Donors Reverse Netanyahu's Financial Attack
Sign in Sheikh Jarrah, East Jerusalem
December 9, 2012
Predicting things in the Middle East is dangerous and foolish. A zillion parameters clutter the equations transforming any such an attempt into an exercise in futility. Yet, the day after the acceptance of Palestine as an observer state by the UN, I predicted in Israel and Palestine go to War
that this time Palestine will circumvent the fiscal blockade imposed by Netanyahu. I dared to publish that, not because of having received a new supercomputer capable of analyzing the event, but because of the sheer stupidity of Netanyahu's decision. The day after the UN vote, Netanyahu stopped the transfer of $100 million, the tax revenues of the previous month; at the same opportunity, he declared that the Palestinian statehood campaign was "a gross violation of the agreements signed with the state of Israel," adding "the government of Israel rejects the U.N General Assembly decision." Moreover, he announced the construction of 3,000 houses in E1
, a terrain between Jerusalem and Ma'aleh Adumim, an attempt to bisect the West Bank and transform Palestine into a non-viable state. A few days later, on December 9, 2012, Arab states agreed to provide Palestine with $100 million monthly as a "financial safety net." Palestine got a bit more independent; Israel got a lot more irrelevant.
© Richard Johnson, National Post
Life in the West Bank
© National Post
Palestine | Compared to other states
Netanyahu's step was a strangling attempt. Earlier this year, the World Bank forecast a $1.5 billion Palestinian budget deficit for 2012, with donor funds expected to cover only $1.14 billion of this shortfall. The World Bank and the International Monetary Fund said in September that the financial crisis in Palestine will worsen unless foreign funding increases and Israel eases long-standing curbs on development. On September 6, the Palestinian government said that $240 million were needed every month in order to balance their expenses. Yesterday, after a meeting in Doha, Arab foreign ministers called for the "immediate implementation" of a resolution passed in March, at an Arab summit in Baghdad, which called for the provision of $100 million monthly to Palestine. The ministers also called for the convening of a donors' conference to discuss ways to balance the Palestinian budget and discuss the reconstruction of Gaza. Beyond the participating Arab states, the donors include the US and the European Union; most of the latter voted for Palestine at the UN. This is not all, Qatar's ruler, Sheikh Hamad bin Khalifa al-Thani pledged $400 million to develop Gaza in October, during a visit there; following Operation Pillar of Cloud
, this help has become especially urgent. Overall, Netanyahu successfully thwarted the Palestinian dependence on Israel; in the future he probably will be awarded the Palestine Prize for his role in the achievement of Palestinian independence. The already promised funds will ensure the function of this young state until things improve. In the next months, Palestine will probably attempt to disconnect its tax system from the Israeli one. This won't be difficult for transactions within the West Bank and Gaza; the main problem is posed by the many Palestinians still working in Israel, mainly in construction and food-related services. However, this can be solved with a single political decision.
Palestine's Next Step
© Richard Johnson, National Post
Life in Gaza
Financial independence is not enough. Yesterday, history was made, when the State of Palestine placed signs in East Jerusalem calling on Jews to leave
. At this stage, further steps are not expected, but the event disclosed a bit of the Palestinian strategy for upcoming months. Probably, they will begin placing their own road signs, with the exceptions of roads 443 and 60. Since these are essential for Israel's creation of a "second corridor
" between Jerusalem and Tel Aviv, they have been rather isolated from their surroundings by the IDF, which observes them closely. The following step would be the crucial one, another acid-test for Netanyahu
. In the same way that the IDF places blockades and carries out ID checks of Palestinians traveling in the West Bank, the Palestinian Police will stop and check settlers traveling on the same roads. The most obvious location for this would be downtown Hebron
, where some of the most extremist settlers live. Since settlers are armed, such an event will easily deteriorate into a minor battle, the prelude of Palestine's Independence War.