Facing a billion-dollar deficit and with no funds to pay government employee salaries, the Palestinian Authority has asked Russia and China to help rescue it from financial collapse.
Foreign Minister Riyad Maliki this week blasted Arab countries for not fulfilling financial pledges toward the Palestinian Authority. He also assigned responsibility to Israel for the crisis, for its withholding of tax money collected on behalf of the Palestinian Authority since December. (Israel decided on that move in response to the PA’s unilateral move to seek upgraded status, to nonmember observer state, at the UN General Assembly on November 29. It said it was withholding the funds to pay down the PA’s debts to Israel, including for electricity.)
The Arab League decided last March to create a “financial safety net” of $100 million a month to protect the Palestinian Authority from financial collapse. Arab failure to fulfill a pledge to fund that safety net proved that “the Arab nation is incredibly moving away from the Palestinian issue,” Maliki said.
“It is shameful to talk about an Arab [financial] safety net when not a penny was paid to the PA,” Muhammad Shtayya, a member of the Palestinian negotiating team told Palestinian radio on Monday.
According to London-based daily A-Sharq Al-Awsat, the Palestinian Authority has sent out a plea for funding to Russia and China, and assembled a delegation to travel to Western and Asian capitals and update them on the depth of the financial crisis.
The World Bank in September called on donor countries to intervene and save the PA from collapse, underscoring the importance of Israeli-controlled Area C of the West Bank for private-sector economic development.
On Tuesday, the Arab League announced that Algeria transferred $26 million dollars to the Palestinian Authority. Secretary General Nabil al-Arabi recently contacted Arab foreign ministers and urged them to quickly pay their share of the Palestinian budget.
Arabi said the PA continues to pay the salaries of 77,000 civil servants in the Gaza Strip despite its financial distress and the threat of foreign aid cuts by the US congress.
In early 2012 Israel appealed to the International Monetary Fund requesting a bridging loan of $1 billion on behalf of the Palestinian Authority, but was turned down.