Palestinians Say No Compromise on Tax Funds, Even in Face of Economic Collapse

'It’s a clear Israeli interest to preserve stability' in the West Bank, says one of the the officials, explaining why the Palestinians won’t budge

Palestinian President Mahmoud Abbas speaks at the Arab League headquarters, Cairo, April 21, 2019.
Amr Nabil,AP

Senior Palestinian Authority officials said Monday that Palestinian President Mahmoud Abbas has no intention of accepting tax revenues that Israel collects on its behalf, as long as Jerusalem continues to deduct funding earmarked for Palestinian prisoners and their families, despite an imminent risk of economic collapse.

Israel, as well as the United States and the Arab world, fear that a collapse of the Palestinian Authority will lead to chaos in the West Bank. According to senior PA officials, this is the Palestinians' only leverage. “For years we’ve been talking to Israel and the entire international community about how important the existence of the PA is for stability in the West Bank,” an official said.

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Israel collects taxes on behalf of the PA and transfers the money monthly. In February, Israel dramatically cut funds under a law passed last year that allows Israel to deduct the the amount of money that the PA pays to Palestinian prisoners and their families.

Abbas is refusing to accept the reduced sum on principle. The tax transfers constitute 63 percent of the PA’s budget.

“It’s clearly in Israel's interest to preserve stability,” said the official, explaining why the Palestinians won’t compromise. He added this interest is shared by Jordan, Lebanon and other Arab countries that would have to deal with the security, diplomatic and financial consequences if the PA collapses.

“As far as we’re concerned, let the people take to the streets,” the official said. “We have our backs to the wall. The ones who should feel pressured are all those who have gotten used to having someone handling Palestinian affairs in the West Bank and coordinating security with Israel for 25 years.

“In the event of a collapse there won’t be a vacuum. Israel knows exactly who will control the field. That’s why Israel should rethink this. in the White House they may find themselves without a PA when they present their so-called 'Deal of the Century,' and Jordan and Lebanon will have to explain what they plan to do with the Palestinians in their territories.”

Jordan and Egypt are trying to resolve the issue in the absence of American intervention. The Trump administration is following developments but cannot offer any practical help toward easing the crisis because there has been no communication between the United States and the Palestinians for a year and a half. The U.S. administration cut almost all aid to the Palestinians last year, and it has tried over the past few months to save a relatively small portion of the budget for supporting the PA security forces.

In private conversations in recent days, Abbas has told associates that the current crisis is a tough test for everyone. “The Arab world promised a financial safety net and we expect that promise to be kept,” he declared.

The PA president also said that if the PA agrees to accept the partial funds, “then Israel will exploit every opportunity to make more unilateral deductions. That’s why there will be no such compromise and Israel will have to reverse its decision and return the money in full.”

All the countries and agencies providing aid to the Palestinians will attend a conference on Tuesday in Brussels to discuss the PA crisis. PA Foreign Minister Riyad Malki told Voice of Palestine radio that PA Prime Minister Mohammad Shtayyeh will make a presentation at the conference describing the PA’s financial situation. Israel Defense Forces representatives are also expected to attend the conference, with Israel expected to once again ask the international community to fund a series of humanitarian projects in Gaza and the West Bank.

UN Special Envoy to the Middle East Nickolay Mladenov addressed the issue on Monday, telling the UN Security Council in New York that there has been a marked deterioration in the PA’s economic situation recently. According to Mladenov, the risk of collapse has increased despite support from Arab countries. He added that both sides must deal with the elements of the crisis through dialogue and avoid unilateral moves, and expressed hope that a solution could be found at the Brussels conference.

A Palestinian financial source told Haaretz that Israel transferred February’s tax money after making the deductions, but the PA returned the money without using it. As a result, the PA has cut the outlays of government ministries by 50 percent and will pay PA employees only 60 percent of their salaries. It has also reduced its subsidies of medical treatments provided to Palestinians in Israel. However, the source said, these cuts will still not cover the deficit caused by the missing tax money.