As Israel cuts into PA tax base over terror payments, Ramallah threatens retreat

As Israel cuts into PA tax base over terror payments, Ramallah threatens retreat

PA clerks left their posts at Gaza’s Kerem Shalom crossing on Sunday, likely signaling the start of a complicated dance of threats and posturing that could bring new violence

Avi Issacharoff

Avi Issacharoff, The Times of Israel's Middle East analyst, fills the same role for Walla, the leading portal in Israel. He is also a guest commentator on many different radio shows and current affairs programs on television. Until 2012, he was a reporter and commentator on Arab affairs for the Haaretz newspaper. He also lectures on modern Palestinian history at Tel Aviv University, and is currently writing a script for an action-drama series for the Israeli satellite Television "YES." Born in Jerusalem, he graduated cum laude from Ben Gurion University with a B.A. in Middle Eastern studies and then earned his M.A. from Tel Aviv University on the same subject, also cum laude. A fluent Arabic speaker, Avi was the Middle East Affairs correspondent for Israeli Public Radio covering the Israeli-Palestinian conflict, the war in Iraq and the Arab countries between the years 2003-2006. Avi directed and edited short documentary films on Israeli television programs dealing with the Middle East. In 2002 he won the "best reporter" award for the "Israel Radio” for his coverage of the second intifada. In 2004, together with Amos Harel, he wrote "The Seventh War - How we won and why we lost the war with the Palestinians." A year later the book won an award from the Institute for Strategic Studies for containing the best research on security affairs in Israel. In 2008, Issacharoff and Harel published their second book, entitled "34 Days - The Story of the Second Lebanon War," which won the same prize.

File: Palestinian security forces in Hebron, November 14, 2017. (Wisam Hashlamoun/Flash90)
File: Palestinian security forces in Hebron, November 14, 2017. (Wisam Hashlamoun/Flash90)

The Kerem Shalom crossing, Gaza’s most important entry point for commercial goods, was operating normally on Monday.

That may not seem like dramatic news, but given the circumstances, it was an unusual and unexpected development.

As of Sunday, the crossing’s Gazan side is run by officials unaffiliated with the Palestinian Authority — in other words, the terror group Hamas.

How is that possible? Since when do Hamas and Israel, which operates the Israeli side of the crossing, cooperate in this way?

This isn’t the first time — and won’t be the last — the two warring sides have cooperated in order to avert a deterioration in Gaza’s humanitarian situation or preserve a status quo.

Palestinians climb the security fence along the border between Israel and the Gaza Strip, during clashes east of Gaza City, on February 15, 2019. (Said Khatib/AFP)

This time, however, credit for the cooperation is due not to Israel or Hamas, but to Hamas’s bitter enemies in the Ramallah-based Palestinian Authority.

Between 2007, when Hamas took control of Gaza from the PA in a violent coup, and November 2017, the Strip’s various crossings with Israel, including Kerem Shalom, were run by Gazan workers unaffiliated with the PA, meaning they received their salaries from Hamas.

After the partial and temporary reconciliation agreement between the Fatah-led PA and Hamas that month, PA officials returned to the crossings to manage the Gazan side.

On Sunday, for reasons that are not yet fully clear, the PA officials walked out of the Kerem Shalom crossing and have yet to return.

Hamas claims the move was part of the PA’s efforts to punish the group and was intended to shutter the vital crossing. PA officials, meanwhile, complain that their clerks were “expelled” by Hamas officials who took over the administration of the crossing.

Empty trucks from Gaza wait to be loaded with goods (left) as full trucks drive toward Gaza in the background at the Kerem Shalom crossing between Israel and Gaza last year (photo credit: Tsafrir Abayov/Flash90)
Illustrative. Empty trucks from Gaza wait to be loaded with goods (left) as full trucks drive toward Gaza in the background at the Kerem Shalom crossing between Israel and Gaza (Tsafrir Abayov/Flash90)

Either way, the crossing has continued operating normally, without the PA as mediator between Israel and Hamas.

A great deal of speculation has emerged over the PA’s reasons for what most observers believe is its own decision (not Hamas’s) to remove its clerks from Kerem Shalom. One theory argues that the move follows the Israeli cabinet’s decision on Sunday to implement a July 2018 law cutting tax fund transfers to the PA by the amount spent by the PA on salaries and stipends for convicted Palestinian attackers and their families, including terrorists.

Israel views such a move, long stalled by concerns over the PA’s stability, as morally just. These funds, after all, effectively serve as direct financial compensation for terror attacks. But it’s not clear how this view squares with the current government’s policy of allowing transfers of $15 million in cash from Qatar to Hamas each month in order to stave off the rising violence and rocket attacks emanating from Gaza – a policy defended by officials as intended to preserve stability in Gaza. Isn’t that also a de facto financial reward for terror attacks? Or more to the point, even if the transfer cuts are a just policy, are they necessarily a wise one?

The Palestinian Authority’s annual budget is roughly NIS 18 billion (some $5 billion). Its tax income is less, under NIS 14 billion ($3.8 billion). The PA’s stipends to prisoners come to some NIS 500 million ($138 million) each year, or roughly 3-4 percent of annual tax income. Cutting that amount from the PA’s tax income, which Israel transfers in monthly installments, will have a significant effect on the economy of the West Bank and on the Palestinian Authority, which has become over the years a vital part of Israel’s efforts to maintain a stable status quo in the West Bank.

Palestinian Authority President Mahmoud Abbas, second right, at a meeting of the Palestinian Central Council in the West Bank city of Ramallah, on October 28, 2018. (Abbas Momani/AFP)

Leading Fatah and PA officials have already warned that the authority could decide to simply refuse to receive all money from Israel, including taxes collected by Israel from Palestinians under PA rule. That could mean a PA forfeiture of hundreds of millions of shekels each month – several billion a year, and perhaps as much as a third of the PA’s total budget. It could mean, in other words, the de facto collapse of the PA.

When the PA threatened to do so in the past, Israel caved each time, fearing a spike in violence that could ensue after the PA’s disappearance. But Israel is now in the middle of an election, in which a right-wing incumbent government could find itself politically unable to appear to cave to the Palestinian threat.

What, then, does the Hamas takeover at Kerem Shalom signal? How will the cuts to the PA’s finances being advanced by Israel’s cabinet affect other functions currently carried out by the PA’s security services, including cooperation with Israeli security agencies? And what effect would the budget cut have on the security situation in the West Bank?

The answers to these questions are not yet clear. Whether the PA follows through on its threat or limps along seeking other sources of income, whether Israel reverses its decision either before or immediately after the April 9 elections, or decides to take its chances with a hobbled PA, and where the new arrangement might lead in terms of the security situation, all remain to be seen.

A Palestinian protester runs near burning tires during a demonstration near the fence along the border with Israel, east of Gaza City, on February 15, 2019. An Israeli military vehicle is pictured on the other side of the fence. (Said Khatib/AFP)

One thing is certain: Trouble is brewing.

On Sunday, as the PA’s clerks abandoned Kerem Shalom, Hamas turned its ire on Israel, renewing nightly (as opposed to weekly Friday) protests and sabotage operations led by its “night units” along the Israel-Gaza border. At a protest on the border, an explosive device was tossed at IDF troops, leaving one soldier moderately wounded, while 19 Palestinians were injured in IDF return fire. The triangular Israel-PA-Hamas relationship is more fragile than before, and likely to grow more so in the coming weeks.

read more: