Palestinians holding off policy change until Nov. 3

The latest press reports about European Union pressure on the Palestinian government to accept the truncated customs and tax funds that Israel collects on behalf of Palestinians appear to be serious. While EU officials have denied there is any pressure on Ramallah, reliable Palestinian sources in Ramallah told Al-Monitor the pressure is real. “Everyone is looking for a solution, and the EU was supposed to help find a bridging formula. The media coverage is perhaps part of the process to help bring this situation to a resolution,” the source, who asked not to be identified, said. The source insisted no Palestinian position will be taken until the results of the US Nov. 3 elections become clear.

Palestinians and Israelis have been at loggerheads after the Israeli government and Knesset decided to punish Palestinians for their support to families of prisoners and martyrs.

Israel’s Knesset passed a law in July 2018 barring the transfer of the amount used for the prisoners’ and martyrs’ safety net. Palestine’s finance minister refused to accept the truncated monies.

Since the 1994 Paris Economic Protocol, Israel has been collecting customs and taxes for goods earmarked for Palestine and transferring the amount monthly after taking a 3% administrative fee. The latest decision is a further cut of revenues that are supposed to be deposited in the Palestinian coffers.

The EU’s High Representative and Vice President Josep Borrell held a phone call with Palestinian President Mahmoud Abbas Sept. 30. According to an EU press release, “Their conversation was an opportunity to exchange views on several important issues, including on the socio-economic situation and the prospect of Palestinian elections. In this context, High Representative Borrell reiterated the EU’s continued support to Palestinian state-building.”

Meanwhile, Israeli daily Jerusalem Post claims the EU turned down a request from Palestinians for an increase in aid. “No stopgap extra funding should be expected … if they do not accept their own money,” the Israeli daily quoted an EU diplomat as saying Oct. 8. 

For its part, the EU tweeted Oct. 8, “The EU and its Member States are and continue to be the largest international financial supporter of Palestinians. The EU is a firm supporter of the Palestinian Authority (PA). The EU and many partners in the international community have encouraged the Palestinians to again accept the transfers of their own tax revenues as it is their money. There has not been a suggestion of cutting or suspending funds for the Palestinian Authority.”

According to Axios, EU foreign policy chief Borrell called on the Palestinian president to “relaunch security and civilian coordination with Israel, but Abbas was noncommittal,” diplomats told Axios Oct. 7. Jordan and Egypt have passed similar messages to Abbas about the revenues and coordination with Israel, according to Israeli officials. Neither country has confirmed the Axios report. The report by Axios’ Israeli reporter Barak David said Abbas conditioned accepting the funds, with Israel committing in writing that it is no longer pursuing annexation.

Borrell called Abbas and told him the EU would not offer financial assistance or loans until the PA accepts the taxes, according to Axios. Jordan and Egypt have made similar demands, according to the news site. Choosing to refuse the tax revenues, amounting to around $190 million, was a big move, as the money is the primary source of income for the PA, accounting for more than half of its budget.

Peter Stano, lead spokesman of the EU high representative, tweeted Oct. 8 that the EU has not changed its position. “Contrary to some misleading reports, the EU is not changing its position on cooperation with Palestinian Authority, there was no suggestion of cutting or suspending EU funds in relation to Palestine not accepting tax revenues from Israel.”

To be resolved, the financial problem between Israel and Palestinians requires one side to climb down the legal and political tree they have climbed. Israel says the issue has become a law and the government can’t violate its laws. Palestine says the support to families of prisoners and martyrs is also part of Palestinian law. Article 22 of the 2005 Basic Palestinian Law states: “Maintaining the welfare of families of martyrs, prisoners of war, the injured and the disabled is a duty that shall be regulated by law. The National Authority shall guarantee these persons education, health and social insurance.”

Different suggestions have been made without breaking the law. One was for Israel to scrap the 3% administrative fee and this would offset the amount the government is required to deduct.

Another idea was for the Palestinians to accept the money as a down payment rather than accepting it as settling the entire amount due.

One Palestinian activist suggested that the EU replenish the deducted amount. Ali Abunimah, co-publisher of Electronic Intifada, suggested that if the Europeans want to help resolve the problem, they should make up for the amount Israel insists on cutting from the Palestinian tax revenue. Abunimah told Al-Monitor that instead of forcing the Palestinians to accept the truncated money, the EU should subtract that amount from its support to Israel. "The EU should at the very least subtract the money that Israel withholds from the Palestinian tax money from the lavish support that the EU gives Israel," he told Al-Monitor

As Palestinians prepare to go to elections and put their house in order, one question will have to be asked: Will the Palestinian leadership show any flexibility in dealing with important political and economic issues, or will it stay steadfast on its principles without any movement until the other side agrees to all the Palestinian demands.