January 24, 2013
By Evelyn Gordon
When the Palestinian Authority (PA) obtained UN recognition as a nonmember observer state in November, many Israelis feared the consequences for Israel: After all, PA President Mahmoud Abbas stated openly that he sought recognition primarily "to pursue claims against Israel" in international forums. Those fears may yet prove justified. But so far, the biggest victim of Abbas's UN bid has been the PA itself.
The PA currently faces the worst financial crisis of its crisis-filled history. According to PA Prime Minister Salam Fayyad, it's in "extreme jeopardy," and on the "verge of being completely incapacitated." Its 150,000 employees have received only half their November salaries and nothing for December. It "owes local banks more than $1.3 billion and can't get more loans," the Associated Press reported. It "also owes hundreds of millions of dollars to private businesses, including suppliers to hospitals, some of whom have stopped doing business with the government." And it expects the poverty rate to double, to a whopping 50 percent of the total Palestinian population in the territories, if the crisis isn't resolved soon.
So dire is the situation that a mere month after the vote, Abbas was already threatening to dissolve the PA and return full control of the territory to Israel if things didn't improve quickly. If the PA can't even pay salaries, he said, "What's left for us to do?"
In short, far from augmenting Palestinians' independence, the UN vote has endangered even the limited autonomy they currently have. For the financial crisis is a direct consequence of that vote - and, even worse, a totally predictable one.
The first source of the crisis is that Israel stopped transferring roughly $100 million a month in taxes it collects on the PA's behalf. Contrary to Fayyad's disingenuous charge of Israeli "piracy," this merely ended an ongoing Palestinian piracy: For years, the PA hadn't paid its bills to the Israel Electric Corporation, but Israel swallowed the loss, at considerable sacrifice: The IEC's finances are so precarious that it can't raise money without government guarantees. Last year, it sought a 30% rate hike from Israeli consumers to stabilize them. Yet Israel's agreements with the Palestinians entitle the state to cover such debts by withholding money from the monthly transfers. The Israeli government repeatedly warned both the PA and UN member states that if the UN bid went forward, in violation of all Israeli-Palestinian agreements, it would withhold the full NIS 800 million (about $214 million) it was owed to it.
Second, Congress has been withholding some $450 million in U.S. aid - and though the Obama administration wants this money released, Congress hasn't yet agreed. This, too, was known in advance: Washington repeatedly warned that the UN bid "would have significant negative consequences" for America's "ability to maintain our significant financial support for the Palestinian Authority."
Third, though Arab states promised to cover the shortfallemergency donation (which hasn't yet arrived), but no money is even in the pipeline for the following months. And despite Fayyad's professed bewilderment at this lapse ("I have no explanation," he said), it was completely predictable: Arab states have serially defaulted on previous pledges to the PA, so why would they behave differently this time?
Finally, there's the PA's own fiscal mismanagement - from the billions of dollars it pours into Hamas-run Gaza, including paying 60,000 former PA employees full-time salaries to sit at home and do nothing, to such grandiose money-wasters as allocating more than $1 million to commemorate the 48th anniversary of Fatah's first terrorist attack on Israel (even as its own employees go unpaid) or booking first-class tickets and five-star hotels for 22 Arab foreign ministers to attend its UN triumph (though most never showed). This, too, was well-known.
Nevertheless, the PA opted to proceed with the UN bid. In short, it walked into a full-blown fiscal crisis with eyes wide open. And only nine countries opposed this decision.
Or, to put it another way, the PA deliberately chose to subject its own people to severe financial hardship - tens of thousands of breadwinners with unpaid salaries, a skyrocketing poverty rate - for the sake of scoring points against Israel in the international arena. And virtually the entire world knowingly abetted this choice rather than insisting that the PA put its people's welfare first.
The sorriest part of this story, however, is that it isn't unusual. The PA has consistently put harming Israel ahead of helping its own people - most notably, as I explained in a previous JINSA column, by refusing repeated Israeli offers of statehood, thereby leaving millions of Palestinian refugees vulnerable to repression and expulsion from other Mideast countries. And Western countries have consistently supported this self-destructive behavior, out of a misguided notion that by supporting the PA's positions, they "bolster" the PA and thereby help the Palestinian people.
The UN bid was a prime example: Several European countries said they voted yes or abstained because Hamas's popularity was boosted by its conflict with Israel in November, so they needed to bolster Abbas by giving him a "victory" too - even if, as some European ambassadors admitted, this "victory" might actually "lead to further hardening of positions instead of improving chances of a two-state solution."
Similarly, the European Union repeatedly and explicitly backs PA demands on final-status issues like borders and Jerusalem while not explicitly demanding any Palestinian concessions. Yet this effort to bolster the PA's negotiating position merely reinforces the Palestinian delusion that no reciprocal concessions are required, even on obvious deal-breakers like the "right of return." President Obama sought to bolster the PA by backing its demand for an Israeli settlement freeze, only to have Palestinians dismiss the "unprecedented" freeze he secured as "worse than useless" and refuse even to begin negotiations.
Indeed, after 20 years of Western efforts to "bolster" the PA, not only is there still no Palestinian state, but the PA itself is on the brink of financial collapse. So instead of clinging to the same failed tactics, perhaps Western governments should try something different.
Rather than "bolstering" the PA by acceding to its every whim, however self-destructive, while constantly seeking more Israeli concessions, they should try pressing Palestinians to finally make the concessions needed to seal a deal. It couldn't possibly fail more miserably. And it just might work better.