Economic push for Palestinian Authority instead of political dialogue

Palestinian Prime Minister Mohammad Shtayyeh (Issam Rimawi - Anadolu Agency)

Middle East Monitor  /  September 4, 2021

Israeli and Palestinian sides have agreed that they are not ready for resuming peace talks as the Palestinian Authority (PA) is suffering serious internal crises and Israel has a fragile coalition government.

Therefore, Al-Khaleej Online reported that the US administration had ordered both to deescalate the tension dominating their relationship over the past few years.

According to the news website, Israel, the PA and the US were displeased with the latest Israeli offensive on Gaza, between 11 and 21 May, prompted by the escalation between Israel and the Palestinians, increasing Hamas’s popularity.

In order to end the ongoing difficulties, all three sides found that economic incentives to the PA were the best way to improve the ongoing crises and prepare for resuming the political process.

Since 2018, the PA has been experiencing economic crises, the worst since its founding in 1994, due to the Israeli deduction of tax revenues that it collects on behalf of the PA, estimated at 100 million shekels ($31 million) monthly – 60 per cent of the PA’s income.

This deduction coincided with the retreat of foreign grants for the PA and domestic income due to COVID-19. This raised the debts of the PA to $2.3 billion by the end of June.

According to Al-Khaleej Online, the current US administration believes that the PA would collapse if its financial crisis continues. Therefore, it decided to reinstate its annual funds to UNRWA, which Donald Trump’s administration stopped.

However, the resumption of funds will require months for Congress to cancel a law introduced by Trump’s administration banning funds to UNRWA.