Labor MK Isaac Herzog told Palestinian Authority Prime Minister Salam Fayyad that the collapse of the PA from financial pressures would be a catastrophe for Israel.

The two met in Ramallah on Monday for a discussion that reportedly focused on the financial crisis facing the PA, which partially stems from Israel’s withholding of tax transfers to the Palestinians.

Fayyad expressed his concern regarding a possible economic collapse of the PA, according to an Israel Radio report, and warned of the dangers of the PA being too dependent on tax revenues transferred to the Palestinians by Israel.

The government last week shored up the Palestinian economy by deciding to transfer frozen tax revenue to the PA, which had been held by Israel after the Palestinian’s successful bid at the UN in November to acquire non-member observer state status.
“The scenario of the collapse of the PA is a catastrophe not only for the Palestinians, but also for us,” Herzog said, adding that such a scenario would lead to the IDF retaking direct control of West Bank cities and Israel losing a peace partner.
“The Mahmoud Abbas and Fayyad government is the only Palestinian partner [for Israel] in the political scene, and Israel has to make a maximum effort to return to negotiations,” Herzog said.
Fayyad has warned in the past weeks that Ramallah is quickly becoming  insolvent, pleading with Arab states to pony up on commitments to bolster the PA’s coffers.