Abbas threatens to dissolve Oslo as protests rise over PA’s untenable financial situation

Palestinians security officers face off against protesters during clashes in the West Bank city of Hebron, September 2012. (Photo: Reuters)

Last week while Palestinian Authority (PA) employees announced their second strike in the past 30 days, Palestinian President Mahmoud Abbas responded indirectly by threatening to dissolve the PA and called on Israel to re-occupy the West Bank similar to the pre-Oslo era. Abbas’s statement was primarily meant for Prime Minister Benjamin Netanyahu to protest the fact that Israeli settlements continue to expand, thwarting the possibility of partition through negotiations. Yet underneath the president’s remarks that were “eagerly” accepted by the Israeli rightist Avigdor Lieberman, was a subtle message to West Bank protesters making clear that Israel should be the scapegoat for their current financial woes.

At the same time PA employees were going on strike this week, refugees also announced they will go on strike against the United Nations Refugee Works Agency UNRWA) over service cuts. The PA announced it will ease some of the financial burdens on refugees by paying expensive winter electrical costs, but thus far no additional support will be given to public workers. This decision led to a heated protest against Fayyad in Nablus over new year’s where over 50 people were taken to the hospital following fighting between protesters and PA security forces. 

The PA’s 153,000 employees received salary cuts in both November and December. Last month public sector salaries were reduced by seventy-five percent, and this month salaries will likely not be paid at all. PA employees will strike on Wednesday and Thursday of this week, and decide next week if they will announce another day of demonstrations later in January. Strikes against the PA have been successful in the past. Last September when taxi drivers led strikes across the West Bank against an increase in gas prices, protests nearly shut down major Palestinian cities. Within days Prime Minister Salam Fayyad appeased demonstrators by subsidizing gas prices.

After the Palestinian UN statehood bid this past fall Israel declared it would withhold Palestinian tax revenues amounting to around $100 million per month. Initially the Arab League stepped in an said they would donate the expected total shortage of $400 million, however over the weekend Arab League head Nabil al-Arabi said that as of now the money would not be transferred. Ma’an News reported Palestinian officials blamed the U.S. for influencing the Arab nations, “Secretary General of the Popular Struggle Front Ahmed Majdalani said the failure to transfer funds was ‘clearly a political decision… (and) collective punishment against the Palestinian people because of the agenda of seeking an independent Palestinian state,'”—yet even with the cash loss, the PA would still have trouble covering salaries this winter. As of early 2012 the PA debt to private lenders peaked at $1.2 billion, and government cash shortfalls were around $500 million.

A majority of the PA’s budget comes from foreign aid, which has decreased over the past few years. In 2011 the PA received $800 million in aid, down from an expected $1 billion. Because of trade restrictions imposed by the Paris Protocols in the Oslo Accords, the West Bank economy is cut off from the Gaza economy. That, combined with the 97 fixed checkpoints (as reported by B’tselem in December 2012), has hindered the pre-existing local agricultural market. A visible example in Ramallah is the outdoor fruit and vegetable market where most of the produce comes from Israel. Only as small section of stands in the back are of “West Bank grown” products.

Today the Palestinian Authority has become the largest single employer in the West Bank. Since most of its revenue comes from donor aid, when that aid does not come it rocks the Palestinian economy and is largely to blame for the government’s immediate inability to pay its workers’ wages. PA employees are blaming Israel for the current financial crisis despite the PA’s role in the unsustainable economy. “This strike is against Israel’s piracy,” said Bassam Zakarneh, a union spokesperson who condemned the isolated action of withholding tax revenue, rather then the occupation in general. Although strikers have labeled Israel as the prime cause for their salary freeze, it is worth noting that they have not declared a protest against Israel, rather they are striking against their Palestinian employer.

For Israeli politicians, Abbas’s offer to re-occupy the West Bank inspired in-fighting from Shimon Peres to Avigdor Lieberman. Tzipi Livni used the moment to attack her rivals in the upcoming Israeli elections and rebuked the notion of Israel “taking the key” of the West Bank. Haaretz reported on December 28, 2012:

Tzipi Livni, former opposition leader and current head of political party Hatnuah responded, saying that the dream of Netanyahu, Lieberman and Bennett that the PA will return to Israeli control is the nightmare of anyone who wants to see Israel as a Jewish and democratic state that is connected to the world.

The re-occupation of the West Bank is not a new idea in Israeli political circles. It was threatened as a punitive measure to both recent Palestinian statehood bids at the U.N. Ahead of the first bid, Israeli rightists expressed glee over the prospect of annexing the West Bank, which prompted a failed Knesset bill to do just that. Again in 2012 a similar bill was put forward and it floundered similar to the year before. But political forces that pushed those bills are poised to do well in the upcoming elections, so the idea is sure to be raised again.

This week’s strikes show the ideology for a “Greater Israel” will come with a financial liability that Israeli politicians must be ready to assume if they pursue annexation. While Israel and Abbas may be squawking over who should run the West Bank, the most pressing issue has less to do with negotiations and more about who will pay the PA’s bills.