Abbas seeks to free Palestinian economy from Israel

Palestinians are determined to revisit the Paris Protocol on Economic Relations, which they have said deepens their subordination to Israel.

al-monitor Palestinian President Mahmoud Abbas attends a joint news conference with Malta's President Marie-Louise Coleiro Preca, in Ramallah, in the Israeli-occupied West Bank, Jan. 31, 2019.  Photo by REUTERS/Mohamad Torokman.

Feb 6, 2019

GAZA CITY, Gaza Strip — Israel has tentatively agreed with the Palestinian Authority (PA) to revisit the Protocol on Economic Relations they signed in Paris in April 1994.

PA President Mahmoud Abbas revealed the news Jan. 27 at the Palestinian Central Bureau of Statistics in Ramallah, the West Bank. “We tell the Israelis that multiple agreements were signed between us, starting with the 1993 Oslo Accord, to date, and it is up to [Israel] for these relations to continue based on just and legal foundations — or else we will relinquish them, starting with the Paris Protocol," he said. "They gave preliminary consent for us to sit and discuss it, after [they had] initially refused to add any amendments."

The Times of Israel reported Jan. 28 that spokespeople for the Israeli prime minister and Foreign Ministry refused to comment on Abbas' remarks.

The PA in December had formally requested that Israel revisit the protocol, and Palestinian Foreign Minister Riyad al-Maliki said Dec. 8 that French authorities agreed to participate.

The Paris Protocol regulates the two sides’ economic relations, and applies to the West Bank and Gaza Strip regarding a five-year transitional period set forth under the Oslo Accord for the two sides to settle matters such as borders, refugees and the status of Jerusalem. The protocol provided for formation of an economic committee to follow up on the protocol's implementation every six months, or upon either party's request. Yet, since 2000, the committee has been convened only once, in 2009.

Speaking to Al-Monitor, Mohammad Mustafa, Abbas' economic affairs adviser, said the protocol needs to be revised or annulled to liberate the Palestinian economy from Israel's and improve the trade imbalance. He said Israel has failed to comply with the agreement's basic provisions, which include free movement of goods and people.

The Palestinian government is developing a comprehensive economic program designed to expand vital sectors such as energy, agriculture and health; to create job opportunities; and to shrink the trade deficit with Israel by cutting back on imports from Israel and diversifying import sources, he added.

Mohsen Abu Ramadan, a PLO Central Council member, told Al-Monitor Israel has violated multiple agreements with the PA, including the Oslo Accord. He also cited Israel's constant military incursions into Palestinian areas and its withholding of tax and customs revenues collected on behalf of the PA, which has caused the PA to lose 70% of its financial resources.

Just last year, Israel cut and withheld clearance revenues of hundreds of millions of dollars to compensate the families of Israelis who were killed or wounded during Palestinian armed operations. The Paris Protocol states Israel must allocate all relevant import tax revenues to the Palestinian Authority within six working days from the day of collection.

Ramadan said the protocol has deepened Palestinian economic subordination to the Israeli economy and sapped the possibility of building a strong Palestinian economic structure based on production. Revisiting the protocol is a step toward implementing decisions by the PLO Central Council and Palestinian National Council to move toward statehood and subsequent economic disengagement from Israel.

Nabeel Kassis, finance minister and director general of the Palestine Economic Policy Research Institute (MAS), told Al-Monitor the ultimate goal is to end the Israeli occupation of Palestinian territory. “This doesn't mean that Palestinians can’t benefit from some of the protocol’s provisions in case the two sides decide to add amendments on it instead of annulling it,” he said.

Israel is the source of 59% ($2.93 billion annually) of PA revenues. This is while 81% of PA products are exported to Israel ($770 million per year), according to the Observatory of Economic Complexity statistics for 2016.

Speaking to Al-Monitor, Mouin Rajab, an economics professor at Al-Azhar University in Gaza, ruled out the possibility that the PA will find an alternative to the Paris Protocol. Palestinians can’t invest in their natural resources due to Israel’s control over them, the crossings, and gas fields facing the Mediterranean Sea, he added.

Rajab blamed Palestinian government institutions for keeping the economy almost entirely subordinated to the Israeli economy. He added that the government hasn't developed serious studies that could result in economic disengagement from Israel. The government only insinuates, occasionally, that it will do so, he said.

Among all of the PA's agreements, the Paris Protocol has drawn the most criticism from Palestinians, who have been insisting on its annulment, not amendment, as it has cost Palestinians dearly — for example, $9.46 billion in 2015, as per the last published figures.

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