Israel?s relationship with the Palestinian Authority (PA ) has reached a new low, the worst it has been since the second intifada and the 2002 siege on then-PA president Yasser Arafat at his headquarters in the Mukata'ah in Ramallah. In those days of bloodshed and violence, Palestinians perpetrated devastating suicide bombings and the IDF conducted retaliatory raids into the Palestinian cities.

But no violence is involved in the current struggle between Israel and PA President Mahmoud Abbas and Prime Minister Salaam Fayyad. True, there are occasional incidents of rock-throwing and some Israeli casualties, and there are ongoing skirmishes between Palestinians and settlers, along with “price tag” attacks as well as some murderous Palestinian terror attacks on Jewish settler families – but for the most part, the struggle is political, not violent.

The PA is conducting an all-out political campaign at the UN and its institutions to achieve recognition as a state. Israel views this initiative as hostile and unilateral activity, part of the Palestinians’ attempt to evade engagement in direct negotiations without preconditions. The Palestinians, in turn, view Israeli construction in the territories as hostile and unilateral activity.

The political struggle has escalated over the past few weeks, accompanied by mutual threats. On the Israeli side, particularly prominent is the voice of Foreign Minister Avigdor Lieberman, calling for cutting all contact with Abbas, whom he defines as an obstacle to peace. Other spokespersons in the government and on the right are also calling for punishing the PA for its hostile positions. In response to the acceptance of the Palestinians to UNESCO, for example, Prime Minister Binyamin Netanyahu decided to accelerate the pace of construction in Gush Etzion, Maaleh Adumim, and the Jewish neighborhoods over the Green Line in Jerusalem.

And both sides are using the same threat – to disband the Palestinian government in Ramallah.

Is that even possible? Absolutely.

Nor is it merely a theoretical possibility.

The dissolution of the Palestinian Authority is a feasible scenario, based on the obvious fact that there seems to be no chance of the diplomatic process being resuscitated in the near future. In the absence of a peace process, the status quo is untenable. The PA might fall apart. Robert Seri, UN representative to the region, was recently quoted in the press as saying that this possibility should be taken seriously, and he warned that Abbas’s threat to quit is credible and could lead to a new wave of violence.

From Israel’s point of view, nothing could be easier than to topple the PA . In a recent cabinet meeting, for example, the government decided to withhold the transfer of the monies that Israel collects as taxes for the PA . This arrangement is part of the Oslo Accords; the monies include customs taxes, tax on fuel, and the VAT that the Israeli treasury collects for the PA on imported goods. Every month, representatives of the Israeli and Palestinian Finance Ministries meet together, do their assessments, and agree on the amount to be transferred from Israel to the PA . Annually, these transfers amount to more than a billion dollars, which makes up about half of the Palestinian national budget. Without these funds, the PA cannot pay salaries or maintain public services, such as health and education, in the West Bank or the Gaza Strip.

It’s doubtful that this delay will continue for long, because Defense Minister Ehud Barak opposes it. But should the Israeli government persist, or resume withholding funds in the future, the PA might, indeed, collapse.

This is not the first time Israel has withheld these funds. Israel did so in May when Abbas and Hamas leader Khaled Mashaal signed a reconciliation agreement. But, in the past, the World Bank and the countries contributing to the PA provided funds to help them get through the crisis.

Things are different now.

First of all, the contributing countries have made it clear that, given the economic crises in Europe and the US, they do not have the money to contribute to the Palestinians. Furthermore, the money that Europe had given the Palestinians was meant to further the peace process; if there’s no peace process – there’s won’t be any money, either.

The Palestinians regard withholding the funds as theft. “We were accepted to UNESCO, not to al-Qaeda,” Nabil Shaath, a senior Palestinian official, complained to the Palestinian media in early November. And “Al-Quds,” the East Jerusalem newspaper, published a caricature depicting Abbas as he enters UNESCO, while at the same time, Netanyahu, his face covered like a thief’s, sneaks out the back door with a suitcase filled with Palestinian money.

Abbas’s warning notice to disband the government in Ramallah is the ultimate weapon. The Palestinians are turning to the entire world, and primarily to the State of Israel, and threatening that they will bring about the return of full Israeli control. This is perceived as an act of despair, a declaration that the PLO, the flagship Palestinian national movement, has not been able to complete the deed and establish a state – and so they are giving up.

