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Israel, PA find creative ways to save West Bank from economic collapse

Israel understands that implementing the "deduction" law could generate an economic collapse of the PA and in turn endanger security coordination with the Palestinians.
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Half of the crisis in Israel’s relationship with the Palestinian Authority (PA) is behind us, but a comprehensive solution will have to wait until after the Sept. 17 elections. One thing is clear: In the final analysis, Palestinian President Mahmoud Abbas has defeated Israel. On Aug. 22, Israel transferred some NIS2 billion ($570 million) to the PA on the advice of its security agencies in light of the economic crisis in the West Bank.

A short reminder: The PA has refused in recent months to accept various taxes that Israel collects on its behalf (VAT, customs duties, fuel taxes) to protest Israel’s decision earlier this year to withhold some of these funds in order to punish the PA for its financial support of Palestinian terrorists and their families. So far, Israel has accrued NIS3 billion ($850 million) that the PA has refused to accept. Abbas’s insistent stand that he would accept all the money owed or none at all had led the PA to the verge of collapse, with Israeli security officials warning the political echelons that the coordination with the PA’s intelligence and police forces was under threat. Acting on the recommendations of security experts, the government sought a way out of implementing the so-called “deduction” law, but Abbas refused to fold. Finance Minister Moshe Kahlon met with his PA counterpart Shukri Bishara in an effort to resolve the crisis, to no avail.

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