By Baruch Yedid/TPS • 6 October, 2019
The financial crisis between Israel and the Palestinian Authority (PA), in which the Authority refused to receive any funds from Israel over its cut of the amount paid in salaries to terrorists and their families, ended over the weekend following a meeting between the PA’s Minister of Civil Affairs Hussein al-Sheikh and Israeli Finance Minister Moshe Kahlon.
At the beginning of the year, Israel decided to deduct a total of NIS 502 million from the PA’s tax funds each year, the equivalent sum the PA pays to terrorists and their families.
In response, the PA has refused to receive any tax funds from Israel, a move that has pushed it towards financial failure. In August, it was suggested that Israel will return the funds by foregoing taxes on fuel and other funds owed by the PA, in the total sum of NIS 2 billion.
The new agreement stipulates that Israel will return a total of NIS 1.8 billion of the tax funds it has collected on the PA’s behalf and which has accumulated over the past eight months. This amount does not include the monthly sums Israel deducts from the PA’s funds over its payment of stipends to terrorists.
“In doing so, the PA recognizes Israel’s right to deduct the support money for prisoners,” a senior PA official told TPS.
This sum is in addition to the 2 billion Israel is foregoing in taxes on fuel and other funds.
The PA official told TPS that intense internal pressure from a-Sheikh and Colonel Majd Faraj, the head of the PA’s General Intelligence, led PA head Mahmoud Abbas to fold and back away from his initial refusal to receive any funds from Israel.
These two officials are gradually becoming a significant factor in the PA and are considered a focal point of power, alongside their counterpart, Mohammed Ishtayeh, the PA’s Prime Minister.
Faraj recently visited the US and met with US security officials. Israeli and US security officials have expressed concern over the collapse of the PA and have recommended increasing the security-related assistance to it.
Another source in the PA told TPS that a meeting between the PA and the donor countries has failed and they refused to increase the support to the PA. Even the economic security net which Abbas asked from Arab countries is not progressing, and these developments have convinced Abbas to receive the tax funds from Israel, despite Israel’s deduction of the sums transferred to the terrorists and their families.
Similarly, Fatah officials recently expressed concern that if the PA goes to elections while the PA’s clerks were only receiving partial pay because of the financial crisis, it would hurt them at the ballots.
Hamas has launched an attack on Abbas and accused him of making belligerent statements about severing relations with Israel, but ultimately accepting Israel’s dictates and deducted funds.