The Palestinian Authority’s Self-Inflicted Financial Wounds

...It’s long past time for the West to be equally honest. If well-meaning Westerners really want to improve conditions in the PA, they need to finally put the onus where it belongs: not on Israel, but on the Palestinians’ own dysfunctional government.

Evelyn Gordon..
Commentary Magazine..
06 February '14..

Since writing last week’s post on the hypocrisy of trying to “help the Palestinians” by throwing actual Palestinians out of work, I’ve discovered more support for my claim that ordinary Palestinians agree with me on this issue. The Forward and the Christian Science Monitor both interviewed Palestinian employees of SodaStream, the now-famous Israeli company with a plant in a West Bank settlement, and were told emphatically that these employees opposed a boycott of the company that might cost them their jobs. The Monitor also spoke with Palestinians not employed by SodaStream, who said that far from wanting the company boycotted, they wished they could trade their own jobs for SodaStream’s better pay and shorter commute.

BDS supporters have a simple answer to this: Israel, they charge, is strangling the Palestinian economy; just force it out of the West Bank, and Palestinians will create plenty of jobs to replace Israeli companies. The problem with this argument is that the real impediment to Palestinian job creation isn’t Israel, but the Palestinians’ own government. And nothing better illustrates this than the case of Palestinian-Canadian investor Mohamed Al Sabawi.

Once again, the biggest losers are the Palestinians

...So far, not one Palestinian Authority official has come out in public against the campaign of intimidating Palestinian businessmen. It will not only foil Kerry's plan, but also scare away potential investors. Those making threats do not want to see prosperity; instead they want the Palestinians to continue living in misery in order to keep alive the fight against Israel.

One of the Palestinian businessmen
under attack is Munib al-Masri

Khaled Abu Toameh..
Gatestone Institute..
31 May '13..

After rejecting US Secretary of State John Kerry's new plan to boost the Palestinian economy by investing $4 billion in the private sector, the Palestinians have begun threatening businessmen who want to work with Israeli counterparts.

Kerry's plan, which was revealed at last week's World Economic Forum in Jordan, has been condemned by many Palestinians as a U.S. attempt to bribe them into making political concessions to Israel. But several Palestinian businessmen who attended the conference have welcomed Kerry's economic plan and expressed a desire to meet with Israeli counterparts to talk about joint investments in the West Bank.

Some Palestinian businessmen who dared to meet with Israeli colleagues in the past few days are now facing threats and calls for boycotting them and their companies. The threats are being made by various Palestinian organizations and individuals, as well as by political activists belonging to several Palestinian groups in the West Bank and Gaza Strip.

One of the Palestinian businessmen under attack is Munib al-Masri, often described as the wealthiest Palestinian in the world. Al-Masri has been strongly condemned by Palestinians for meeting with Israeli businessmen before, during and after the Jordan conference.

In his defense, al-Masri said that Palestinian Authority President Mahmoud Abbas knew in advance about the meetings with Israelis. Al-Masri expressed "regret" over the accusations and threats made by Palestinians campaigning against "normalization" with Israel.

Wants U.S. Cash, Not Peace - Any Guesses?

...In other words, the Palestinians say thanks for the cash but no talks except those that guarantee they get everything they’re asking for while giving nothing in return and even then there’s no guarantee they won’t continue the conflict as their insistence on the “right of return” — which is tantamount to calling for Israel’s destruction — indicates.

Jonathan S. Tobin..
Commentary/Contentions..
28 My '13..

Secretary of State John Kerry and some Israelis, notably President Shimon Peres, had high hopes for the latest initiative to improve the Palestinian economy. Kerry arrived at the World Economic Summit in Jordan with his usual unrealistic high hopes for the value of his diplomacy but he did not go there without offering serious incentives to the Palestinian Authority to quit its boycott of peace negotiations that has been going on since before Barack Obama became president of the United States. The United States offered a $4 billion plan that was supposed to both boost the Palestinian economy as well as give PA leader Mahmoud Abbas a tangible benefit for cooperating with Washington’s new plan to restart talks with Israel. But the Palestinian answer wasn’t long in coming. Anyone who has paid attention to Palestinian responses to the various ways that President Obama has tried to tilt the diplomatic playing field in their direction or the way they answered various Israeli peace offers in the last 20 years knows that it was the usual one word reply: no.

As the Times of Israel reports:

Slapping down the notion that the PA might be appeased by Kerry’s focus on economic improvements, President Mahmoud Abbas’s economic adviser, Mohammad Mustafa, said ”The Palestinian leadership will not offer political concessions in exchange for economic benefits.” He added, in a statement reported by the Palestinian Ma’an news agency: “We will not accept that the economy is the primary and sole component.”

