Palestinian president Mahmoud Abbas has fired his advisers and ordered an ex-prime minister and former cabinet members to return bonuses covertly granted two years ago.
Mr Abbas has adopted this largely symbolic cost-cutting stance due to the loss by the Palestinian Authority of $190 million (€170 million) a month in revenue from tariffs and taxes collected on its behalf on goods in transit through Israel to Palestinian areas.
Last year, Israel transferred $2.4 billion in revenues to the authority. In February, however, Israel decided to confiscate €138 million in PA tax revenues paid annually by the authority to families of Palestinians killed, wounded and imprisoned while resisting Israel’s occupation of the West Bank, East Jerusalem and Gaza.
Palestinians consider men, women and children who actively oppose the occupation to be martyrs and heroes, while Israel calls them “terrorists” and argues pensions for families encourage violence.
Salaries halved
Mr Abbas has responded to Israel’s seizure by refusing all revenues collected by Israel. Already unpopular, he has been forced as a consequence to reduce by half the salaries of 160,000 civil servants, security personnel and teachers.
Since the authority is the largest employer in the West Bank, wage cuts have negatively impacted families of authority employees and private sector workers. In a bid to ease their plight, banks, credit card firms and internet companies have agreed to late payments.
Documents leaked in June revealed the authority, which has long faced allegations of mismanagement and corruption, had made lavish payments to former prime minister Rami Hamdallah and his cabinet. His pay was raised to $6,000 a month while ministers were awarded $5,000, a 67 per cent increase.
Mr Abbas has been accused of violating a 2004 law fixing ministerial salaries when he endorsed these raises, which were applied retroactively to 2014; in addition, ministers were granted a housing bonus of $10,000.
The revelations have particularly infuriated civil servants who receive salaries of $700-€1,000 a month. Unless major funding is made available or the issue of Palestinian prisoners and “martyrs” is resolved, the authority could wind down and, ultimately, collapse, leaving Palestinians without an administration, security forces, utilities, and educational and welfare services.
US aid terminated
To make matters worse, the Trump administration has halted all financial aid to the Palestinians, including the traditional US contribution of one-quarter of the $1.2 billion budget of the United Nations Relief and Works Agency (Unrwa), which provides for five million Palestinian refugees. Although Unrwa secured the full sum for 2018, funding remains uncertain for this year.
While the Trump administration and Israel’s prime minister Binyamin Netanyahu have financially squeezed the Palestinian Authority and pressed for Unrwa’s demise, this policy has the potential to backfire on Israel.
When the authority was created under the 1993 Oslo accords, Palestinians expected an end to the occupation and self-rule. Although this did not happen, Israel argued the emergence of the authority meant Israel would not have to rule over another people.
In the absence of the authority and Unrwa, Israel, as occupying power, could have to assume the responsibilities of both the authority and Unrwa in the territories it occupied in 1967.
