Paris Protocol as a tool to save the Palestinian Authority from collapse

Hamada Jaber
2023 / 9 / 13

First of all, I would like to clarify that as I strongly support any step leads to the Palestinian Authority dissolution, I do support too any step to avoid its collapse.
While Israel s security cabinet recently declared that it wants to "prevent the collapse of the Palestinian Authority", it should be no surprise to them that the Palestinian Authority’s --dir--e situation and weakness is --dir--ectly caused by Israel.

Without any political horizon and in --dir--e economic difficulties, the PA and its leadership have lost legitimacy in the eyes of the Palestinians, and a majority of the Palestinian public (52%) believe the collapse of the PA would be in the Palestinian interest. Around 80% of Palestinians want the President Abbas, who was elected in 2005, to resign. Neither Israel nor the Palestinian public take President Abbas seriously, who has threatened on many occasions to dissolve PA´-or-cease the security coordination with Israel. Palestinian support for the Oslo accords project – the two state solution – is at its lowest (28%) since the beginning of the peace process. The decline of the PA is seen as inevitable by most Palestinians and an opportunity for opposition parties, like Hamas.

Benjamin Netanyahu has saved the PA from collapse on many occasions during his years as Prime Minister as he believes (as the majority of the Palestinians do) that the PA’s existence is an Israeli interest. Previous statements by Netanyahu suggest he would like to see “economic peace” – a concept rejected by the PA, which boycotted all of former US President Trump’s attempts to reach a “deal of the century”.

Yet the PA has had no problem accepting Israeli economic lifelines. It is still Netanyahu that could prevent the collapse of the PA by resorting to the economic measures already found in the Paris Protocol.

The ‘Paris Economic Protocol’ was signed between Israel and the Palestinian Liberation Organization (PLO) during Clinton’s administration in September 1993 to organize economic and trade relations between Israel and the new Palestinian Authority (PA) which was created under the Oslo Accords.

On the PA’s behalf, Israel collects customs and taxes on Palestinian imports, value added tax (VAT) on Israeli products sold to the Palestinian market, plus income tax and social transfers from Palestinian workers inside Israel and Israeli settlements. In total, these collected funds represent 60-70% of all PA revenues. According to the arrangements, Israel is supposed to transfer these revenues to the PA on a monthly basis, after deducting a 3% administrative fee.

But these arrangements have been used by successive Israeli governments as a punitive tool against the PA by deducting´-or-withholding revenues.

Under the current Israeli government, revenue withholding has increased to NIS 267 million (about AUD--$--100M) a month, likely to deal a fatal blow to the PA’s deteriorating economic situation.

Signed as an interim accord for five years, the Palestinian understanding was that the Oslo accords and the Paris Protocol, were steps on the way to Palestinians independence and a State by May 1999. Based on this understanding, the Palestinian leadership accepted all the Israeli conditions and restrictions. The PA viewed the short transitional period as a time to establish and build the institutions that could take on responsibilities as an independent state within five years. Those five-year interim accords became permanent, lasting already for thirty years.

At the heart of the Paris Protocol is the Joint Economic Committee (JEC) which is a Palestinian/Israeli committee established to meet semi-annually to monitor and review the agreement execution and its articles. The last official meeting of the JEC was held before the second Intifada in September 2000, even though the Oslo accords are still active de facto. But without the JEC, Israel unilaterally and selectively chooses what and how to implement the Paris Protocol, making an already bad agreement even worse for the PA and Palestinian people.

Why bad? The Paris Protocol entrenches a customs --union-- and clearance revenue system that prevents any chance for an independent Palestinian economy by allowing Israel to collect the main source (about two thirds) of the PA’s budget.

The disparity in the economies which share a customs --union-- is at the expense of the Palestinian people. Israeli GDP in 2022 was nearly AUD--$--800 billion and the minimum wage is NIS 5,571 (AUD --$-- 2314). On the other side, Palestinian GDP in 2022 was less than AUD --$--30 billion and the minimum wage is NIS 1880 (AUD --$--781). The Palestinian economy is effectively dependent on and integrated into the Israeli one. In addition, Israel is the biggest employer of the Palestinians, with around 200,000 Palestinians working in the Israeli market.

At the same time, Israel places severe restrictions on the Palestinian economy that prevents its growth and independence. Movement restrictions are foremost, but Israel’s control over 60% of the West Bank (Area C) which was also set up by the supposedly-interim Oslo Accords chokes Palestinian economic potential, as well as the residents of those areas.

Netanyahu’s current coalition includes parties that openly oppose the existence of the PA, and seek to legalize and facilitate full Israeli control over the West Bank, making hope of any political horizon´-or-independent Palestinian economic growth impossible.

Even though the Paris Protocol was never good for the Palestinians, it might be the only way for Israel to save the Palestinian Authority.

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