Mustafa, who also heads the Palestine Investment Fund, said the PA’s priorities are not economic but rather a political framework for the creation of Palestinian state based on the 1967 lines, with East Jerusalem as its capital, that also ensures the rights of refugees and a political compromise, the Palestinian news agency added.

Investors are nonetheless more than welcome to “come to Palestine,” the statement added.

In other words, the Palestinians say thanks for the cash but no talks except those that guarantee they get everything they’re asking for while giving nothing in return and even then there’s no guarantee they won’t continue the conflict as their insistence on the “right of return” — which is tantamount to calling for Israel’s destruction — indicates.

While this is another humiliating setback for Kerry, it’s actually far more significant than that. It exposes the fallacy at the heart of most efforts to create peace between Jews and Arabs for the last century.

Almost from the beginning of the Jewish return to their ancient homeland, many Zionists as well as their foreign friends thought the Arabs inside the country as well as those in neighboring lands would be won over to the new reality once they realized that the Jews brought development and prosperity with them. The influx into the country created tremendous growth even as the conflict escalated over the course of the first half of the 20th century. Throughout this era, Labor Zionists who combined a desire to rebuild the Jewish presence with socialist ideology believed Arab rejectionism was a function of the exploitation of the masses by an elite that profited from conflict. They thought once it was understood that all would benefit from peace and reconciliation, Palestinian Arab workers and peasants would welcome the Jews. Even hardheaded pragmatists like David Ben Gurion thought this way for a long time. They were wrong.

Surprise! PA’s Fiscal Crisis Is Not Due to Israel But Gaza.

Evelyn Gordon..
Commentary/Contentions..
20 September '12..

The World Bank issued another report on the Palestinian economy yesterday, and its conclusions were utterly predictable: The Palestinian Authority faces a fiscal crisis, and desperately needs additional handouts on top of the $1.14 billion it’s already getting this year; and the crisis is mostly Israel’s fault. But while blaming Israel is always easy, the truth is the PA hasn’t a prayer of ever resolving its fiscal crisis without addressing the real elephant in the room: Gaza.

According to PA Prime Minister Salam Fayyad, Gaza accounts for fully 48 percent of the PA’s expenditures. But since Hamas took over the territory in 2007, revenues received from Gaza have plummeted from 28 percent to a mere 4 percent of the PA’s budget. In other words, the PA has a hole equal to 44 percent of its budget due solely to its unbalanced income and outlays on Gaza. Nothing Israel does will be able to compensate for that.

The problem is twofold. First, because Hamas controls Gaza, the PA can’t collect taxes there – and Hamas has no interest in giving the PA any of the taxes it collects. Often, Hamas doesn’t even pay the PA for services received: After the European Union stopped paying for Gaza’s electricity in 2010, for instance, the PA picked up the tab. In fact, that the PA receives any money from Gaza at all is mainly thanks to Israel, which transfers the taxes it collects on goods imported into Gaza from Israel.

Quote of the week: Why the Palestinian Arab economy remains so weak - and what this means

Frimet/Arnold Roth..
This Ongoing War..
18 August '12..





Let's start with a quotation:

The Palestinians could have built one of the best economies in the region after the beginning of the peace process in 1993. But instead of using the billions of dollars that were given to them by Americans and Europeans to create new jobs, the PLO leadership stole most of the funds and later blamed Israel for damaging the Palestinian economy. Suicide bombings and financial and administrative corruption are the main reason why the Palestinian economy remains as weak as ever. The Palestinians are experts in shooting themselves in the foot and then blaming Israel.

We know little about Hisham Jarallah other than that he is described as a journalist based in the West Bank and that he wrote the words above. Few Palestinian Arab voices have been heard that speak plain sense about the central role that people's personal welfare plays in the way they relate to Arab/Israel conflict. His appears to be one. The Gatestone Institute published his article on their website yesterday. The title - not so politically-correct but absolutely justified - is: "How Palestinians Keep Shooting Themselves in the Foot".

Instead of using the billions of dollars that were given to them by Americans and Europeans to create new jobs, the PLO leadership stole most of the funds and later blamed Israel for damaging the Palestinian economy... [Meanwhile] as the Arab countries continue to impose strict employment restrictions on Palestinians, Israel is opening its doors to Palestinian workers from the West Bank. Palestinians say, in fact, that Israel is becoming one of the largest employers of Palestinians in the Middle East.

