A cash crunch due to a severe drop in foreign aid since 2011 may be ushering in business failures and layoffs in the area under Palestinian Authority rule, leading to the worst crisis in the PA’s 18-year existence, according to AP.
It appears that the Palestinian Authority will not survive this crisis without a major infusion of cash.
In recent months, the PA has been unable to meet all its obligations, most notably the salaries paid out to some 150,000 civil servants and security personnel, which account for about half of the Palestinian government’s $4 billion budget.
For comparison, Israel’s annual government expenditures in 2011 were estimated at $74.8 billion, with estimated revenues at $66.68 billion, for a population roughly three times that of the PA.
Arab citizens constitute close to 25% of “green line” Israel.
One of the reasons this coming crisis may last longer and hurt worse is the fact that the PA can no longer borrow money to fill its gaping deficits. Economist Samir Abdullah told the AP that the PA owes more than $2 billion to local banks, private companies and the public pension fund.
“If there is no reversal in the current trend, the Palestinian Authority will not survive this year,” said Abdullah, who used to serve as a PA government minister.
And the PA has received only half the needed foreign aid to close its 2012 budget deficit of $1.2 billion, according to its Finance Ministry.
Palestinian officials blame the U.S. for withholding aid as a means of applying political pressure. The PA was counting on $200 million from the U.S. in budget support in June, but the payment was held up by Rep. Ileana Ros-Lehtinen, R-Fla., chair of the House Foreign Affairs Committee.
The U.S. 2011 payment was delayed by a congressional hold, in response to Palestinian President Mahmoud Abbas’ appeal to the UN to recognize a Palestinian state in the disputed territories.
The United Arab Emirates cut aid from $174 million in 2009 to $42.5 million since the beginning of 2011.
Qatar refuses to send money as long as there’s no reconciliation between Abbas and the Hamas.
Israel has been blamed for the inability of the Palestinian economy to be self-sustaining, because of the security-related restrictions it places on movement of goods, and the 5-year blockade on Gaza.
According to the AP, Palestinian officials, the World Bank and the International Monetary Fund, say the PA government can only become self-sufficient if Israel removes a network of restrictions on trade and access to resources that discourage investment, drive up costs and limit business opportunities.
But despite some loosening of restrictions, the Israeli government is reluctant to open up new opportunities for Palestinian terrorists to squeeze through the protective fences it has erected over the past ten years.
And so it appears the Palestinians are trapped by their own reluctance to accept Israel’s right to exist, coupled with their continued efforts to inflict terrorist attacks on Israel, and this time no one out there seems eager to spare them a dime.
About the Author: Yori Yanover has been a working journalist since age 17, before he enlisted and worked for Ba'Machane Nachal. Since then he has worked for Israel Shelanu, the US supplement of Yedioth, JCN18.com, USAJewish.com, Lubavitch News Service, Arutz 7 (as DJ on the high seas), and the Grand Street News. He has published Dancing and Crying, a colorful and intimate portrait of the last two years in the life of the late Lubavitch Rebbe, (in Hebrew), and two fun books in English: The Cabalist's Daughter: A Novel of Practical Messianic Redemption, and How Would God REALLY Vote.
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