The two Palestinian governments, the one seated in Ramallah and that in Gaza, are in dire straits financially. Hamas’ government chief Ismail Haniyeh has extensively toured neighboring countries in recent weeks, and following a visit to the Gulf Emirates, arrived in Tehran. One of the reasons for his visits (and possibly the most important one) is money. Many of his associates urged him, both publicly and in private, not to go to Iran. Among those concerned about the visit was his partner in the Hamas leadership, Khaled Mashaal. However, Haniyeh, who has to pay the wages of the thousands of employees of the Hamas government in the Gaza Strip, decided he had no choice but to appeal to Tehran, the only place, he believed, where he would be able to receive immediate financial aid.
Joint deficit of 1.5 billion dollars
A few days ago, the Palestinian Central Bureau of Statistics and the Palestinian Monetary Authority in Ramallah published data regarding the Palestinian Authority’s balance of payments for 2011. The data show an increase in exports of goods, mainly to Israel, which totaled about one billion dollars, and a growth in exports of services provided by transportation companies and subcontractors working for Israel, which amounted to over 500 million dollars.
However, this overall increase in exports is in no proportion to the overwhelming rise in imports to the Palestinian territories in 2011. Imports in 2011 reached about 6 billion dollars. The data thus show a huge deficit in the Palestinian trade balance, amounting to 4.5 billion dollars. As there was also an increase in receipts from work done by Palestinians in Israel, which amounted to close to one billion dollars in 2011, the deficit at the end of the year totaled 3.5 billion dollars.
In previous years, donations to the Palestinian Authority helped cover the deficit. However, they have drastically dwindled since. While three and four years ago, donations reached as high as 2 billion dollars, last year, they added up to barely 800 million dollars. The Palestinians also receive foreign aid from international organizations such as the United Nations Relief and Rehabilitation Administration (UNRRA). In addition, relatives living abroad send them money, and there are some private investments. Overall, these add up to some 1.2 billion dollars. Taken together, in 2011, the Palestinian deficit totaled about 1.5 billion dollars. That is a huge rise compared to the deficit in previous years, which was on the order of no more than 500 million dollars.
The governments in the West Bank and Gaza are living from hand to mouth
Such a deficit, accounting for about 50 percent of the Palestinian GNP, cannot be maintained for long. Last year’s trend of rising deficit and dropping foreign aid is disastrous. The drop in foreign aid may be attributed, among other things, to the faltering peace process. Foreign aid is attendant on the peace process, and in the absence of a peace process, the donating countries, whose economic situations are not so great either, are unwilling to go on making contributions.
The deficit directly affects everyday life in the West Bank and Gaza. The Palestinian Authority holds up payments to suppliers, halts the implementation of governmental projects, delays wages and is behind on loan returns. Gaza residents suffer prolonged power cut-offs, which cause water-supply failures and damage to the sewage system, while in Ramallah, the Palestinian Authority aims to raise taxes and force thousands of civil service employees into early retirement. The Palestinian governments in the West Bank and Gaza are thus barely making it, living from hand to mouth, and their seniors have no choice but to go from door to door, from one Arab capital to another, begging for financial assistance.