He refers to data released this past week by the Palestinian Central Bureau of Statistics in Ramallah. They show some 80,000 Palestinian Arabs are now working in Israel, including the demonized "settlements". There has been modest growth in the past year, and then last week Israel's government issued work permits to 10,000 more Palestinian Arabs from the West Bank.

Palestinians - Just Keep Shooting Themselves in the Foot

Hisham Jarallah..
Gatestone Institute..
17 August '12..

As the Arab countries continue to impose strict employment restrictions on Palestinians, Israel is opening its doors to Palestinian workers from the West Bank. Palestinians say, in fact, that Israel is becoming one of the largest employers of Palestinians in the Middle East.

Figures released this week by the Palestinian Central Bureau of Statistics in Ramallah showed that at least 80,000 Palestinians were now working in Israel and even in Jewish settlements.

In the first quarter of 2012, according to the bureau, there were only 77,000 Palestinians working in Israel and the settlements. In the second quarter of the ear, the number grew to 80,000; and earlier this week, the Israeli government issued work permits to another 10,000 Palestinians from the West Bank.

The move has been received with a sigh of relief among Palestinians, especially as it comes on the eve of the Muslim holiday of Eid al-Fitr, marking the end of Ramadan.

The figures also showed that Palestinians employed by Israelis earn more than those who work for their Palestinian brethren in the West Bank and Gaza Strip. A Palestinian construction laborer often earns more than a senior ministry official in the Palestinian Authority government in the West Bank or the Hamas administration in the Gaza Strip.

What is interesting about the bureau's report is that the number of Palestinians working in Jewish settlements has increased despite calls from the Palestinian Authority to boycott the settlements.

Greenfield - Israel’s ‘You Built It’ Culture

Daniel Greenfield..
frontpagemag.com..
07 August '12..

When Mitt Romney arrived in Jerusalem and suggested that Israel’s success contrasted with its Muslim neighbors was due to a culture of success, he was waving a red flag in front of a red bull. Romney’s comments were as provocative to the left as Obama’s “You didn’t build that” remark was to us.

To the left, success has become the Mark of Cain. Where success once used to be proof of good character, the balance has shifted and it is now proof of bad character. The left blames all disparities on injustice. If A has less than B, then B has somehow discriminated against A. All that’s left is for the sociologists and critical race theorists to plug in the variables, write their papers and explain the mechanism for the injustice and how it can be remedied through centralized redistribution.

This is the era of “You didn’t build that” where achievement is inherently unfair and an object of guilt. To succeed is to steal. Anyone who has achieved more than those around him has unfairly taken from them. And the more he succeeds, the more he has to feel guilty about and the more he must atone through social justice.

Mitt Romney didn’t build companies; he unfairly redistributed what should have been equal resources in an unequal way to create that success. America also didn’t build anything; it just looted the resources and markets that should have been divided equally among the nations of the world. And the same goes for Jews and the Jewish State. Individual success is not exceptionalism; it’s stealing from the collective.

The left already knows why Israel is more successful. Because it’s a greedy country whose success has come at the expense of its poorer neighbors. The left finds the idea of explaining success in terms of character, either individual or national, to be offensive. To suggest that success is due to personal virtue is to also imply that failure is due to a lack of virtue. The left is not interested in exploring what’s wrong with nations or groups that fail, only in explaining how their failure is no fault of their own.

The left was only interested in Jews as an oppressed minority and in Israel as a small doomed country. Once Jews became successful and Israel emerged victorious, the left turned on them and on Israel.

Israel’s success is one of the greatest weapons that the left uses against it. If Israelis were still living in tents and trying to get the power to stay on for more than a few hours a day, the Jewish State wouldn’t make nearly as tempting a target. Israel’s transformation from a bunch of refugees and farmers armed with third-rate weapons to a prosperous nation of flowering orchards, booming tech companies and new towns rising out of the earth, is proof of its immorality. If the Jewish State were truly moral, it would have stayed poor.

Kushner - From Israel: Following a Progression

Arlene Kushner..
05 August '12..





We start with an article by Shoshana Bryen of the Jewish Policy Center, written on July 29 (emphasis added):

"The Palestinians," she wrote, "face an economic crisis more severe than the World Bank had anticipated.

"...The World Bank blames the world economy and Israel. It does not find fault with Palestinian corruption, an outsized security force, an oversized bureaucracy, an overreliance on other people's money, or the failure to find things to do that produce income. It declines to consider whether the ongoing Palestinian war against Israel has had an impact on the Palestinian economy."

