Palestinian Authority May Declare Bankruptcy

The Palestinian Authority is in dire financial straits. The donors on whom it has long relied for aid have recently cut their contributions. This is particularly true of the rich Arab oil states of the Gulf, including Saudi Arabia, the UAE, and Bahrain. European countries are now lessening their contributions to the Palestinians because of the felt need to divert support to Ukraine. The P.A. continues to support its “Pay-For-Slay” program, which not only diverts large sums for the life of imprisoned terrorists, and for the families of terrorists who died while committing their attacks. About $330 million a year is spent on this program that both rewards past, and incentivizes future, terrorism. And that same amount is then withheld by Israel from the import taxes it collects for, and transfers to, the P.A. Furthermore, the colossal corruption in the PA continues, whereby its leaders skim off large sums from the donor funds to reward themselves. Mahmoud Abbas, both President-For-Life and crook-in-chief, has managed to amass, with his two sons Yasser and Tarek, a family fortune worth $400 million. More on the financial woes, and possible bankruptcy, of the PA, is discussed here: “Palestinian Authority discusses bankruptcy amid financial troubles,” i24News, June 28, 2023:

The Palestinian Authority (PA) is discussing the possibility of declaring itself bankrupt due to its difficult financial situation, Israeli public broadcaster Kan reported on Wednesday. The closure of a large number of government offices and instability in the West Bank are behind this decision.

Discussions are currently taking place at the Palestinian Ministry of Finance, with its Prime Minister Mohamed Shtayyeh being kept in the loop. It is not yet clear whether the latest talks have been brought to President Mahmoud Abbas.

Due to the economic situation in the PA, many employees of the security apparatus resigned to seek private employment. In recent months, these employees, like many others in the Palestinian government, have received only 80-precent of their salaries, resulting in their own debt and even finding themselves bankrupt.

One wonders where former employees of the security apparatus will now find jobs. One possibility is that they join Hamas or Palestinian Islamic Jihad, where their experience “in the security apparatus” will come in handy, and where they can be sure of ample support from Iran, that is now funding both terror groups.

Two main reasons for the economic situation were put forward. First, international aid has continuously decreased every year. Second, a monthly deduction of about $11 million [sic – it should be $30 million] from Palestinian taxes by Israel, due to a pay-for-slay policy enacted by the PA which gives terrorists and their families a generous salary for killing Israelis.

Why have the Arab states slashed their support for the Palestinians? First, they are tired of incessant demands for aid from the ever-needy P.A. The Saudi Crown Prince, in a fit of exasperation, in 2018 told Mahmoud Abbas to “accept whatever deal the Americans offer you.” The Arab states don’t like being taken for granted by the Palestinians as an endless well of dollars. The UAE was also infuriated by the PA’s criticism of the country for having joined the Abraham Accords. In 2020, it slashed its aid to UNRWA from $50 million to $1 million, and has not restored any of that aid. Bahrain, also a member of the Abraham Accords, has similarly slashed the aid it formerly gave the P.A. Furthermore, the Arabs are not pleased that the Palestinians have drawn closer to Iran, a country which – despite the recent rapprochement between Iran and Saudi Arabia – is still regarded, rightly, with suspicion by the Arab states.

Israel’s Foreign Minister Eli Cohen on Tuesday spoke with the U.S. Secretary of State Antony Blinken about the region’s lack of stability, particularly about the importance of coordination between Jerusalem, Washington, and Ramallah in preventing further escalations in the West Bank.

Cohen also pointed out “Iran directs terrorism throughout the Middle East, from Lebanon and Syria, through Iraq and Yemen, to Hamas and [Palestinian] Islamic Jihad.”

The P.A. could at once be richer this year by at least $132 million — and perhaps by as much as $330 million. That’s the amount of money now being withheld by Israel from the import taxes it collects and transfers to the P.A., if only Mahmoud Abbas would call a halt to the “Pay-For-Slay” program. But he gives no signs of doing so, having declared he will support that program “with my last cent.” He is 87, and in ill health; perhaps his successor will have different priorities.

The P.A. could also stop criticizing the Abraham Accords, criticism that has infuriated both the UAE and Bahrain so much that in 2020 they both cut to the bone their contributions to the Palestinians. If the P.A. calls a halt to that criticism, perhaps both countries will restore their previous support.

Finally, as of May 2023, the EU has declared that the 300 million euros ($326 million) per year it gives to Ramallah are set to be conditioned on removing “the problematic and hateful material in Palestinian school textbooks and study cards.” In other words, the PA has to remove the antisemitic material in its schoolbooks and other educational material if it wants aid from the EU to be restored. Again, all the PA is asked to do to turn on the tap and receive that $326 million from the EU is to clean up, as it keeps promising to do, but never has done, the antisemitism in its “schoolbooks and study cards.”

The P.A.’s threatened bankruptcy can be avoided if it does the following:

1. Stops its “Pay-For-Slay” program that rewards past, and incentivizes future, terrorism.This wlll result in about $330 million in import taxes Israel has withheld yearly now being turned over to the PA.

2. Stops attacking the Arab members of the Abraham Accords, which should lead the UAE and Bahrain to restore at least some of the aid they cut in 2020.

3. Gets rid of the antisemitic passages in its schoolbooks, so that the EU will again deliver the $326 million it has been withholding until the PA cleans up those textbooks.

4. Stops the corruption that has allowed many in the P.A.’s upper echelon to skim off so much of the aid that is still provided by donors. Abbas and his cronies should be satisfied with what they have already managed to accumulate; it’s time, with the PA on the verge of bankruptcy, to call a halt.

5. Appoints strictly on merit those who will from now on will be charge of the PA’s economy, and not, as now, having the economy run by people appointed on the basis of whom they know, or whom they are related to.

By my estimate, if the PA follows all of these suggestions, close to $1 billion a year will be restored to its coffers. Taken together, these measures should right, for quite a long while, the listing Palestinian ship of state.