“The Palestinian economy is in deep crisis, with a budget deficit of almost USD 0.5 billion for the current year. The fact that Israel is withholding Palestinian revenues could further exacerbate this crisis, and there is a danger that Palestinian state institutions could collapse,” Mr Eide said.
Norway emphasises the importance of maintaining regular transfers in the current situation, and stresses that the parties must agree on the repayment of any debt.
Under the arrangement currently in place, the Israeli authorities are responsible for collecting Palestinian clearance revenues in the West Bank and East Jerusalem, and for their subsequent transfer to the Palestinian Authority (PA). The Israeli authorities refer to the withholding of the funds as the deduction of Palestinian debts to the Israel Electric Corporation. This decision is being seen as a reaction to the vote in the UN General Assembly on 29 November, in which the Palestinians’ status at the UN was upgraded to that of observer state, by an overwhelming majority. The clearance revenues that the Israeli authorities collect on behalf of the PA account for more than a third of the PA’s revenues.
“It is now essential that Israel and the international community engage in a concerted effort to stabilise the Palestinian economy. If the already precarious financial situation deteriorates further, this could weaken the moderate Palestinian leaders who are willing to negotiate, and strengthen extremist actors. This is not in the interests of Israel, the Palestinians or the international community,” Mr Eide said.