Israeli Minister Reportedly Agrees to Release Funds to the Palestinian Authority

[Pelican Press 0]

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******** Minister Reportedly Agrees to Release Funds to the ************ Authority

The ************ Authority has drifted from crisis to crisis for years, struggling to pay its arrears amid dwindling international aid. ******* has often withheld taxes it collects on the authority’s behalf in an attempt to penalize its leadership. At other times, ******* has sent tens of millions of dollars to keep it afloat.

But many called the West Bank’s current economic predicament the most difficult yet.

After the ******-led ******* on Oct. 7, tens of thousands of Palestinians who had worked in ******* were no longer allowed to enter, creating mass unemployment overnight. ******** military raids, road closures and stricter checkpoints have further choked the ************ economy.

Before the war, Mahmoud Abu Issa, 53, was earning over $2,000 a month — an enviable salary in the impoverished West Bank — as a construction worker in *******. He has been unemployed since ******* barred most ************ workers, except for irregular stints as a day laborer for around $10 per day.

His son, who worked with him in *******, had begun building a house before the war began. Since their wages dried up, the house ******** unfinished, he said.

“We sit around day and night, hoping for something to change,” Mr. Abu Issa said. “But there’s nothing.”

Under agreements between the two sides, ******* collects and transfers hundreds of millions of dollars in tax revenue to the ************ Authority. Mr. Smotrich has withheld those funds, which constitute a majority of the ************ government’s budget, exacerbating its fiscal crisis.

As a result, the ************ leadership constantly struggles to pay its employees, who number at least 140,000, according to ************ Authority Finance Ministry officials. Many have only received partial salaries, often at irregular intervals, for years; last month, most received just 50 percent of their wages.

Shadi Abu Afifa, a father of four who lives near Hebron, saw his $930 monthly salary as an officer in the authority’s security forces slashed in half last month. He said his family had stopped buying cooking gas and abandoned other modest luxuries, like internet at home, in an attempt to save money.

“If the economy improves, we might start to feel some hope again,” said Mr. Abu Afifa. “Because right now, we’re in a bad, suffocating situation — the war, the unemployment, everything on top of one another.”

U.S. officials have pressured the ******** government to release the funds, fearing that further economic hardship could lead to more ********* in the West Bank. Jake Sullivan, the national security adviser, called this week for the funds to be released “without further delay.”

Last month, after three ********* countries announced they would recognize a ************ state, Mr. Smotrich announced that he would not renew the waiver — set to expire July 1 — that protects ******** banks from legal liability for working with ************ banks.

Lacking their own currency, Palestinians generally use ******** shekels. If ************ banks want to offer shekel accounts, they must maintain links with ******** banks and rely on them to process shekel transactions.

Since 2017, *******’s Finance Ministry has issued the waiver indemnifying the ******** banks, according to Lilach Weissman, a spokeswoman for the ministry. If the waiver is not renewed, ******** banks would likely cut ties with their ************ counterparts, banking experts said.

“The ramifications would be bad and dangerous for everyone,” said Akram Jerab, the chairman of the board at Quds Bank, which has 31 branches in the West Bank.

At a cabinet meeting late Thursday that went past midnight, Mr. Smotrich agreed to temporarily extend the waiver for four months, said Eytan Fuld, a spokesman for the minister. It was unclear what would happen after that.

If he ultimately follows through with his threat to let the waiver elapse, it could also have economic consequences for *******, experts said. ************ merchants would not be able to use banks to pay ******** suppliers for imported goods. And there would be no way for Palestinians to pay ******* for essential goods like fuel, water and electricity, said Azzam al-Shawwa, a former top ************ banking regulator.

“*******’s commerce is intertwined with Palestine,” Mr. al-Shawwa said in an interview. “Palestine is one of the biggest traders with *******. Is Smotrich ready to lose that?”

Rawan Sheikh Ahmad contributed reporting.

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