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Palestinian Officials: Financial Situation on Brink of Collapse

Palestinian Officials: Financial Situation on Brink of Collapse

Thursday, 20 June, 2019 - 10:00

Palestinian officials said the financial blockade on the Palestinian Authority (PA) was intensifying, warning of a possible collapse if the situation remained the same

Palestinian Prime Minister Mohammad Shtayyeh accused the current US administration of cracking down on Palestinians through the political and financial war against them, forcing them to surrender and accept the alleged deal of the century.

In a recent statement, Shtayyeh asserted that a just and comprehensive political solution is the only acceptable one for the Palestinians, which ensures their rights in an independent state with Jerusalem as its capital according to the 1967 borders.

Meanwhile, PA Minister of Civil Affairs Hussein al-Sheikh said the financial blockade is “intensifying” against the Authority, after its decision to boycott the US administration and its rejection of the deal of the century, which Washington is forging for peace with Israel.

Sheikh, who is also a senior Fatah Central Committee member, tweeted: “they may be able to destroy us, but certainly they can not defeat us.”

Over the past three months, the financial crisis has deepened in an unprecedented way when the PA refused to receive the money Israel collects on its behalf, after Tel Aviv deducted from it.

In February, Tel Aviv began deducting about $11.5 million a month from tax revenues transferred by Israel to the Authority, and decided to proceed with that on a continuous basis during 2019, totaling to about $138 million. This amount is equal to what is paid by the Authority to the families of martyrs and prisoners in 2018.

These funds constitute the largest part of the Authority’s income, causing a major financial crisis. For months, the Authority paid its employees half of their salaries, as part of an emergency budget cut until July.

In the same context, head of the Palestine Monetary Authority (PMA) Azzam Shawwa reported that the Palestinian finances are on the brink of ruin after the suspension of hundreds of millions of dollars of US aid.

The mounting financial pressures on the Palestinians’ self-ruling entity have sent its debt soaring to $3 billion and led to a severe contraction in its estimated $13 billion GDP economy for the first time in years, Shawwa told Reuters.

“We are now going through a critical point.”

“What’s next, we don’t know. How we are going to pay salaries next month? How are we going to finance our obligations? How will daily life continue without liquidity in the hands of people?” said the head of the PMA, Palestine’s equivalence of a central bank.

Shawwa was on a visit to Jordan where he said “I don’t know where we are heading. This uncertainty makes it difficult to plan for tomorrow."

The major cuts in US aid over the past year were widely seen as an attempt to pressure Palestinians back to the negotiating table after it cut off political dealings with the Donald Trump administration in 2017.

After that, Trump announced his recognition of Jerusalem as the capital of Israel and intention to move the US embassy to the city despite its internationally disputed status.

The White House wants the Palestinians to engage with a long-delayed Middle East peace plan devised by Trump’s son-in-law Jared Kushner.

The plan’s economic component will be revealed at a conference in Bahrain next week, which the Palestinians are boycotting, citing pro-Israel bias by Washington.

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