Money Matters

Obama Releases Aid To Palestinian Authority

Will $500 million in U.S. aid be enough to meet the needs of the Palestinian Authority? Anna Lekas Miller reports.

Ammar Awad/Reuters, via Landov

On Friday, the United States released nearly $500 million in aid that had been frozen for months to the Palestinian Authority (PA). Following this announcement, Israel claimed that it would restart regular monthly tax transfers to the PA, which it has been withholding since the U.N. bid for Palestinian statehood in November.

Like Israel, the U.S. Congress froze $200 million in aid to the PA in 2011 as punishment for seeking statehood at the U.N. When Palestine was admitted as a non-member state last November, Congress once again froze the request for funds.

During Thursday's meeting with Palestinian President Mahmoud Abbas, President Obama specifically asked him not to take Israel to the International Criminal Court (ICC) over settlement expansion or any other issue; it is suspected that these funds were released to ensure that President Abbas complies. However, following Obama's visit, forces in Congress are already trying to hinder these funds by introducing a bill titled "The Palestinian Accountability Act," which would cut off all aid to the Palestinian Authority until it formally recognized Israel as a Jewish state.Freezing aid money and withholding taxes bears heavy consequences for Palestinians who work in the public sector and are paid with PA salaries. According to Birzeit Economics Professor Ibrahim Shikaki, 22 percent of Palestinians work in the PA’s public sector; he estimates that an additional 750,000 Palestinians—the spouses and children of PA public sector workers—also depend on PA salaries for their livelihoods.

Due to the inability of the PA to pay their workers in full, many public workers in Palestine have staged strikes in recent months, including a transportation workers’ strike that shut down the West Bank for two days in October. Frequently, hospitals and schools are shut down due to hospital workers’ and teachers’ strikes.

Secretary of State John Kerry in particular has been pushing for the release of these funds since taking up his post last month.

According to State Department spokeswoman Victoria Nuland, the U.S. has already moved $295.7 in fiscal year 2012 money and $200 million in 2013 assistance. While the first sum will be used for U.S. aid projects, the 2013 money will be used for direct budget support.

Still, even the combined total of U.S. foreign aid and Israel’s withheld taxes is hardly enough. On Tuesday, while drafting the Palestinian Authority’s 2013 budget, PA Prime Minister Salam Fayyad announced that $1.4 billion of the $3.9 billion would need to come from foreign aid.

“PA workers should be better off for at least the next 3-4 months,” Shikaki said.

But what happens once this retrospectively meager foreign aid money dries up? Before the Oslo Accords, 40 percent of Palestinians worked in Israel; however, following the big closure, that figure decreased. By 1995, only 16 percent of Palestinians worked in Israel. With the erection of the wall and permanent military checkpoints in 2003, this number decreased even more.

Now, less than ten percent of Palestinians living in the West Bank work in Israel. Most of them work low-wage jobs in the construction or service industries—on top of a monthly fee for their permit to travel within Israel and the transportation cost of going to work, many barely have a net profit by the end of the day. With steadily increasing Israeli restrictions on Palestinians’ freedom of movement in recent years, Palestinians in the West Bank have become even more dependent on public sector jobs and frequently dry salaries from the Palestinian Authority.

“What most people don’t realize is that the Israeli occupation is internal, as well as external,” Shikaki concludes.

Until the end of the Israeli occupation—and the land seizures and restrictions on movement that are making once-profitable industries like agriculture and manufacturing nearly impossible—Palestinians living in the West Bank will depend on the aid-dependent PA government salaries for their livelihood. Until Palestine is truly a sovereign state, it seems that it will be up to the U.S. and Israel’s discretion whether or not to bail it out.