestinians, including funding for the United Nations Relief and Works Agency for Palestine Refugees, which responds the basic needs of millions of people in the Palestinian territories.

The current US administration has restored some aid, but US laws passed under Trump now prohibit direct aid to the Palestinian Authority.

Asi said that even if fully recovered, international aid is a temporary cure and not a cure for the Palestinian economy – and only a political solution can lead to prosperity in the Palestinian territories.

Anas Iqtait, a non-resident researcher at the Middle East Institute and expert on Palestinian economics, described the issue in an article he published at the end of last year.

“Since 1994, the Palestinian economy and the finances of the Palestinian Authority have been dependent on political shifts and roundabouts in relations between the Palestinian Authority on the one hand and Israel and international donors on the other” , wrote Iqtait.

“The PA’s lack of control over economic and fiscal resources has locked the Palestinian economy and the PA’s financial equilibrium into a perpetual cycle of dependence on financial flows controlled by external actors.

In 2020, the Palestinian Authority temporarily refused to receive tax revenue from Israel as the then Israeli government attempted to annex parts of the West Bank. But the Palestinians finally resumed coordination with the Israeli government in December and accepted the funds.

Israel captured the West Bank, including East Jerusalem, in 1967. Since then, it has militarily occupied the land, continuing to build settlements illegal under international law.

The Israeli government controls all ports of entry into the West Bank and sets monetary policy for the Palestinians, who use the same currency as Israel – the shekel – instead of their own.

“Responsibility without authority”

Long before the pandemic, a 2014 UN report warned that the economic situation in the Palestinian territories was becoming unsustainable.

“This can be attributed to continued Israeli restrictions, increased political instability, a deep fiscal liquidity crisis and an increase in local arrears and public debt, all of which have negatively affected basic government operations.” , he added. reading the report.

Jonathan Kuttab, a US-Palestinian lawyer specializing in international law, said Israel was using tax revenues to politically arm the Palestinians.

At the heart of the problem, Kuttab said, is that Israel controls the occupied territories, but pushes basic economic responsibilities to the Palestinian Authority, citing the Oslo accords.

This was highlighted earlier this year when Israel refused to vaccinate Palestinians in the occupied territories despite the success of its vaccination program. Critics have called the situation “medical apartheid”, stressing the provisions of the Fourth Geneva Convention stating that the fight against infectious diseases is the responsibility of the occupying power.

Israel has argued that the Oslo accords give the Palestinian Authority responsibility for providing health care in the Palestinian territories.

“We are dealing with a system that was created to serve the Israelis at the expense of the Palestinians, and the Palestinians participated in this process, hoping that it would result in a real state or sovereignty,” Kuttab said. “They gave them responsibility without giving them authority.”

He said the recurring electricity debt crisis, which resurfaced last month, illustrates the situation – Israel is circumventing its responsibilities as the occupying power by making it the duty of the Palestinian Authority to provide electricity. electricity to the Palestinians, buying it from Israel at a price the Israelis set.

Kuttab noted that when Palestinians in Area C of the West Bank – which is over 60% of the territory and is under full Israeli military control – acquired EU funding to install solar panels to generate electricity in 2017, the Israeli army confiscated the signs. and ended the project because he did not have an Israeli permit.

Meanwhile, Kuttab added, residents of Israeli settlements in the West Bank, unlike Palestinians in the same territory, deal directly with the Israel Electric Corporation.

“Israel has managed to find this formula where they can have their cake and eat it, where they can have full sovereignty but not the responsibility in the occupied territories,” he said.


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