The National (Editorial)
January 17, 2012 - 1:00am

The economic situation of the Palestinian Authority has grown so serious that it is affecting the basic needs of Palestinians. Help from the more prosperous Arab countries seems the most likely way to avert serious damage to the social structure of the already-stressed Occupied Territories.

The PA raises little of its own revenue, and now Israel and foreign donors are strangling it, mainly through suspension of the remittance of US$100 million (Dh367mn) in taxes that Israel collects on behalf of the PA.

The money, normally used to pay salaries and for purchases, has been held by Israel as punishment for the Palestinians campaign for recognition of statehood by the United Nations and their entry into the cultural agency Unesco. Meanwhile, the US is withholding nearly $200 million in aid money.

As The National reported yesterday, the PA's cash crisis has forced many companies to freeze hiring and investment while halving their marketing costs.

"Our clients are hesitant to participate in government tenders for fear of a long delay in payments, and this is badly affecting our business," said Ibrahim Barham of Safad, a Ramallah-based IT firm.

Since the Palestinian Authority cannot pay its bills, firms in technology, construction and pharmaceuticals have had to cut their budgets. And development projects are paused, meaning times will grow even worse if this situation drags on.

The PA has foreign friends but the timing is awkward. The European Union has its own economic problems, and these are evidently bad enough to make this a hard time to ask for largesse. In the Arab world, several countries are on the verge of economic collapse following the Arab Spring and need prompt help.

And the US government, which has long used aid as a tool to influence the policies of the PA, is in a vindictive mood, with presidential elections coming up this year and Congress' sharp tilt toward Israel.

The Palestinian people need a political breakthrough. Until that happens, it is vital that Arab states find ways to help, before red ink drowns the civil administration Palestinians need.


American Task Force on Palestine - 1634 Eye St. NW, Suite 725, Washington DC 20006 - Telephone: 202-262-0017