For now, that is.

From an international legal point of view, Israeli control over the West Bank and Gaza Israel?s relationship with the Palestinian Authority (PA ) has reached a new low, the worst it has been since the second intifada and the 2002 siege on then-PA president Yasser Arafat at his headquarters in the Mukata'ah in Ramallah. In those days of bloodshed and violence, Palestinians perpetrated devastating suicide bombings and the IDF conducted retaliatory raids into the Palestinian cities.

But no violence is involved in the current struggle between Israel and PA President Mahmoud Abbas and Prime Minister Salaam Fayyad. True, there are occasional incidents of rock-throwing and some Israeli casualties, and there are ongoing skirmishes between Palestinians and settlers, along with “price tag” attacks as well as some murderous Palestinian terror attacks on Jewish settler families – but for the most part, the struggle is political, not violent.

The PA is conducting an all-out political campaign at the UN and its institutions to achieve recognition as a state. Israel views this initiative as hostile and unilateral activity, part of the Palestinians’ attempt to evade engagement in direct negotiations without preconditions. The Palestinians, in turn, view Israeli construction in the territories as hostile and unilateral activity.

The political struggle has escalated over the past few weeks, accompanied by mutual threats. On the Israeli side, particularly prominent is the voice of Foreign Minister Avigdor Lieberman, calling for cutting all contact with Abbas, whom he defines as an obstacle to peace. Other spokespersons in the government and on the right are also calling for punishing the PA for its hostile positions. In response to the acceptance of the Palestinians to UNESCO, for example, Prime Minister Benjamin Netanyahu decided to accelerate the pace of construction in Gush Etzion, Maaleh Adumim, and the Jewish neighborhoods over the Green Line in Jerusalem.

And both sides are using the same threat – to disband the Palestinian government in Ramallah.

Is that even possible? Absolutely.

Nor is it merely a theoretical possibility.

The dissolution of the Palestinian Authority is a feasible scenario, based on the obvious fact that there seems to be no chance of the diplomatic process being resuscitated in the near future. In the absence of a peace process, the status quo is untenable. The PA might fall apart. Robert Seri, UN representative to the region, was recently quoted in the press as saying that this possibility should be taken seriously, and he warned that Abbas’s threat to quit is credible and could lead to a new wave of violence.

From Israel’s point of view, nothing could be easier than to topple the PA . In a recent cabinet meeting, for example, the government decided to withhold the transfer of the monies that Israel collects as taxes for the PA . This arrangement is part of the Oslo Accords; the monies include customs taxes, tax on fuel, and the VAT that the Israeli treasury collects for the PA on imported goods. Every month, representatives of the Israeli and Palestinian Finance Ministries meet together, do their assessments, and agree on the amount to be transferred from Israel to the PA . Annually, these transfers amount to more than a billion dollars, which makes up about half of the Palestinian national budget. Without these funds, the PA cannot pay salaries or maintain public services, such as health and education, in the West Bank or the Gaza Strip.

It’s doubtful that this delay will continue for long, because Defense Minister Ehud Barak opposes it. But should the Israeli government persist, or resume withholding funds in the future, the PA might, indeed, collapse.

This is not the first time Israel has withheld these funds. Israel did so in May when Abbas and Hamas leader Khaled Mashaal signed a reconciliation agreement. But, in the past, the World Bank and the countries contributing to the PA provided funds to help them get through the crisis.

Things are different now.

First of all, the contribu ting countries have made it clear that, given the economic crises in Europe and the US, they do not have the money to contribute to the Palestinians. Furthermore, the money that Europe had given the Palestinians was meant to further the peace process; if there’s no peace process – there’s won’t be any money, either.

The Palestinians regard withholding the funds as theft. “We were accepted to UNES CO, not to al-Qaeda,” Nabil Shaath, a senior Palestinian official, complained to the Palestinian media in early November. And “Al-Quds,” the East Jerusalem newspaper, published a caricature depicting Abbas as he enters UNES CO, while at the same time, Netanyahu, his face covered like a thief’s, sneaks out the back door with a suitcase filled with Palestinian money.