"...The World Bank and other donors fall precisely into the trap, treating Palestinian poverty as if it has no relationship to Palestinian government policy...If the Palestinians were nearly as worried about poverty (rather than cash flow) as the World Bank, their leadership would figure out how to produce something people in the real world value and for which they would pay.

http://www.jewishpolicycenter.org/3239/palestinian-financial-crisis-looms

~~~~~~~~~~

An important article, which made significant points about the failure of the PA government, such as it is, to adopt responsible fiscal policies.

Bryen's article actually followed on the heels of news releases regarding a World Bank assessment of the fiscal situation of the PA (emphasis added) :

Israel or the Palestinians? Who’s Dependent?

John Podhoretz..
Commentary/Contentions..
31 July '12..

I have a piece in the New York Post today that suggests only a liar or an insane person would deny that Israel benefits from a political culture far healthier than the corrupted and diseased culture of the Palestinian polities. You can read it here. Mitt Romney pointed out the wild disparity in GDP in the areas controlled by the Palestinians and those under Israeli dominion. Someone on Twitter commented that Israel is a “welfare state” living off the U.S. and we should see what would happen if it were cut off.

Well, let’s see. U.S. aid to Israel has remained steady around $3 billion a year since the signing of the Camp David Accords in 1979. It was set that high in part because Israel surrendered functional oil fields to Egypt when it gave back the Sinai and lost a significant source of income. In 1980, that aid was enormously important to Israel’s general health. It constituted something like one-seventh of the nation’s overall GDP ($22.8 billion). Flash forward to 2011. Israel’s GDP was $245 billion. U.S. aid constituted 1/81st of Israel’s GDP.

What’s more, almost all that aid is in the form of military assistance, much of it in the form of support for Israel’s Iron Dome missile-defense efforts, which have direct R&D implications for the United States. In other words, Israel is testing, under real-world conditions, equipment the U.S. may need to use later.

Palestinian Financial Crisis Looms? Looking at the Roots of the Crisis.

Shoshana Bryen..
American Thinker..
29 July '12..

The Palestinians face an economic crisis more severe than the World Bank had anticipated; the Bank fears that the territories may become "ungovernable." This is not actually new, but since the Bank in its panic is considering bypassing restrictions on money to Hamas, it is worth looking at the roots of the "crisis."

The Palestinian Authority's 2012 budget -- produced by PM Salam Fayyad, the West's "go-to man" for economic decision-making -- was a fantasy. It called for $3.5 billion in spending, including $1.1 billion in aid, and showed a deficit of between $750 million and $1.1 billion. The latter has proven to be closer to the truth. The Palestinian economy was expected to generate about $1.3 billion, and the PA planned to spend three times that. (By comparison, Vermont, the smallest generator among U.S. states, produced about $26 billion last year.) U.S. aid ($513 million, not including security assistance) was expected to cover about 20% of actual PA spending, with the Europeans kicking in another 20%.

With planning like that, who could be surprised by a $200-million cash shortage?

The World Bank blames the world economy and Israel. It does not find fault with Palestinian corruption, an outsized security force, an oversized bureaucracy, an overreliance on other people's money, or the failure to find things to do that produce income. It declines to consider whether the ongoing Palestinian war against Israel has had an impact on the Palestinian economy.

There used to be income.

The truth behind why the Palestinian Arabs face "worst financial crisis" ...

Israel's role in it and what it could mean to the financing of Palestinian terrorism

Frimet/Arnold Roth..
This Ongoing War..
02 July '12..





The background to the revealing piece of analysis by Elder of Ziyon that follows can be found in an al-Arabiya news report headlined "Palestinian authority faces ‘worst funds crisis since founding’"


EoZ's posting starts with the AFP version of essentially the same story:

The Palestinian Authority government in the West Bank is facing its “worst financial crisis” since its 1994 establishment, the Palestinian labor minister told AFP on Sunday. Ahmed Majdalani warned that a shortfall in the delivery of aid from Arab donor nations means the PA will be unable to pay employees their July salaries or pay off debts it owes to private businesses across the West Bank. “It is the worst financial crisis experienced by the Palestinian Authority since its founding,” he told AFP... The Palestinian Authority has frequently warned it faces a massive financial shortfall that threatens its ability to pay thousands of government employees on time, or even at all. A delay in salary payments would be particularly sensitive this month, as the Muslim fasting month of Ramadan begins in mid-July. Muslims often break their daily fast at large communal meals, stocking up ahead of time on plenty of food. Last July, Palestinian prime minister Salam Fayyad said the government would pay workers half-salaries because it faced a shortfall of hundreds of millions of dollars. He attended a special meeting of the Arab League to urge Arab donor nations to make good on aid pledges.

