Feb 27, 2006

Palestinian Authority On The Brink Of Financial Collapse

Left: James Wolfensohn, courtesy of Jerusalem Post.

James Wolfensohn, an international envoy, cautioned mediators today that the Palestinian Authority is in danger of financial ruin within two weeks, in part because Israel has stopped the flow of tens of millions of dollars in taxes and custom duties to the incoming Hamas government.

Wolfensohn said a financial crisis could escalate to political violence and chaos. He implored the EU and the US to develop a plan to address the Palestinian revenue situation.

There are 140,000 people drawing paychecks from the Palestinian Authority, including 58,000 security personnel. The likelihood of violence in the region certainly increases in exponential fashion if the security forces do not get paid.

Meanwhile, the European Union today authorized roughly $163 million in emergency aid to help the Palestinians meet essential services until Hamas forms the next government.

Rami Tahboub, an employee of the Palestinian Foreign Ministry, said that it was not in the world's best interests to ignore an imminent Palestinian Authority implosion.

"I don't believe the world will stop funding the Authority because if it does, it will weaken Mahmoud Abbas and lead the PA to collapse," Tahboub said.


liberal_dem said...

I wonder what Bush & Co. would do if Venezuela offers them a $5 million loan? Or Iran? Or some other 'evil' nation.

historymike said...


Probably use it as "proof" that Chavez is in bed with terrorists.

Stefan Schmidt said...

Israel has stopped the flow of tens of millions of dollars in taxes and custom duties to the incoming Hamas government.

How did Israel do this? I believe an ‘embargo’ is an act of war….

historymike said...

They collect monies for the Palestinians; the Palestinaian Authority is more like an autonomous zone than a true nation.

The peace accords that Israel negotiated with the PLO in 1994 described the PA as "an interim administrative organization."

According to the Accords, the Palestinian Authority was designated to have control over both security-related and civilian issues in Palestinian urban areas (referred to as "Area A"), and only civilian control over Palestinian rural areas ("Area B"). The remainder of the territories (including Israeli settlements, the Jordan Valley region, and bypass roads between Palestinian communities) were to remain under exclusive Israeli control ("Area C").

Some speculate that Israel might use the death of Arafat and the election of Hamas to renege on the deal, and try to reclaim control again.

Stephanie said...


I have to agree with you. This seems like an intentional act of war to me. It seems their goal is to start up violence, so they can justify "putting it down" and taking control again.

Peahippo said...

The last time I saw the stats, the US Congress under the aegis of international aid gave about $80 million yearly to the PA. Increasing this amount might be problematical in today's legislative climate, but then again, I can't explain why the PA gets our money in the first place.

historymike said...

Yes, I can see no reason why the Israelis would pull this except to stir up trouble.

Peahippo: I think the reasoning behind the influx of cash is that a stable Palestine is better than another 1980s Beirut.

Lisa Renee said...

Israel is doing more than just cutting off funding...Though our media isn't doing much to cover it:

Israel is continuing its targeting of Palestinians. Its recent bombardment of northern Gaza and incursions into the Balata refugee camp near Nablus seem evidence, if such was needed, that Israel has not learnt any lessons from the recent past. Indeed, at a time when Palestinian groups are largely holding fire, the only rational explanation for the recent Israeli escalation is that Israel is hoping it will provoke a reaction. Perhaps Israel is afraid of the outside world fully accepting the results of Palestinian elections.

An exerpt from the Jordon Times that I found when reading the World Round up this morning.

historymike said...

Yes, the US media is asleep with regard to Palestine.

Too may embedded reporters and Baghdad correspondents.

Stephanie said...

I'm not sure the media ever reported Palestine fairly; it would certainly explain why so many people are so staunchly pro-Israel without an awareness of most of the facts involved. It's too easy to see this conflict as black and white...reality is rarely so easy on us.