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Frej to ToI: Financial crisis threatens PA and whole region

Israel will push states to boost aid to Palestinians at donor confab, minister says

Regional Cooperation Minister Issawi Frej to meet with PA Prime Minister Mohammad Shtayyeh; Ramallah saw big drop in international assistance in 2021

Regional Cooperation Minister Issawi Frej at the Knesset in Jerusalem, on July 14, 2021. (Yonatan Sindel/Flash90)
Regional Cooperation Minister Issawi Frej at the Knesset in Jerusalem, on July 14, 2021. (Yonatan Sindel/Flash90)

Israel will push for more international aid to the Palestinians at a conference of donor countries in Norway this week, Regional Cooperation Minister Issawi Frej told The Times of Israel on Monday.

“During our meetings in the coming days, our message to donor countries will be to provide more aid to the Palestinians. The neglect over the past years has created a financial crisis that threatens not just the Palestinian Authority, but the region as a whole,” Frej said in a phone call.

Foreign assistance to the PA has plummeted over the past year. According to publicly available filings, Ramallah received $480 million in foreign budget aid between January and September 2019. Over the same period in 2021, it received just $32.75 million in budget support.

International observers have expressed concern that an increasingly cash-strapped Ramallah could face financial collapse. The PA’s budget deficit is expected to reach $1.36 billion in 2021, according to the United Nations.

Frej contrasted the approach of the new government, led by Prime Minister Naftali Bennett, with the previous administration of Benjamin Netanyahu. The minister charged that Netanyahu had “neglected” the economic aspects of bilateral deals between Israel and the PA.

“Israel and the Palestinian Authority are a single economic unit. No one’s doing a favor for the other here — this serves both sides. A strong PA will benefit Israel,” added Frej, a member of the left-wing Meretz party.

The Ad Hoc Liason Committee — an umbrella organization of international donors to the Palestinian Authority — is set to convene in Oslo over the next two days. Frej, along with other senior Israeli military officials and civil servants, will represent the Jewish state at the conference.

The meeting comes as the Palestinian Authority faces a “continuing economic and fiscal crisis,” according to the United Nations. The coronavirus pandemic, compounded by dwindling foreign aid to Ramallah, has raised fears that the PA will soon no longer be able to pay its own civil servants.

“It is increasingly difficult for the PA to cover its minimum expenditures, let alone make critical investments in the economy and the Palestinian people,” said United Nations Special Coordinator for the Middle East Peace Process Tor Wennesland, in a statement last week.

Palestinian Authority Prime Minister Mohammad Shtayyeh holds a briefing with foreign press at his office in the West Bank city of Ramallah, November 10, 2021. (Abbas Momani/AFP)

Israel’s national electricity company recently initiated planned blackouts in some Palestinian areas due to Ramallah’s inability to pay its electrical bills. Israel provides most of the Palestinians’ electricity, whether directly or through the Jerusalem District Electricity Company.

“I hope to draft enough funds and resources to allow the electricity sector in the Palestinian Authority to stand on its own feet,” Frej added.

Frej said that he would also hold a face-to-face meeting with Palestinian Authority Prime Minister Mohammad Shtayyeh during the conference. The Arab Israeli minister met PA President Mahmoud Abbas in October along with other Meretz politicians.

Shtayyeh is set to leave for Oslo on Tuesday, where he will meet with donor countries as well as Norwegian officials, the premier said.

“This visit to Norway holds great importance at this time, as we face a difficult financial situation,” Shtayyeh told the Palestinian Authority cabinet during its regularly scheduled Monday meeting.

The Palestinian delegation would ask for more aid money “so as to fulfill our obligations,” Shtayyeh said.

A spokesperson for Shtayyeh could not be reached for comment on a possible meeting with Frej.

EU foreign policy chief Federica Mogherini addresses a joint press conference before chairing a regular session of the International Donor Group for Palestine (Ad Hoc Liaison Committee (AHLC)) at the European Commission in Brussels on March 20, 2017. (AFP PHOTO / EMMANUEL DUNAND)

Ramallah has seen repeated financial woes so far this year, leading to concerns that the Palestinian Authority could face economic collapse. The European Union, the PA’s largest single donor, did not transfer any of its usual budget support until November.

After a visit by Shtayyeh to Brussels in late October, the EU transferred a tranche of $17.8 million, or about one month’s worth of salaries and pensions for PA civil servants. But a full resumption of aid is unlikely until 2022, after the EU budget is approved, European officials have said.

Israel also confiscated NIS 600 million from taxes it collects on Ramallah’s behalf  in July. Under a 2018 Israeli law, Israel regularly confiscates money from the revenues to penalize Ramallah for its policy of paying stipends to Palestinian security prisoners held in Israel, and the families of Palestinians killed during violent confrontations with Israeli forces — including those who committed terror attacks against Israelis.

The Palestinian Authority has criticized Israel’s policy, which it says violates agreements between the two sides. In his remarks to the cabinet on Monday, Shtayyeh said he would ask international donors to pressure Israel into ending the policy.

Israel says the stipends amount to a direct incentive to carry out terror attacks against Israelis.

As the prospect of a Palestinian fiscal crisis loomed in late August, Israeli Defense Minister Benny Gantz announced that Israel would loan back NIS 500 million, effectively circumventing the law.

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