The PA’s codependence problem


Analysis: Its six-month suspension of coordination with Jerusalem taught the Palestinian Authority that it needs to achieve economic autonomy as well as security if it wants an independent and viable future state of its own

Palestinian President Mahmoud Abbas and Prime Minister Benjamin Netanyahu in 2013

(Photo: Getty Images) Milstein

Having spent six months staring into the abyss and coming to the conclusion that it was heading towards economic collapse, the Palestinian Authority last week ended its suspension of cooperation with Israel.

The frozen ties had a negative impact on the PA’s public support, as Palestinians had for years received services from the Israeli authorities in areas such as work permits, medical treatment and more.

The Israeli government, on the other hand, found that a suspension of relations did not necessarily lead to a renewed outbreak of violence.

On the contrary, Israeli institutions picked up some of the slack and in effect made the case for the concept of one state in charge as opposed to two.

The primary bone of contention that triggered the freeze was the monthly tax revenue collected by Israel on behalf of the Palestinian Authority – made up of taxes from Palestinian working in Israel and from cross-border commercial activity – which comprises 60% of the PA’s annual budget of some NIS 19 billion.

After declaring the suspension of cooperation due to Prime Minister Benjamin Netanyahu’s now-halted plan to annex parts of the West Bank, the PA refused to receive the money.

But instead of this move punishing Israel for unilaterally declaring its annexation plan, the PA struggled to pay its 160,000 employees, causing growing anger on the Palestinian street that even threatened the regime.

Fortunately, U.S. President-elect Joe Biden’s victory in the November elections gave Ramallah the excuse it needed to reverse course.

Now both sides understand that it is not just the security cooperation that must continue uninterrupted, but that civil coordination also has the potential to trigger far-reaching shifts in the region.

The recent suspension of ties also showed how vital the funds collected by Israel are to the PA’s continued survival. And this reliance on the tax revenue will only grow over time, as more and more international institutions discontinue their funding of the Palestinian government.

For Israel, the flow of the funds collected on behalf of the PA is a source of strategic stability in the West Bank. Despite a strife-filled decade, the territory has enjoyed relative calm even though the funds also serve to tie the Palestinian Authority to Israel and make it much more reliant on Jerusalem.

Any discussion about a future agreement that would see the two entities go their separate ways will require careful consideration of how to reduce the PA’s reliance on the revenue collected by Israel for its survival.

For without becoming financially independent of Israel, there can be no viable future Palestinian economy or creation of the infrastructure needed to function as a state, if and when the two sides seek such a separation.



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