The European Union will not expand aid to the Palestinian Authority until the PA accepts tax revenues collected on its behalf by Israel, according to a report Wednesday.
The Palestinians have refused to take hundreds of millions of dollars worth of tax revenues Israel is holding for it over Prime Minister Benjamin Netanyahu’s pledge to annex parts of the West Bank, which was shelved as part of the normalization deal inked last month with the United Arab Emirates.
The Palestinians have also severed security and civilian coordination in protest.
Citing European diplomats and Israeli officials, the Axios news site said the Palestinians have requested loans from the EU and several unspecified European countries in recent weeks to help pay salaries, as the Ramallah-based PA faces a financial crunch from its refusal to accept the tax dollars and the coronavirus pandemic.
The EU, France, Germany, Britain and Norway told Abbas that they now view annexation as being off the table and that he should therefore accept the $750 million held by Israel’s Finance Ministry. But the PA leader refused to do so unless he receives a written commitment that Netanyahu won’t move forward with extending sovereignty over West Bank lands, the report said.
EU foreign policy chief Josef Borrell also phoned Abbas and told him Europe would not offer financial assistance or loans until the PA accepts the taxes, according to the report, and urged him to resume cooperation with Israel. Diplomats quoted by the news site said Abbas was evasive on this point.
Jordan and Egypt conveyed similar messages, Israeli officials said.
In July, the EU announced a €23 million ($27 million) grant to the PA, helping it to partially pay salaries from the month before.
The EU, which is the Palestinian Authority’s largest donor, has sent some €2.8 billion ($3.3 billion) in direct aid to the PA since 2008. Counting additional financial commitments to Palestinian civil society and to the United Nations Relief Works Agency (UNWRA), which also benefit Palestinians, the European Union has committed over €1.11 billion ($1.3 billion) between 2017 and 2020 alone.
Tax revenues collected by Israel have always constituted a large percentage of the PA budget. Since the coronavirus pandemic began, however, they have become even more essential: The domestic tax base has vanished, with businesses closed and much of the population unemployed and at home. Meanwhile, foreign donors have been busy tending to the crisis in their own countries.
The PA was unable to pay its employees for months, finally mustering enough money to pay parts of May salaries in early July.