Once again, Israel appears set to financially strangle the Palestinians in order to get from them the concessions it wants, writes Khaled Amayreh Another financial crisis has hit the Palestinian Authority (PA), affecting its ability to pay salaries to as many as 200,000 employees and civil servants. The PA, which is not a sovereign entity, relies to a large extent on foreign aid, including semi-regular contributions from the US, EU and oil-rich Arab countries. Many observers contend that the nearly complete dependence of the PA on foreign aid severely restricts its ability to pursue independent national policies, such as achieving national reconciliation with the main Palestinian Islamist movement, Hamas, and also adopting more strident policies vis---�-vis Israel. In addition to the political strings attached via dependence on foreign aid, the PA can hardly pursue long-range economic and financial planning that would put the Palestinians in a better position to free themselves from the Israeli occupation. Prime Minister Salam Fayyad, who is viewed favourably by Western donors, said only half the usual salaries would be deposited in banks in July and that the other half would be paid when funds became available. Fayyad's aides said the main problem stemmed from Arab donor countries' failure to pay their pledged contributions on time. According to Ghassan Khatib, head of the Government Press Office in Ramallah, three reasons stand behind the current crisis: accumulation of deficits; over-borrowing from banks; and the fact that the arrival of donor contributions doesn't correspond to the pace of PA financial needs. Failure to pay full salaries before the beginning of the holy Muslim month of Ramadan, which starts 1 or 2 August, could lead to social protests and deeper disenchantment among ordinary Palestinians. The unprecedented step of paying employees only half a salary is already infuriating salary-dependent and debt-laden civil servants, who accuse the government of "fabricating the crisis" for political reasons. They also accuse the prime minister of carrying a foreign agenda, an allusion to heavy-handed US interference in Palestinian domestic affairs. Fayyad retorted, arguing that the latest financial crisis was caused by some donor countries' failure to make good on their pledges. Fayyad also invoked the habitual procrastination of the Israeli government in paying the PA tax and customs revenue that Israel levies on imported goods and commodities destined to the occupied Palestinian territories through Israeli ports. On several occasions, Israel threatened to strangle the PA financially by withholding the monthly payments, which amount to around $120 million. The PA appealed to the Obama administration and EU to pressure Israel to release the payments. Israeli leaders said the transfer of these payments to the PA would stop if Hamas was included in any future Palestinian government and also if the PA went ahead with plans to seek UN recognition of a putative Palestinian state in September. Moreover, the US Congress, which often is at Israel's beck and call, has also adopted a resolution threatening to freeze US financial aid to the PA if the latter insisted on obtaining recognition at the UN. The same resolution left the door open for severing aid to any Palestinian government that wouldn't recognise Israel and renounce terrorism. Some Palestinian political analysts believe the crisis is largely fabricated by Fayyad with the purpose of forcing political factions to keep him at the helm of government in Ramallah. Exasperation with Fayyad among political factions, especially Hamas and the left, and even wide segments within Fatah, has increased. However, due to strong US and European backing of Fayyad, PA President Mahmoud Abbas has thrown his weight behind the current prime minister, insisting that he is the only acceptable candidate for the position in any national unity government. Hamas had said it wouldn't support the extension of Fayyad's premiership, accusing him of presiding over a government that persecuted and repressed Hamas supporters and went too far in security coordination with Israeli in the West Bank. Talal Okal, a political analyst, opined that the current crisis would exacerbate in the coming weeks and months, especially if the PA defied US and Israeli warnings against PA plans to formally apply for UN recognition of a Palestinian state on the basis of the 1967 borders. The PA says its decision to that effect is final and irreversible. However, Abbas has said on several occasions recently that he would be willing to "walk in a different path" if the Quartet �ê" which includes the US, UN, Russia and EU �ê" issued an explicit declaration stating that resolution of the conflict would require Israel to withdraw to the 1967 armistice lines between the West Bank and Israel proper. The Obama administration tacitly accepts this condition, but is reluctant to issue a clear and unequivocal declaration to that effect for fear of upsetting Israel and its powerful Jewish lobby in Washington, which tightly controls the US Congress. The Israeli Prime Minister Binyamin Netanyahu firmly rejects any notion of withdrawal to 1967 lines, calling them "indefensible". Netanyahu has also come out against the concept of land swaps in the context of a territorial compromise, saying that Israel has no land in Israel proper to cede to the Palestinians, even in return for retaining Jewish colonies in the West Bank. The latest financial predicament haunting the PA underscores the existential dilemma of living under the Israeli occupation while behaving like a sovereign state. It also illustrates the irreconcilability of pursuing national goals �ê" ie achieving freedom from the decades-old Israeli occupation �ê" and at the same time relying, to a large extent, on the good will of the Israeli government.
