The Palestinian Authority isn’t likely to retreat from its absolute rejection of the Trump administration’s “deal of the century,” according to an assessment the army recently gave the government.
Most Israeli security and defense agencies also say the PA has only two to three months to go before a process of economic collapse begins, given its economic straits. This distress is mainly due to its conflict with Israel over its funding for security prisoners held in Israel.
According to Israel Defense Forces assessments, Abbas sees himself under a three-pronged attack, from Israel, Hamas and the United States, much of this a coordinated effort aimed at preventing a two-state solution.
Washington has slashed almost all its financial aid to the Palestinians, including funds allocated by international organizations. In Abbas’ view, it is now proposing an “economic peace” instead of resolving the issues of borders and Jerusalem. He also thinks the United States trying to dictate a permanent separation between the West Bank and the Gaza Strip.
Israel is also hurting the PA economically due to the dispute over the prisoners and continues to build in the settlements. In Abbas’ view, it is also refusing diplomatic negotiations and lying in wait for opportunities to annex part of the territories after Trump’s deal fails.
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Hamas is building aquasi-state in the Gaza Strip under his nose, with the tacit consent of America and Israel, Abbas believes. He’s also suspicious of the leaders of some Sunni Arab states, fearing they will support Trump’s plan.
Feeling that “the whole world is against us,” the 84-year-old Abbas is clinging to his own approach to the conflict. According to the IDF, he rejected every compromise proposal prior to the unveiling of the American deal, based on his view that this isn’t the time to negotiate, because every concession, even so much as a millimeter, will lead to a slippery slope that will end in an imposed “economic peace” and the burial of the two-state solution.
Abbas is also bolstering his domestic position by appointing Mohammed Shtayyeh as the new prime minister, tightening ties among the various organizations under his authority (the PA, the PLO and the Fatah party) and ratcheting up tensions with Hamas.
Nevertheless, he has stuck to his principled rejection of terrorism. He is not speaking from both sides of his mouth on this issue the way his predecessor, Yasser Arafat, did throughout the period of the Oslo Accords and the second intifada.
PA’s financial woes deepen
Meanwhile, the PA’s economic problems are growing. Most Israeli security agencies say that within two to three months, the PA will enter economic collapse.
The main reason for the financial crisis is the dispute with Israel over the PA’s financial support for security prisoners held in Israel. In late February, the security cabinet belatedly decided to implement a law passed in July mandating the deduction of the amount of this support from Israel’s tax transfers to the PA.
As a result, Israel has been cutting more than 40 million shekels ($11 million) a month — almost 500 million shekels a year — from the tax revenues it collects on the PA’s behalf and then passes on. Abbas, in response, has refused to accept any of the tax money.
Consequently, the PA’s revenues have plummeted by some 600 million shekels a month, around half its total budget. This has forced it to slash the salaries of civil servants, including members of the PA security services, by 40 to 50 percent in recent months.
Despite this, security cooperation with Israel in the West Bank has been maintained with very little erosion, expressed in only a few isolated incidents, the army said. The PA security services continue to arrest people suspected of planning terror attacks and return Israelis who enter PA territory by mistake unharmed — two issues that Israel considers critical.
Two weeks ago, Qatar announced that it would provide significant financial aid to both warring Palestinian factions — $180 million, in six monthly installments, to Gaza’s Hamas government and $300 million to the PA in the West Bank. Of the latter, $50 million is a grant and the rest a loan. But experience shows that the Palestinians have trouble repaying loans, or simply are in no rush to do so.
Nevertheless, if the Qatari aid does not exceed the promised amount, it won’t cover the shortfall created by the PA’s refusal to accept tax transfers from Israel.
Abbas visited Qatar this week to try to persuade it to oppose Trump’s plan and pledge additional financial aid. Absent more aid, if Abbas doesn’t retreat on the tax transfers and refuses to accept the economic stimulus to be presented at the Bahrain conference, the PA will face an economic crisis it will have trouble surviving for long. For now, it’s dealing with it by implementing austerity measures and cutting salaries.
Israel believes Abbas will have trouble retreating on the issue of financial support for the prisoners, as the Palestinians consider this a fundamental issue, part of their ethos of struggle against Israel.