The Palestinian Authority’s Money Woes

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The Palestinian Authority (PA) is having money troubles. Very big money troubles, and of course it blames Israel for all of its financial woes. But those woes are entirely the fault of the PA itself. More on where its money goes, and why that leads Israel, for justifiable reasons, to withhold some of the tax revenue it collects on behalf of the PA, can be found here: “Palestinian Authority losses due to terror payments has reached 6.96 billion shekel – in last five years alone,” by Itamar Marcus and Ephraim D. Tepler, Palestinian Media Watch, August 27, 2024:

The Palestinian Authority prioritizes its payments to terrorists and has lost over 6.96 billion shekels (over $1.88 billion) in the last 5 years alone, according to its own data.

The official PA news agency, WAFA, criticized Israel for causing the PA’s financial crises and itemized all the deductions from tax revenues that Israel collects for the PA. However, a look at the PA’s numbers shows that the PA itself is responsible for its crises.

Israel’s deductions are in 3 main categories.

Deduction 1: Pay-for Slay

Every year, in accordance with its Anti “Pay-for-Slay” law, Israel makes 12 monthly deductions from the tax transfers that it would otherwise have sent the PA. This deduction is identical to the amount that the PA rewarded imprisoned terrorists and families of so-called Martyrs in the previous year.

Deduction 2: Money to Gaza since October 7

After the massacre and atrocities committed by Gazans on October 7, 2023, Israel has been making deductions from the PA in accordance with the amount that the PA sends to Gaza each month. The sum of these deductions is sent to Norway for future distribution when Israel will be able to be sure that the proceeds will not go directly into Hamas’ hands.

Since the atrocities committed by Hamas on October 7, in addition to its “Pay-For-Slay” deductions, Israel has also been deducting further sums from the import taxes it has been collecting from the PA. Those sums are precisely equal to the amount that the PA has been sending to Gaza. It’s a way to discourage the PA from helping finance Hamas.

Deduction 3: Repaying PA debts

For many years, Israel generously allowed the Palestinian Authority to use Israeli hospitals, electricity, and water, even though the PA did not pay its fair share. Israel finally decided to make a deduction from the tax transfers in accordance with a portion of the debt that the PA has incurred.

The PA’s official daily said that these “illegal deductions” are the cause of its financial crises. However, it is clear from looking at the PA’s own figures that the PA has only itself to blame for its woes….

It is shocking to realize that for years, Israel has been supplying both goods and services to the PA, including the use of Israeli hospitals, as well as electricity and water provided by the Jewish state, to their mortal enemies. Worse still, Israel has not been receiving anything like the payments that the PA should have been making to it. Finally, fed up with this absurd state of affairs, the Israeli government is now making a further deduction from the taxes it has collected on behalf of the PA, and using that money to whittle away at the sums the PA owes Israel for that water, that electricity, those hospital stays.

If the PA were to stop “Pay-For-Slay” program, on which it has spent 3.48 billion shekels over the past five years, it would not only have had that amount to spend on such things as the health, education, and welfare of all the Gazans who are not terrorists, but would also be the recipient of the 3.48 billion shekels that Israel had been withholding from the PA’s tax revenues during that same period. A double gain. And all the PA has to do is stop rewarding terrorists and their families.

To keep money out of the hands of Hamas during the war, Israel has been deducting from the PA the amount equivalent to what the PA sends monthly to Gaza. This is what the PA reported:

“…the Israeli deductions from the tax revenues in the category of ‘monies designated for the Gaza Strip’ are approximately 2.55 billion shekels [over $692 million] since the outbreak of the war against the Gaza Strip, from the start of October 2023 until July 2024, and 255 million shekels [over $69 million] a month on average. Israel has been deducting these monies as a punitive measure against the PA’s refusal to stop transferring the funds designated for the Gaza Strip, particularly the salaries of the [PA] public employees, foremost among them the employees in the health and education sectors.”

[WAFA, official PA news agency, Aug. 18, 2024]

The PA misstates the aim of the Israeli deduction. It is trying to stop money going to Hamas, which runs the Gaza Strip and helps itself to as much of the aid money lavished on Gaza as it wants. Israel has no special desire to harm public employees, as the PA claims — other than those who have connections to Hamas.

Whoever succeeds Mahmoud Abbas as president of the PA should, in order to free up billions of shekels, promptly end the “Pay-For-Slay” program. Then no longer would terrorists be rewarded and terrorism incentivized. The PA would save both the amount it had been spending on the program, now to be spent on health and education for Gazans, and the identical amount that Israel had been withholding from the taxes it had been collecting for the PA but would now release. From 2019 to 2024, that amount was $1.89 billion, or $400 million USD each year. Furthermore, once “Pay-For-Slay” is halted, the provisions of the Taylor Force Act would no longer threaten a possible discontinuance of American aid. Taylor Force hasn’t been observed until now, but a restive Congress might force the next administration to observe its provisions. And with some of that approximately $400 million USD, a lot of good could be done for the people of Gaza.

Finally, Western donors should demand that the huge sums that just three Hamas leaders — Khaled Meshal ($4 billion), the late Ismail Haniyeh ($4 billion), and Mousa Abu Marzouk ($3 billion) — have stolen from the aid money foreign donors have sent to Gaza, be returned to be used for the benefit of the people of Gaza. It ought not to be impossible to issue international warrants for the arrest of the surviving pair, to jail them, and to find out where they have hidden all that money – in bank accounts and real estate – and retrieve it, just the way the American government has tracked down and seized the assets of Mexican drug lords. Who could possibly object to seizing billions of dollars that those three Hamas leaders have stolen and using those huge sums for the welfare of people in Gaza?