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Palestinians hold flags and placards during a protest against the rising cost of living in the West Bank city of Ramallah.
Palestinians hold flags and placards during a protest against the rising cost of living in the West Bank city of Ramallah.

Israel speeds up cash to Palestinians

Payment of US$75 million represents about half the monthly taxes, or clearance revenues, Israel collects for the Palestinian Authority.

RAMALLAH // Israel will speed up the transfer of US$75 million (Dh275.4m) to the Palestinian Authority to help it curb an economic and political crisis that has triggered large protests.

The move is the latest sign of Israeli concerns over the stability of the West Bank's cash-strapped administration. The money represents about half the monthly taxes, or clearance revenues, Israel collects for the PA.

That amounts to about $1.3 billion a year in PA revenues, but agreements struck with Palestinian leaders allow Israel to control its flow, giving it power to inflict financial punishment by withholding its disbursement.

Benjamin Netanyahu, the Israeli prime minister, announced the decision on Tuesday following a wave of demonstrations across Palestinian cities against living costs and unpaid salaries, the Israeli daily Haaretz reported yesterday.

Anger at rallies has been directed at Palestinian officials, especially the Palestinian Authority prime minister, Salam Fayyad, who announced earlier on Tuesday a series of measures to address protester grievances that included cancelling increases in fuel prices and distributing unpaid salaries to government workers.

Mr Netanyahu informed the PA president, Mahmoud Abbas, and Mr Fayyad through an intermediary about the decision to release the Palestinian funds later that evening, the newspaper reported.

Israeli leaders also have taken a series of recent measures to help the PA grapple with a worsening budget crisis aggravated by undelivered donor aid but originating from Israel's occupation of Palestinian territories. Palestinian debt has ballooned to some $3bn.

"There is rising fear in Israel of a PA collapse," said Noam Sheizaf, a contributing editor at +972Magazine, an online Israeli publication.

The Israeli newspaper Maariv reported on Tuesday that Israeli officials have asked the European Union and United States to transfer to the PA hundreds of millions of dollars. That included $200m of Palestinian aid held up in the US Congress.

In April, Israel's central bank governor, Stanley Fischer, hatched a plan with Mr Fayyad to secure a $100m, short-term loan from the International Monetary Fund for the Palestinians.

Israel would borrow the money and then hand it over to the Palestinians, but the Washington-based financial institution rejected the proposal because the PA is not recognised as a state.

Israel has withheld the disbursement of PA tax revenue in the past, and its leaders have rejected amending agreements that would offer Palestinian leaders more control over economic issues.

Israel's deputy foreign minister, Danny Ayalon, on Monday rejected a Palestinian request to discuss altering the 1994 Paris Protocol. That accord gives Israel near-total control over external Palestinian trade policy.

But Mr Sheizaf said Israeli leaders have been trying to encourage more financial aid to Palestinians from abroad because they fear the consequences of a PA collapse, such as having to assume full control over the West Bank.

That would be expensive, dangerous and politically costly because it would bolster claims that Tel Aviv Israel rules over 2.5 million West Bank Palestinians by "apartheid", he said.


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