Israel and PA agree to reestablish economic ties

Finance Minister Yair Lapid met Palestinian counterpart Shukri Bishara in Jerusalem on Sunday and came to an understanding on restarting frozen economic ties between the sides.

Sources in the Finance Ministry said that the ministers agreed on a time frame in which they would resume cooperation with one another and that future meetings would discuss promoting joint investment and trade projects.

After the meeting, Lapid said that future cooperation between Israel and the Palestinian Authority would be mutually beneficial.

The meeting with Bishara, who was sworn in earlier this month along with new Prime Minister Rami Hamdallah, was the first high-level meeting between the two offices in several months.

Official economic ties between Jerusalem and Ramallah were cut off in November after Israel responded to the Palestinian bid for UN recognition by withholding hundreds of millions of shekels in taxes that Israel had collected on behalf of the Palestinian Authority.

The move, along with skyrocketing unemployment in the Palestinian territories, served to deepen an economic morass and led to the resignation of Bishara’s predecessor, Nabil Qassis.

Lapid’s office said the meeting was being carried out under the auspices of Prime Minister Benjamin Netanyahu and that Lapid considered the resumption of economic ties to have “major importance,” according to a press statement released Saturday night.

In August 2012, Israel and the Palestinians signed a bilateral trade agreement, following over a year of talks. The agreement was meant to help foster trade between Israel and the PA, assist the Palestinian tax system and strengthen its financial base, enable both sides to more effectively fight smuggling and tax evasion. The agreement was based on the 1994 Paris Protocol, which was designed to govern trade relations between the sides.

On Saturday, dozens of people in Nablus took to the streets to protest the high cost of living in the Palestinian territories, the Ma’an news agency reported. Marchers called on the new government to cancel the 1994 protocol, which waswidely seen in the West Bank as unfair toward Palestinians.

The meeting between Lapid and Bishara came one month after the resignation of former prime minister Salam Fayyad, an economist who was seen as one of the main architects of the Palestinian economy.

Qassis resigned in March after his belt-tightening measures were rejected.

Both Israel and the Palestinians are important trade partners for each other, though that relationship has weakened over the last few years.

Earlier this month, US Secretary of State John Kerry suggested a $4 billion investment in the Palestinian economy as a way of fostering peace talks.

Joshua Davidovich and Asher Zeiger contributed to this report.