Shocking numbers. How is the economic relationship between Israel and the Palestinian Authority? | Economy

Bethlehem For the third consecutive month, the Palestinian government is deducting part of its employees’ salaries due to what it says is a financial crisis they are going through for several reasons, including: Israel withholds part of the tax clearance funds it raises in favor of the Palestinian Authority, and due to the delay in foreign financial aid.

The economic relationship between Israel and the Ramallah Authority is still based on the Paris Protocol, which is the economic annex to the “Oslo Agreement” signed in 1993 between Israel and the Palestinian Liberation Organization.

But it is assumed that this protocol has been in place for a limited period since the signing of the agreement, and it ends in 1999, so how is the economic relationship between Israel and the Palestinian Authority going so far? What is the money exchanged between the two parties? Can the Palestinians economic decoupling from the occupied state?

What is the financial income of the government?

Foreign aid was between 50-60% of the Palestinian Authority’s revenue during the first years of its establishment, which was funded by European and Arab donor countries, but in recent years it no longer exceeds 20%.

The Palestinian Authority’s budget over the past few years is close to $ 5 billion, and it suffers from a lack of revenue, either due to the low value of foreign aid, or the decline in internal revenue, of which taxes are the most important. .

Economists believe that the most important element of taxation for the Government is the value-added funds on imported goods, as well as customs funds on the imported ones, and the value of taxes today makes up almost 70% of the Palestinian Authority’s budget.

What are the most prominent provisions of the Paris Economic Protocol?

The Paris Economic Protocol defines the economic relationship between Israel and the Palestinian Authority, and among its most prominent articles: Determining the goods that the Palestinians import, the most important of which is the ban on goods that are considered inputs to production processes.

The agreement also specifies the quantities of water given to the Palestinians from their land, which according to experts today are no longer sufficient, even for drinking, so how can they obtain water for economic development, whether for agricultural and industrial uses?

And because Israel controls the crossings and borders, it therefore controls all Palestinian exports and imports that have to go through it. The economic protocol stipulates that 3% of the tax money is deducted in favor of Israel, which collects these funds and to the Authority.

Also, according to the protocol, tax funds are valid for up to 6 months from the date of their issuance, after which the legal right to claim it for a Palestinian will be forfeited.

According to the protocol, Israel should be the main controller in import and export operations. Today, the occupying power controls 88% of Palestinian exports, as well as 54-57% of Palestinian imports.

There are provisions in the protocol relating to customs, monetary transactions, retirement, workers, trade, tourism projects, road victims’ money, and others.

What is the problem with the agreement?

Dr. Magdi Al-Jabari, professor of finance and accounting at the University of Hebron, south of the occupied West Bank, believes the Paris Economic Protocol is the most dangerous economic deal that has chained the Palestinians because it stifles development, killing the Palestinians. economy and limit its growth and development.

The agreement, according to Al-Jabari, also precludes the optimal use of natural resources in the Palestinian territory, especially the areas classified as “C”, which make up 63% of the total land occupied in 1967.

As for Thabet Abu Al-Roos, a member of the General Union of Palestinian Economists, he believes the most prominent problem of the agreement is the one customs envelope that prevents the government from moving only two degrees in the course imposed by Israel is.

In the sense that if the tax rate in Israel is 16%, the government may not go below 14% or more than 18%, and here appears the difference in income levels for Israeli and Palestinian citizens, which is negatively reflected on the latter.

The dark side

Abu al-Rous believes that the other dark side of the agreement is Israel’s control of the crossings, and therefore it makes the controlling Palestinian tax collection, and the Palestinians do not know the details of these amounts.

He told Al Jazeera Net: that the Israeli side has so far and over the years not disclosed any details to the Palestinian side about the financial numbers under which the government receives the clean-up funds, and gives Israel a final financial number which it ag. only applicable without details.

Today, cleaning accounts for no less than 68% of the Government’s revenue, which means that it is the largest source of this revenue.

The problem with that, too, according to Abu al-Roos, is that without an audit of the value of these funds, and documents and documents that support their details, the government can not plan for the future, nor is it able to to draw up discretionary budgets, given the control of its financial resources on Israel’s part.

The other problem is that Israel deducts water and electricity debts, and if it wants to, it deducts part of the cleaning funds it collects for the government, such as deducting the salaries of prisoners and families of martyrs, which solves the problem of the recent period.

The government can not object to this for more than 6 months, because after that, according to the agreement, if he does not receive the cleaning funds from Israel, whatever it is, it is considered canceled and they are not entitled to claim it. not.

Abu Al-Roos believes that given the provisions of the Paris Economic Protocol, the economic bond between the Palestinian Authority and Israel is close and cannot be removed because the regulations and laws in the Palestinian Authority were built on the basis of this agreement, and therefore it is difficult to break away from this reality, which is the dependence of the Palestinian economy on the Israeli.

What is the solution?

Dr. Al-Jabari returns and tells Al-Jazeera Net: Today, tax money is an Israeli method of blackmailing the government, and on the other hand, the latter is moving towards the easiest solutions to solve this blackmail by part of the blackmail to pull off. employees’ salaries.

The first is also, according to Al-Jabari, for the government to cut unnecessary small business, and to fight financial and administrative corruption to reduce the shortfall it suffers.

The government must – according to al-Jabari – reduce its financial spending on foreign affairs and diplomacy, which does not play the role entrusted to it to first clarify the justice of the Palestinian cause to the world, or the financial effort for the to mobilize steadfastness. of the Palestinians on their land.

Although in his opinion it is more correct that the Palestinian government increases the value of employees’ salaries due to the high prices, and to alleviate the misery of the citizen.

He believes the best solution is to cancel the Paris Economic Protocol altogether because the Israelis do not stick to it, and they use the points in their favor. The Palestinian side insists on weakness and weakness, because this agreement limits their economic development and revives their economy.

Also the most important and dangerous of these, according to Al-Jabari, is that he turns the Palestinian arm with his economy, siege and restriction of his movement with checkpoints and settlements, around the political dimension of the issue that gives him his right to his land, homeland, capabilities and liberation from occupation.

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