The Palestinian Authority returned hundreds of millions of shekels that the Israeli government deposited into its accounts in recent months, it was revealed on April 29, 2019.1 Israel traditionally collects tax revenues for the PA on Palestinian purchases, but when Israel began deducting monthly the sum of 41.8 million shekalim, equivalent to the amount the PA pays in terrorists’ salaries and grants, the Palestinians declared they would refuse to accept any of their monthly payment. Israel’s unilateral deposit into the PA accounts was a response to the growing concern of a financial collapse of the Palestinian government.
In parallel to the rejection of the funds, the Palestinian Authority declared it would not cover medical costs for Palestinian medical patients sent to Israeli hospitals.
This hardline PA line can be traced to the new Palestinian Prime Minister, Muhammad Shtayyeh. [See the previous analysis, The Palestinian Authority’s New Prime Minister.]
Our previous report on the Shtayyeh government noted the encouragement of Hebron personnel to take a conspicuous role in the cabinet. But in the political agenda of the new government, we can discern problems with the Hebronite elements that may collide with the basic economic interests of Hebron.
Muhammad Shtayyeh is the first Fatah-affiliated prime minister. He is committed to Fatah’s agenda and the decisions taken by the Fatah supreme echelons, including those decisions to annul the Oslo Agreements and to disconnect the economy of the PA from the Israeli economy. In the security domain – Fatah has repeatedly called to end the security coordination with the IDF.
Shtayyeh was among the leading Fatah figures who preached for the implementation of these measures, and in his inauguration interview, he declared that he intended to implement them “gradually.” He revealed that stopping the payments for Israeli hospitals that treated Palestinian patients was not because of lack of money, but because Fatah wanted to end the dependence on Israeli health facilities. He said that he already began talks with Jordan and Egypt to hospitalize PA patients there.
According to Ramallah sources, Shtayyeh stated he would have nothing to do with politics, and he will be responsible only for the economy and services. The political agenda, he insisted, is the responsibility of the PLO that is the source of authority of the PA.
Our former report reported that the (non-Fatah) PLO-affiliated organizations are aligned with Hamas and not with Ramallah (a weak spot in Ramallah’s future political agenda). As for the economic program of Shtayyeh, it is fully politically oriented, and what he means in the economy is not to advance the economy but to mobilize it to the “struggle.” He defined his economic agenda as a “Sumud economy” – “steadfastness economy” and elaborated the austerity measures that he intended to take.
As for Ramallah, a city of intellectuals and services providers there is no problem in this, but Hebron is a city of wealthy merchants and industrialists who work with Israel, and for them, this “struggle economy” is a no-starter and meaningless.
The representative of this economic echelon, Khaled Asseile, cannot accept it and, according to Ramallah sources, he already created an axis with the finance minister, Shukri Bishara, to block this policy.
As Khaled Asseileh has many economic connections with Israel, Bishara is conducting a series of meetings with his Israeli counterpart, Finance Minister Moshe Kahlon, to solve the current problems of the PA economy. For example, a major achievement they have already reached is regulating the electricity payments to the Israeli electricity company that the Palestinian municipalities were unable to pay.
In the convoluted procedure, the PA does not pay for the electricity, and it comes out of the Israeli Treasury. If Fatah were to compel Bishara to end his meetings with Kahlon, the PA would indeed find itself in a financial deadlock.
To overcome the looming crisis, the PA’s Foreign Minister Riyad al-Malki asked the Tunis Arab Summit to grant the Authority an “economic safety net” – a steady flow of 100-200 million dollars to replace the Israeli funds.
According to our Ramallah sources, the Summit ignored Malki’s request. Chairman Mahmoud Abbas raised it again in the latest Arab foreign ministers meeting in Cairo on April 21, 2019, this time in the open, and the Arab league accepted the request, but this does not mean that they will comply.
However, as of today, there is no safety net to replace the Israeli payments, and the whole “economic struggle” is a large question mark.
With this gloomy prospect, the PLO is preparing for its convention after Ramadan, (May 5 – June 4). President Trump is also preparing to announce finally his “Plan of the Century” after Ramadan. The two events will be important milestones, but are they on the same road?
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