Pledged Israeli measures to boost cash-strapped PA back on track after delay

Top official says drop in handling fee Israel charges PA for fuel transfers and boost in Ramallah’s portion of Allenby crossing fees will be applied for month of April

Jacob Magid is The Times of Israel's US bureau chief

Palestinian Authority President Mahmoud Abbas speaks during a conference to support Jerusalem at the Arab League headquarters in Cairo, Egypt, February 12, 2023. (AP Photo/Amr Nabil, File)
Palestinian Authority President Mahmoud Abbas speaks during a conference to support Jerusalem at the Arab League headquarters in Cairo, Egypt, February 12, 2023. (AP Photo/Amr Nabil, File)

WASHINGTON — A series of small Israeli measures aimed at financially boosting the cash-strapped Palestinian Authority are now in place after over a month-long delay, a senior National Security Council official told The Times of Israel on Thursday.

The top official said that Israeli authorities this week granted final approval to lower the handling fee Jerusalem charges Ramallah for fuel transfers from three percent to 1.5%; raise the percentage of revenues it transfers to Ramallah from the fees it collects from travelers at the Allenby border crossing between the West Bank and Jordan; and expand the list of tax-free imports that it facilitates on the PA’s behalf.

The first two measures will be applied for the month of April, the senior NSC official said, adding that the list of tax-free imports will be updated at the next meeting of the Israeli-Palestinian Joint Economic Committee (JEC). Updating the list will enable the Palestinian private sector to import specific goods up to a predetermined rate at either an exempt or favorable customs rate.

The JEC is mandated under the Oslo Accords as the authoritative body for adjudicating financial disputes and promoting joint economic initiatives. However, it has not met since 2009 amid long-deteriorating Israeli-Palestinian ties. The Biden administration announced last July that Israel had agreed to reconvene the panel, though no date has been set for the meeting.

The three measures were requested by the PA for years and are now finally being enacted against the backdrop of sustained pressure from the Biden administration along with a pair of Israeli-Palestinian regional summits held in Aqaba, Jordan and Sharm el-Sheikh, Egypt, which aimed to lower tensions between Jerusalem and Ramallah.

The Aqaba and Sharm el-Sheikh meetings brought together senior Israeli, Palestinian, US, Egyptian and Jordanian officials for the first such gatherings in decades, with political and security representation from all participants. Israel and the PA committed to holding off on advancing unilateral measures opposed by the other side for a period of three to six months. The sides also agreed to meet again in Sharm el-Sheikh in April, though an Egyptian official expressed skepticism that the third meeting would take place by the end of the month, given that no date has been set.

Palestinian Authority Civil Affairs Minister Hussein al-Sheikh and PA President Mahmoud Abbas in a photo posted by al-Sheikh on May 12, 2020. Prime Minister Benjamin Netanyahu, right, and Minister for Regional Cooperation Tzachi Hanegbi attend the weekly cabinet meeting at the prime minister’s office in Jerusalem, Israel on Dec. 29, 2019. (Abir Sultan /Pool photo via AP)

A week and a half before the February 26 Aqaba meeting, Netanyahu’s office leaked that it had agreed to the three aforementioned measures, framing them as part of its effort to ease the PA’s financial situation ahead of the holy month of Ramadan, which began in late March. But then a month went by and none of the steps were implemented. A PA and a US official in late March both blamed far-right Finance Minister Bezalel Smotrich for dragging his feet on signing off on the steps. Smotrich’s office at the time declined to comment on the matter.

The three measures have the potential to add millions of dollars to Ramallah’s coffers annually. Lowering the fee on fuel transfers would be particularly significant because they make up over 30% of the PA’s imports. But the 1.5% fee Israel will be charging is still roughly a percentage point higher than what the World Bank recommends, according to a source familiar with the matter.

Earlier this month, Israel implemented another commitment aimed at easing Palestinian livelihood when it began operating the Allenby crossing on a nearly full-time basis, after over a year of pressure from the Biden administration. The crossing is primarily used by Palestinians who are barred from using Ben Gurion International Airport.

With the Allenby pledge fulfilled, US Ambassador to Israel Tom Nides told The Times of Israel he is focused on expanding 4G cellular coverage to Palestinians in Gaza and the West Bank, who currently are only granted 2G and 3G service respectively.

The initiative has moved slowly though, according to Israeli and US officials, but Nides said he was determined to see it through in the coming months. “I want it turned on on their phones by the end of the year.”

He’s also working on securing funds from several Arab countries for the East Jerusalem Hospital Network that were pledged last year. The US announced $100 million of its own funding during Biden’s visit and said the United Arab Emirates, Qatar, Kuwait and Saudi Arabia would be matching that sum with $25 million each. Since then, only the UAE has followed through with its donation.

In addition, Nides revealed that he’s working to get the Jenin Power Plant up and running after years of preparation and expressed his hope that it would be ready to provide nearly 50% of electricity for Palestinians by the end of the year.

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