The strength of the relationship between the state of the Palestinian economy and the degree of political tension in the territories is a matter of dispute. But everyone agrees that this connection exists, and Israel officially sees a connection between the two.
At the start of the week, Prime Minister Yair Lapid said, "The IDF and Shin Bet have been working for the last few weeks to prevent terrorist activity inside Israel…. We will continue the policy that says - wherever terrorism originates from we will come down hard, also in economic-civil terms."
Lapid even added that in places where there is quiet, Israel will make an effort to allow normal life and promote the Palestinian economy. "At the same time, Israel will positively consider increasing the number of workers who will be allowed to leave Gaza to up to 20,000 workers, but it will stop there. Any further increase in the number of workers will conditional on return home our young men who are held in Gaza"
Palestinians remain in an undeveloped country
Since the beginning of the year, the security forces have seen a sharp increase in terrorist incidents - stone throwing on main highways has increased greatly, as well as more serious incidents like shooting, stabbing and car ramming attacks. The peak of the attacks was during the winter, when 19 Israelis were murdered within the Green Line. The current more tense security situation was reflected in the shooting at the beginning of the week in the Jordan Valley, when six people were injured, including two seriously.
One leading researcher relates the uptick in terror to the deterioration of the Palestinian economy, which has yet to recover from the Covid pandemic.
International Monetary Fund (IMF) and World Bank quarterly reports about the Palestinian economy, stress the dismal fiscal situation of the Palestinian Authority. While the annual expenditure over the last five years has remained fairly constant at around NIS 17.5 billion, revenues have dropped sharply from NIS 16.6 billion in 2016 to NIS 13.6 billion in 2020, and recovered only partially in 2021, climbing to NIS 14.9 billion.
The Palestinians are completely dependent on foreign aid, which has decreased by 65%, from NIS 2.9 billion in 2016 to just NIS 1 billion in 2021. This year, expenditure has exceeded revenues by more than 15%, and the budget deficit has reached 5.3% of Palestinian GDP .
These figures have affected the public both in terms of salary cuts for state employees, and lack of investments in infrastructure, education, housing, etc. These leave the Palestinian citizen in an undeveloped country with much bitterness towards the Palestinian Authority (PA), but mostly directed towards Israel.
Corruption among Abu Mazen's sons
Tel Aviv University Institute for National Security Studies INSS senior researcher Haggay Etkes says that what indicates a complete loss of trust in the PA is protests by Palestinian workers in Israel.
They are protesting against the transfer of their salaries through the banks and not in cash, as was the case until now. Their lack of trust in the PA causes the workers to oppose the move, which is supposed to help them, both in the fight against the trade in work permits, and in transferring them between different contractors.
According to Etkes, the growth of the Palestinian economy this year was reasonable but stemmed from an increase in trade and import taxes and not from industry or agriculture. He points out that the income from Israel is equivalent to about a quarter of the Palestinian GDP.
Another issue raised by employment in Israel is how it relates to academically educated Palestinians. "When a plasterer in Israel earns much more than a white-collar employee in Ramallah, it affects the structure of society. Ultimately, the principle by which education is supposed to be an engine of growth does not really work, and the status of the educated in the PA is damaged."
Last week I spoke to Amjad - a Palestinian laborer from the Hebron area who has been working in Israel for years and I asked him about his opposition to transferring his salary through the banks. "You are cooperating with the corruption of the Palestinian Authority, and so are the Americans. Every dime that enters the Palestinian Authority goes to the corrupt. What do they do for us? Roads? Schools? Nothing. It's all from foreign money or from Israel, and what comes to them goes into their pockets. Look at the villas they are building in Rawabi (a prestigious new city south of Ramallah) and the most corrupt leader - look at how much money his sons are sitting on."
These harsh sentiments are echoed in countless conversations, and they are completely justified - investigations by international media over the years substantiate the complaints. PA chairman Mahmoud Abbas has three sons. His oldest son Mazen, who gave his father his common nickname, died in 2002 of a heart attack. The other two sons, Yasser and Tarek, are wealthy businessmen in international terms.
Yasser, the second son, built a business empire connected to the Gulf countries. In 1997 he arrived in Ramallah and founded companies in the fields of computers and communications. News agency "Reuters" found that USAID tenders worth millions of dollars and in a wide variety of fields, somehow fell "accidentally" into Yasser's hands.
The American magazine Foreign Policy previously published a comprehensive investigation on Abu Mazen's sons, and among other things noted Yasser Abbas's monopoly on the sale of American cigarettes. In addition to the cigarette company, Yasser is the chairman of the Falcon Holdings Group, which owns companies in the fields of civil engineering, electronics, real estate and cellular communications.
Another investigation by an Arab media outlet from the Gulf revealed that in 2009 the company, headed by Yasser Abbas, received $35 million from the Americans to carry out local business projects such as road construction on behalf of the PA. According to Israeli and Palestinian sources, most of these projects were carried out, if at all, only partially, while saving costs, and without actual supervision by the donor countries.
The younger brother, Tarek, is the owner of the advertising and public relations company Sky, the largest in the PA. It turns out that almost every product marketed by international companies in the Palestinian Authority passes through it. Sky also holds the exclusive franchise for advertisements on the Palestinian state television station.
In 2015, documents were published showing that Yasser Abbas had purchased several apartments in a prestigious residential complex in Ramallah for substantial sums. Yasser Abbas sued Foreign Policy for defamation but his claim was dismissed. In a 2009 interview with "Globes," Yasser Abbas claimed it had nothing to do with his family ties. In general, according to him, being Abu Mazen's son does not help, either in life or in business. "Father's shadow gets in the way. You try to build a personality for yourself, to be who you are, but people look at you as 'the son of'."
The PA leadership is losing control
Another reason for the escalation in the security situation is the approaching end of the rule of PA chairman Mahmoud Abbas (Abu Mazen). Abbas is over 87, has postponed presidential elections more than once on various pretexts, and his status, as well as the status of the leadership of the PA as a whole, is being undermined. All this is being expressed in the deterioration of the rule of authority.
In Hebron, clan battles involving gunfights have been going on for months with deaths on both sides, and the Palestinian police are powerless. In Jenin, where the Islamic Jihad and unruly Fatah factions are particularly strong, Israel is the one forced to enter and arrest their senior officials. The same is true in Nablus, where members of Fatah's military units often join with Hamas to challenge the political leadership.
Published by Globes, Israel business news - en.globes.co.il - on September 6, 2022.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.