Palestinian Prime Minister Announces New Reform Package

 Palestinian Prime Minister Mohammad Mustafa speaks to journalists in the West Bank town of Tulkarem, during his visit to the area in the aftermath of a deadly raid by Israeli forces in the nearby Nur Shams refugee camp, Monday, April 22, 2024. (AP)
Palestinian Prime Minister Mohammad Mustafa speaks to journalists in the West Bank town of Tulkarem, during his visit to the area in the aftermath of a deadly raid by Israeli forces in the nearby Nur Shams refugee camp, Monday, April 22, 2024. (AP)
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Palestinian Prime Minister Announces New Reform Package

 Palestinian Prime Minister Mohammad Mustafa speaks to journalists in the West Bank town of Tulkarem, during his visit to the area in the aftermath of a deadly raid by Israeli forces in the nearby Nur Shams refugee camp, Monday, April 22, 2024. (AP)
Palestinian Prime Minister Mohammad Mustafa speaks to journalists in the West Bank town of Tulkarem, during his visit to the area in the aftermath of a deadly raid by Israeli forces in the nearby Nur Shams refugee camp, Monday, April 22, 2024. (AP)

Newly installed Palestinian Prime Minister Mohammad Mustafa announced a package of reforms on Tuesday aimed at strengthening the Palestinian Authority (PA) amid increased global pressure for a revival of political dialogue with Israel.

Mustafa, appointed by Palestinian President Mahmoud Abbas earlier this year, said his government would introduce measures to improve transparency and fight corruption, overhaul the justice system and security sectors and improve public sector efficiency.

In addition, he said the health and education system would be improved, public finances strengthened and economic reforms implemented.

The reform pledges largely match promises previously made by his predecessor Mohammed Shtayyeh, who announced his resignation in February as the PA looked to build support for an expanded role amid Israel's war against the group Hamas in Gaza.

The United States and other international partners have pressed the PA to implement sweeping reforms to restore confidence among Palestinians who have become deeply disillusioned with the body set up under the interim Oslo Peace Accords more than 30 years ago.

The urgency to make reforms has increased as attention has turned towards the governance of Gaza, once Israel winds up its military campaign against Hamas following the Oct. 7 attack on Israel led by fighters from the movement.

Despite resistance from Israeli Prime Minister Benjamin Netanyahu, Washington and its allies say the PA must be involved in administering the enclave once Israeli troops pull out.

The United States and most Western countries say only a two-state solution, entailing an independent Palestinian state next to Israel, can offer the chance of a peaceful resolution to decades of conflict.

However, Abbas reacted angrily last week when Washington vetoed a Palestinian request for full United Nations membership, saying the PA would reconsider bilateral ties with the United States following the decision.

The PA has been grappling with a severe financial crisis which has left most public sector employees receiving only part of their normal salary for the past two years.

The crisis has worsened since the start of the war in Gaza as Israel has cut off some of the tax revenues it collects on the PA's behalf, accusing the Authority of supporting Hamas.



Israel to Use Withheld Palestinian Tax Income to Pay Electric Co Debt

Smoke rises from Jenin in the occupied West Bank, during clashes between militants and the Palestinian Authority's security forces, inside the Jenin refugee camp, on January 12, 2025. (Photo by JAAFAR ASHTIYEH / AFP)
Smoke rises from Jenin in the occupied West Bank, during clashes between militants and the Palestinian Authority's security forces, inside the Jenin refugee camp, on January 12, 2025. (Photo by JAAFAR ASHTIYEH / AFP)
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Israel to Use Withheld Palestinian Tax Income to Pay Electric Co Debt

Smoke rises from Jenin in the occupied West Bank, during clashes between militants and the Palestinian Authority's security forces, inside the Jenin refugee camp, on January 12, 2025. (Photo by JAAFAR ASHTIYEH / AFP)
Smoke rises from Jenin in the occupied West Bank, during clashes between militants and the Palestinian Authority's security forces, inside the Jenin refugee camp, on January 12, 2025. (Photo by JAAFAR ASHTIYEH / AFP)

Israel plans to use tax revenue it collects on behalf of the Palestinian Authority to pay the PA's nearly 2 billion shekel ($544 million) debt to state-run Israel Electric Co (IEC), Finance Minister Bezalel Smotrich said on Sunday.

Israel collects tax on goods that pass through Israel into the occupied West Bank on behalf of the PA and transfers the revenue to Ramallah under a longstanding arrangement between the two sides.

Since the Hamas-led attack on Israel on Oct. 7, 2023, triggered the war in Gaza, Smotrich has withheld sums totaling 800 million shekels earmarked for administration expenses in Gaza.

Those frozen funds are held in Norway and, he said at Sunday's cabinet meeting, would instead be used to pay debt owed to the IEC of 1.9 billion shekels, Reuters reported.

"The procedure was implemented after several anti-Israeli actions and included Norway's unilateral recognition of a Palestinian state," Smotrich told cabinet ministers.

"The PA's debt to IEC resulted in high loans and interest rates, as well as damage to IEC's credit, which were ultimately rolled over to the citizens of Israel."

The Palestinian Finance Ministry said it had agreed for Norway to release a portion of funds from an account held since last January with 1.5 billion shekels, calling money in the account "a punitive measure linked to the government’s financial support for Gaza.”

The ministry said as part of the deal, 767 million shekels of the Norwegian-held funds will pay Israeli fuel companies for weekly fuel purchases over the coming months. A similar amount will be used to settle electricity-related debts owed by Palestinian distribution companies to IEC.

Smotrich has been opposed to sending funds to the PA, which uses the money to pay public sector wages. He accuses the PA of supporting the Oct. 7 attack in Israel led by Hamas, which controlled Gaza. The PA is currently paying 50-60% of salaries.

Israel also deducts funds equal to the total amount of so-called martyr payments, which the PA pays to families of militants and civilians killed or imprisoned by Israeli authorities.

The Palestinian finance ministry said 2.1 billion shekels remain withheld by Israel, bringing the total withheld funds to over 3.6 billion shekels as of 2024.

Israel, it said, began deducting an average of 275 million shekels monthly from its tax revenues in October 2023, equivalent to the government’s monthly allocations for Gaza.

"This has exacerbated the financial crisis, as the government continues to transfer these allocations directly to the accounts of public servants in Gaza," the ministry said.

It added it was working with international partners to secure the release of these funds as soon as possible.