Ramallah- With the Israeli government’s insistence on deducting part of Palestinian tax funds, at a time when it is closing the door to about 200,000 Palestinian workers, it is pushing the West Bank in Palestine into economic hardship that may open the door wide for an explosion until late January at the latest, according to Experts spoke to Al Jazeera Net.
Last October 30, the Israeli Minister of Finance, Bezalel Smotrich, directed the freezing of Palestinian clearance funds, because the Palestinian Authority did not condemn the “Al-Aqsa Flood” operation launched by the Palestinian resistance on the settlements surrounding the Gaza Strip on the 7th of the same month.
According to agreements between the two sides, Israel collects tax money on goods coming into the West Bank and Gaza through the ports it controls in exchange for 3%, and transfers it monthly to the Palestinian Authority in what is known as “clearance.”
Discount under various pretexts
Clearing is the first source that helps the Palestinian Authority in disbursing the salaries of its employees, but the occupation authorities used to deduct them under various pretexts, which prompts the Authority to refuse to receive them.
The Palestinian Ministry of Finance estimates the monthly value of the clearance funds at approximately 750 million shekels ($202 million), while Gaza’s withheld share is estimated at approximately 270 million shekels (about 73 million dollars).
If we add to Gaza’s share deductions equal to what the authority pays to the families of prisoners and martyrs, electricity and water prices, hospital debts, and other excuses, the total monthly deductions become about 600 million shekels (about 162 million dollars).
Due to clearing deductions, the Palestinian Authority cannot pay the salaries of its employees, and in late November it was forced to disburse an advance from banks equivalent to half the salary of employees working in the government sector for last October.
In addition to the Israeli cuts, about 200,000 Palestinians, who were bringing cash amounting to 900 million shekels per month ($243 million) into the Palestinian market, are prevented from going to their workplaces inside Israel, which constituted an additional burden whose continuation threatens to expand the circles of poverty and unemployment.
Added to all of the above is economic recession and decline in various sectors in the West Bank, in addition to the devastation of the Gaza Strip and its siege that has been ongoing for more than two months.
According to United Nations estimates a few days ago, the Palestinian economy lost more than 12% of its value, or $2.5 billion, in an “unprecedented economic shock.”
Solutions or explosion?
Rabih Murad, an economist at the Palestinian Economic Policy Research Institute (MAS), says that all of the above may lead to the situation exploding in the West Bank next January if appropriate solutions are not found.
He added: “Until the end of January, we may enter into a very major economic crisis, if the Israeli government continues to prevent the return of workers, who constitute the most prominent purchasing power in the West Bank, about 900 million shekels per month, that is, approximately 3 billion shekels from the beginning of the war.” Until the end of December.
Rabeh Murad points out losses estimated at about 900 million shekels due to the 48 citizens not entering the West Bank for shopping, studying, etc., in addition to a similar amount as indirect losses due to the damage and cessation of various sectors.
The Palestinian expert continues: “By the end of January, if there is no breakthrough, we will enter a major economic crisis that is unprecedented even in the Al-Aqsa Intifada (2000-2004) and the Corona period (2020), which will affect political and economic stability.”
Support declines
Rabah Murad says that Israeli Prime Minister Benjamin Netanyahu is too weak to extract the approval of the army and police for the return of workers and to submit to American pressure to stop tax deductions or return the workers.
In light of the decline in European support due to the requirements for political renewal, the only thing available to the authority to overcome its crisis is the “generous Arab donation,” but it is also not guaranteed due to the pretext of change and reforms.
As for the possibility of resorting to banks, Murad said that they are facing difficulty in recovering their debts, whether in Gaza or the West Bank, and therefore the possibility of helping them is limited and the crisis will not be resolved.
Data from the Palestinian Ministry of Finance until the end of last September show that the volume of local debt amounts to about 3.4 billion shekels, including nearly one billion shekels to banks.
The only pressure paper
For his part, Dr. Nael Moussa, an economist and lecturer at An-Najah National University, says that the Palestinian Authority “has reached a bottleneck, and it cannot advance or retreat.”
He added that 70% of the authority’s revenues are from clearing, and 30% are local revenues, and their absence means a decline in economic activity.
As for the authority’s options, he said that what is required is “to put the cart before the horse, declare its failure to assume its responsibilities, and give employees – including members of the security services – unpaid leave.”
He believes that laying off the approximately 70,000 security employees is “a required step and a pressure tool in the hands of the authority that responds to the pressures of the Israeli government.”
If the Authority resorts to this step, the Palestinian expert says, this “strengthens the party that supports clearing payments on the Israeli side, which fears the explosion of the West Bank, and creates a rift by weakening the position of the extremist ministers, led by the Minister of Finance.”
Moussa concluded that the West Bank is facing an explosion, the timing of which depends on the extent of the debt-weary street’s tolerance, “but not more than weeks.”
Double failure
In turn, political analyst Suleiman Bisharat criticizes the absence of a speech by the Palestinian Authority – despite the passage of two months – that amounts to the level of war, at least from an economic standpoint and the rise in commodity prices.
Bisharat talks about “a government failure and the absence of horizons in managing the economic file, which helped reveal the fragility of the economy and economic plans, if any, during the war.”
He says, “The workers’ incomes were covering up the failure of the economic situation in Palestine, and if the war continues in this way, we will witness an economic collapse that may lead to the inability of the Authority’s employees to fulfill their obligations and search for other sources of income.”
Bsharat rules out the Authority’s tendency to give its employees unpaid leave, especially security personnel, as a means of pressure on Israel, “because that means the collapse of the Palestinian Authority and fulfilling a right-wing Israeli desire to annex the West Bank and create alternative administrative entities and local authorities, as is the case in the 1948 territories.”
Bisharat rules out any internal movement against the authority, without ruling out that economic action will constitute an incentive for citizens towards the option of confrontation with the occupation.
He continued that the political and security levels’ discussion of the idea of returning workers at the height of the war indicates a sense of the danger of continuing to prevent them, suggesting pressure on Israel to pass on the clearance funds or provide alternative sources to pay the salaries of PA employees at least.
He added that the continuation of the current situation as it is for a month or two will inevitably lead to a public reaction and the explosion of the situation on the ground in the West Bank.
