‘No collapse’ of Palestinian Authority says minister despite strong UN warning

‘No collapse’ of Palestinian Authority says minister despite strong UN warning
A young Palestinian sits at the entrance of a shop in Gaza City on June 3, 2020, amid the novel coronavirus pandemic crisis. (AFP)
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Updated 26 July 2020

‘No collapse’ of Palestinian Authority says minister despite strong UN warning

‘No collapse’ of Palestinian Authority says minister despite strong UN warning
  • UN Special Coordinator for the Middle East Peace Process Nikolay Mladenov gave a briefing to the Security Council last week warning that the PA was on the verge of total collapse
  • Khaled Al-Osaily, the PA’s national economy minister, viewed the UN official’s remarks as a reminder to the the world of its responsibilities about preventing such a collapse

GAZA CITY: The Palestinian Authority (PA) is not on the verge of collapse, one of its ministers told Arab News, despite a UN official saying that its current financial and economic crisis meant it might not be able to pay people’s salaries or even carry out its duties in the future.

Khaled Al-Osaily, the PA’s national economy minister, viewed the UN official’s remarks as a reminder to the the world of its responsibilities about preventing such a collapse and as a judgement of the international community rather than the Palestinian people.

He downplayed the crisis the PA was experiencing and said that it could borrow from banks to cover necessary expenses, contrary to what observers of Palestinian economic affairs believed.

The PA could still rely on “the option of borrowing from local banks, an amount estimated at about $400 million, sufficient with internal revenues, to manage its affairs for a few months,” Al-Osaily told Arab News.

He acknowledged the difficult reality the PA was facing due to its political position in response to Israel’s West Bank annexation plans, but believed in the ability of the Palestinian people to overcome the crisis because they had succeeded in overcoming many challenges during decades of occupation.

UN Special Coordinator for the Middle East Peace Process Nikolay Mladenov gave a briefing to the Security Council last week warning that the PA was on the verge of total collapse. 

He expressed concern that the coronavirus pandemic had wiped out 80 percent of Palestinian revenues. In addition, Rammallah’s refusal to accept tax revenues from Israel meant it was unclear if there were enough resources to pay future salaries or even for the PA to continue performing its governing duties in the coming months, he said, adding that the PA had been late in paying people’s salaries since May.

Israel was trying to take advantage of the PA’s deteriorating reality and applying pressure so that it reversed its position on ending existing agreements, especially on security coordination, said Al-Osaily. He stressed that the leadership was sticking to its guns and would not be subject to any blackmail regardless of the pressure. “Our issue is political, not relief or economics,” he added.

Financial and economics expert Haitham Daraghmeh said that the PA could not improve its current economic situation especially due to the fallout from its political stance, which coincided with the coronavirus pandemic and its negative effects on the global economy.

“The PA does not have economic alternatives, is unable to manage its affairs, and has made an appeal to Arab countries for support or borrowing but without a meaningful response ... even European countries are satisfied with supporting the health sector at the present time due to the deterioration of economic conditions globally,” he told Arab News. “Even borrowing from local banks is no longer available. The PA has borrowed the ceiling (maximum) available to it according to the banking system and, in the event of the current crisis (lasting) for a longer period, the conditions are likely to deteriorate.”

But he also believed that the decision to dissolve or allow the collapse of the PA was not a Palestinian option but an international decision and, therefore, whenever the situation worsened the international community would intervene with Israel to ease things.

According to Daraghmeh, the fact that this situation had been in place for a long time with no foreign intervention may lead to anger in the streets and security chaos that Israel would not be spared from. It may even suffer the most severe impact, he added.

A professor of financial and economic sciences at the College of Graduate Studies at Ramallah’s Arab American University, Nasr Abdul Karim, said that the PA faced a major dilemma. But he disliked the term “collapse” as he thought the authority was far from that point.

“Mladenov’s warning is more functional than political and the PA will not collapse except with an international desire that meets with a Fatah decision,” he told Arab News. “As for its collapse due to the current financial crisis it is unlikely (given) that it is not under popular pressure that leads it to sway and collapse which would mean its complete disappearance.”