Ramallah: Palestinian Prime Minister Salam Fayyad has sent an official letter to US and European officials warning them of a possible collapse of the Palestinian National Authority if the Israeli government insists on withholding the December Palestinian tax revenues.
Fayyad urged US and European officials to exert pressure on the Israeli government to transfer the Palestinian December funds at the earliest opportunity to enable the Palestinian government to pay its public employee wages.
A senior government official told Gulf News that the officials were fully aware of the PNA’s grave cash crisis and were continuing to communicate with Israel on Palestine’s behalf.
Fayyad’s letter contained warnings of the PNA’s possible financial collapse. He said Israel should transfer the Palestinian tax revenues and stick to the financial agreements between the two parties.
The Paris Economic Agreement, which is the financial protocol of the Oslo Accords signed between the Palestinian Liberation Organisation and Israel, stipulated that Israel collects the tax and fees on behalf of the PNA and transfers these funds to the PNA each month. Israel currently collects about $100 million (Dh367 million) and transfers it to the PNA monthly after charging 3 per cent of the total amount in return.
Israel withheld the Palestinian tax revenues a month ago as punishment to the Palestinian leadership which approached the UN General Assembly and upgraded the status of Palestine to a non-member observer state. Former Israeli Foreign Minister Avigdor Lieberman had earlier announced that Israel would not transfer the Palestinian tax revenues for the coming four months, and the Israeli government would use those funds to pay the PNA debts to Israeli electric and water companies. Lieberman then declared that the PNA has a debt of 1.6 billion Shekels and that the Palestinian tax revenues would be used to settle those debts.
Public workers have held a number of general strikes during which all the official PNA institutions, schools, universities and other departments were closed during December. The Palestinian public workers have maintained that they will not stand being left without their salaries by the beginning of January. Under public pressure, the Palestinian government borrowed $100 million from the local banks and paid the public workers a half-month salary, but that scenario might not be possible this month as the PNA currently owns the local banks 1.3 billion Shekels.
The Palestinian government has used the safety net of $100 million as a guarantee at the local banks to secure the loan, said the official.
The Arab states earlier announced a safety net for the Palestinians during the Baghdad Summit if the Israelis punished the Palestinians for approaching the UN General Assembly and in case foreign aid was suspended. So far the Arab states have not provided the PNA with the promised safety net.
The PNA has about 200,000 public workers and needs $200 million to pay their monthly salaries. The Palestinian government uses its tax revenues (collected by the Israel government) to cover half of the salaries and the rest comes from foreign aid.