Photo Credit: Abed Rahim Khatib / Flash 90
A Gazan showing the money he withdrew from an ATM in Rafah in the southern Gaza Strip.
A Gazan showing the money he withdrew from an ATM in Rafah in the southern Gaza Strip. (archive)

The Palestinian Authority (PA) has commenced with preparations to alter the Paris Protocols and even disconnect from the Israeli economy, Muhamad Mustafa, financial advisor to PA head Mahmoud Abbas, stated Wednesday.

The 1994 Paris Accords dictate the economic relations between Israel and the PA.

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As part of the move, the PA is examining the option of replacing the Israeli Shekel with the Jordanian Dinar, the US Dollar or the Euro.

Disconnecting from the Israeli economy will improve the PA’s economic infrastructure while relying on its ability to sustain itself, Mustafa explained. The final objective is a complete disengagement from the Israeli economy, he underscored.

These drastic moves, led by Abbas, are the PA’s response to Israel’s alleged intentions to annex areas in Judea and Samaria and over its recent cut in the transfer of the PA’s taxes.

The PLO’s executive committee has already voted in favor of the move and is now waiting for Abbas’ final decision on the matter.

This policy, led by the PA’s new Prime Minister Mohammed Ishtayyeh, has led to the PA’s decision to stop sending Arab patients from the PA to Israeli hospitals, with an understanding that this will cause the medical institutions financial damage.

However, analysts have criticized this economic strategy, which they say is not supported by proper planning or emergency funding. The viability of such a move is almost impossible, they point out.

In the meantime, the European Union’s (EU) foreign policy chief Federica Mogherini announced Tuesday an additional €22 million in assistance to the PA. The EU has also offered a solution to alleviate the financial crisis in the PA.

Israel has decided to cut NIS 42 million each month from the tax revenues that it transfers to the PA, in accordance with a new law that partially freezes the PA’s funds as a penalty for its practice of providing salaries to Arabs who committed acts of terrorism against Israelis. The stipends are paid out in varying amounts in accordance with the crime and sentence; the more violent and lethal the attack, the higher the monthly stipend.

A total of NIS 502,697,000 will be cut in the coming year, about half the sum that Israel transfers to the PA annually. In response to the cut, the PA has announced it will not receive any tax transfers from Israel, taking an “all or nothing” stance, a move that could lead to the PA’s complete collapse.

The EU has suggested that the PA pay the terrorists in a form of social security which is not rated by the crime committed, but rather by the socio-economic state of the recipient.

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