Middle East Monitor / November 3, 2021
The European Union (EU) has provided €15.6 million ($18.8m) to the Palestinian Authority (PA) to help it to pay October’s salaries and pensions for staff in the health and education sector. The money was transferred to the Palestinian Ministry of Finance by the EU, which has been the largest single donor to the PA, providing €150 million ($175.7m) for social allowances, including salaries for employees such as teachers and health care workers.
The ministry suffers from a financial crisis and is close to “breaking point“, warned Tor Wennesland, the UN Special Coordinator for the Middle East Peace Process, last month. Income has been hit by Israel deducting some of the tax revenues it collects on behalf of the authority. Israel says that this money is used to pay stipends to the families of martyrs and prisoners who “committed terror attacks” against the occupation.
In August, PA Prime Minister Mohammad Shtayyeh said that the total amount deducted by Israel since 2019 has been NIS 851m ($272m). He pointed out that this presents many challenges to the PA because international donors have not paid their dues since the start of this year. His government, added the prime minister, is obliged to borrow money from local banks to meet the demands of the Palestinian people and PA pledges.
The European Commissioner for neighbourhood and enlargement, Oliver Varhelyi, reaffirmed last month that the EU is a major donor to the UN Relief and Works Agency for Palestine Refugees (UNRWA). “UNRWA plays a stabilizing role in the region,” he explained. “It must continue to do so, with a clear focus on its core mandate. We will leave no issue off the table in finding innovative approaches to find a sustainable financing model.”
UNRWA’s funding comes almost entirely from voluntary donations made by UN member states. The agency has faced severe financial difficulties since the US administration of President Donald Trump stopped US aid donations altogether in 2018. Prior to the Trump administration’s cuts, the US had been providing the agency with $350 million a year, more than a quarter of its $1.2 billion annual budget.
In April, however, the Biden administration announced that it was planning to provide $235 million in aid in a bid to engage with the PA and move forward on a two-state solution.