EoZ says:

Rubin - An Example of the Fantasy Middle East: Spinning the Palestinian Economy to Claim the Opposite of Reality

Barry Rubin
The Rubin Report
23 June '11

http://rubinreports.blogspot.com/2011/06/example-of-fantasy-middle-east-spinning.html


Here’s the West’s biggest problem at this moment in the Middle East (there will be bigger ones soon): The creation of an absolute fantasy world in place of the actual real Middle East.

Consider an article in the Financial Times.

The lead:

“Palestinian workers in the West Bank have so far failed to benefit from the recent surge in economic growth, with new research showing that unemployment is high and rising while wages continue to fall.”

Their interpretation:

The survey offers a sobering counterpoint to recent statements by Israeli and international leaders hailing annual growth rates of more than 9 per cent in the West Bank and Gaza Strip. At the same time, it appears to confirm the concerns expressed by international economists and by Salam Fayyad, the Palestinian prime minister, who warned repeatedly that the revival of the Palestinian economy was “unsustainable” without further political progress.

My interpretation of their interpretation:

Ah, so if the Palestinian Authority lies about its economic situation, it really shows that Israel is wrong. Ha, ha. Good one. And if the economy isn’t doing well, it also shows that Israel must make more concessions and the Palestinians must be given more things! Another good one.

My interpretation:

The Palestinian economy is a mirage floating on a sea of massive foreign donations. It is still full of government incompetence, inefficiency, and corruption. If everything is so fragile and you turn it into a state that doesn’t miraculously solve economic problems. It just creates a fragile state that will depend on anti-Israel demagoguery, tolerating cross-border raids into Israel, infusions of pro-Islamist money (Iran, Syria, Muslim Brotherhood), and possibly a takeover by Hamas.

We are being told that Hamas is not to be feared because the West Bank economy is doing so well. If elections are held the Fatah rulers of the PA will win. Similar confidence made fools of them in 2006, when Hamas won the election and the U.S. State Department depended on false polls done by Fatah cadre to predict the opposite.

So when a respected journal like the Financial Times tells you that 25 percent unemployment proves that we must rush into a deal one might ask what planet they are living on.

Euphemism:

“[Israel and the Palestinians] have also clashed over a recent deal to restore unity between rival Palestinian factions, and agreement which Israel rejects.”

Unvarnished Truth

Might one of those factions be a genocidal, antisemitic, revolutionary Islamist, terrorist, client of Iran and Syria, intent on war group known as Hamas? Otherwise, why should Israel possibly reject “unity between rival Palestinian factions.”?

Never Blame the Palestinian Leadership for Palestinian Problems

There’s no discussion of what the PA might be doing wrong. Prime Minister Salam Fayyad, who had been continually bragging about his accomplishments regarding the economy, is portrayed as being the chief person warning about the problems. And Israel is at fault, if only for trying desperately to find something nice to say about the PA.

Joffe: Who Oversees Foreign Aid to the Palestinians?

Alexander Joffe
Hudson New York
05 May '11

http://www.hudson-ny.org/2085/palestinians-foreign-aid


In Palestinian economics, where all the money goes is unclear -- but where does all the money come from? Which U.S. programs give how much and who has legislative oversight? Now that Palestinian Authority (PA) prime minister Salaam Fayyad has announced a plan for September for unilateral Palestinian statehood, which includes a request for $5 billion over three years -- and presumes that the newly announced Fatah-Hamas rapprochement does not scuttle all American aid -- the problem of oversight is all the more pressing.

The fundamental tension between Congress's power of the purse and the president's obligation to make foreign policy has always been clear. But so too is the extent to which certifications and waivers by the Executive blatantly circumvent the express will of Congress and defy its obligations to advise and obtain consent.

The will of Congress and the empirical reality regarding the difficulties of the Palestinian Authority and Palestinian society count for little when successive U.S. presidents waive requirements and certify compliance regardless of Palestinian performance. And presidential ability to "reprogram" funds removes Congress even farther from the equation.

A recent Congressional Research Service study notes that since 2007 the U.S. has contributed $650 million to the Palestinian Authority for "direct budgetary assistance" and almost $400 million for "security forces and criminal justice systems" in the West Bank. Almost another $1 billion was directed through the U.S. Agency for International Development (USAID) to be "implemented by nongovernmental organizations in humanitarian assistance, economic development, democratic reform, improving water access and other infrastructure, health care, education, and vocational training." Finally, the U.S. is the largest single contributor to UNRWA and having provided over $230 million in 2010.