Abbas’s warning notice to disband the government in Ramallah is the ultimate weapon. The Palestinians are turning to the entire world, and primarily to the State of Israel, and threatening that they will bring about the return of full Israeli control. This is perceived as an act of despair, a declaration that the PLO, the flagship Palestinian national movement, has not been able to complete the deed and establish a state – and so they are giving up.

For now, that is.

From an international legal point of view, Israeli control over the West Bank and Gazahas not come to an end, since Israel still controls the external boundaries of the West Bank as well as many aspects of daily life of the Palestinian people in the West Bank and, to a certain extent, in Gaza as well.

And since Israel is considered the occupying power, Israel is responsible for attending to the needs of civil society in the occupied territories. In other words, Israel would have to reestablish the civil administration – actually a military administration – that ran the territories before the establishment of the PA in 1994.

Is that even possible? Absolutely not. There’s no chance that anyone in Israel would approve of this and there’s no way that Israel could manage this feat, given the current circumstances.

The civil administration controlled the West Bank and Gaza for 27 years, between 1967 and 1994. Several hundred Israelis worked as staff officers in key positions that related to all aspects of the Palestinians’ lives, serving as quasi-cabinet ministers. Some 30,000 Palestinians worked under them. Most of these workers were teachers and health workers, as well as policemen, supervisors, vehicle inspectors, customs officials, and clerks in the ministries of agriculture, tourism, commerce and trade, and transportation, and in electricity and water utilities.

Beginning in 1981, the mayors of the largest cities, including Nablus, Hebron, Ramallah and Gaza, quit their jobs, so Israeli officers then also became responsible for thousands of municipal workers.

With the establishment of the PA , most of these 30,000 Palestinian employees stayed on in their jobs. The PA also employed tens of thousands of new workers, and today the number of Palestinian civil servants is approximately 150,000 – more than 5 times the number employed during the Israeli administration.

To this number, it is necessary to add the several thousand civil and military personnel employed by Hamas in Gaza.

The reestablishment of the civil administration in the West Bank is not viable from a security point of view, either. It would be difficult, if not impossible, for Israeli officials to return to their former offices and municipalities in the Palestinian territories.

The IDF and the security forces could not possibly protect the hundreds of Israelis who would be providing services to the Palestinian public.

And even if it were possible in terms of security – Israel could not absorb the tremendous expense, over $2 billion, that is required to pay salaries and to maintain the systems of public services and development.

Approximately one half of that sum is given to the PA by the international community; spokespersons for the contributing countries and the Quartet have already made it clear that they have no intention of contributing to a new Israeli administration in the territories.

As a result, should Abbas declare that he is resigning and dismantling the PA , the more than 150,000 employees of the Palestinian government would no longer receive their salaries. Schools would close and health and other services would collapse. The Israeli civil administration would not be able to replace these systems, and chaos would ensue.

Some Palestinian officials are already calling for disbanding the PA , based on their assessment that even the ensuing chaos would be preferable to the status quo. The current situation, they contend, merely reinforces Israeli control over the West Bank and East Jerusalem. They note that at the beginning of the peace process, some 20 years ago, there were 100,000 settlers in the West Bank; but during the peace process, their number grew threefold, and today there are more than 300,000 settlers.

Some Palestinians – including Professor Sari Nusseibeh, president of Al-Quds University – go further: not only do they call for the disbanding of the PA , but they are also demanding full annexation to Israel, with full civil rights such as those enjoyed by the million and a quarter Palestinian citizens of Israel.

Their position does not stem from a sudden love for the Jewish and Zionist state, but rather from their belief that this is the only way to deal with Israel and prove to Israel and the world that Israel cannot possibly control the territories. Although only a small group of intellectuals are making this demand, they should not be taken lightly, even if there is no chance that their position will be endorsed by a majority of the Palestinian public.

In the past, Abbas’s threats to disband the PA in Ramallah were viewed merely as a form of saber-rattling and a means to blackmail Israel into concessions.

But in these times, the threat is more serious, because the Palestinian government has been pushed into the proverbial corner. The UN initiative is losing its momentum. Ramallah will not even consider returning to the negotiating table as long as Israel refuses to freeze construction in the settlements, because this would present Abbas and his government as impotent.

Nor is the option of terror and violence viable any longer.

Disbanding the PA may be the only step left for them – it is a step born of desperation, and it could lead to a new situation in the region.