Australia / Israel Review

Colin Rubenstein

What do the Palestinian Authority’s (PA) deep-seated economic problems have in common with its unstinting hostility towards Israel and reluctance to work towards resolving the conflict?

They are each symptomatic of a failure of Palestinian leadership. And, if you feel a sense of déjà vu over the PA’s intention to circumvent the peace process by again seeking to upgrade its status at the United Nations, you may also appreciate the repetitive character of these failures. Those who fail to learn from their past mistakes are doomed to repeat them.

Sadly and ironically, it is the Palestinian people themselves who stand to lose the most from their leaders’ shortcomings. The economically-motivated demonstrations which have erupted in the West Bank over the past month demonstrate that some Palestinians are coming to realise that their current path is economically unsustainable.

In one sense, PA President Mahmoud Abbas and PM Salam Fayyad could almost be absolved for the disastrous state of PA finances. Nearly half of their budget goes to pay salaries in Gaza – yet the PA collects no taxes from there. Meanwhile, Arab countries are increasingly refusing to fulfil aid pledges.

Yet other factors contributing to this financial chaos clearly can be sheeted home to Ramallah.
It is hard to ignore that, nearly two decades after the Oslo Accords, a staggering 180,000 Palestinians work in the public sector. Moreover, many of these jobs are reportedly corrupt “no work, no show” sinecures granted as rewards to relatives and political cronies.

Meanwhile, economic experts say that the PA continues to make no serious effort to collect taxes from West Bank residents, preferring to rely on endless foreign aid and indirect taxes collected by Israel.

Moreover, with the PA endemically short of funds to pay full salaries, and racking up US$170 million in unpaid electricity bills and thus risking black outs for its citizens, other priorities remain. Payments to Palestinian prisoners in Israeli jails – including those who have killed Israelis – recently increased again, in some categories by up to 300%. The worst killers now get six times the average Palestinian worker’s salary. The PA now spends more than six percent of its budget on payments to prisoners and the families of suicide bombers.

Moreover, the reflexive Palestinian excuse – that its weak private sector is forever hamstrung by “the occupation” – doesn’t take into account the steps the Netanyahu Government has taken to improve the business climate in the PA.

Indeed, the belief in Jerusalem that a strong Palestinian economy is an Israeli interest as well has translated into a series of goodwill gestures – including massive tax advances to Ramallah to ensure the PA can continue to make its payroll, as well as an effort by Israel to provide guarantees so the PA could get an IMF loan.

As Israel’s Strategic Affairs Ministry head Yossi Kuperwasser noted, “we want them [the PA] to change their behaviour, but we don’t want to bring them to the point where they might fall.”

Meanwhile, the PA decision to delay until after the US presidential elections a vote at the UN General Assembly on their request to upgrade to non-member observer state has left an opportunity to reconsider the move. It’s important that Abbas does so.

The upgraded status would achieve nothing in regard to improving the lives of Palestinians or bringing them closer to realising their aspirations for an independent state.

What it would do, however, is undermine the whole basis of 45 years of UN resolutions, including 242, calling for peace through a negotiation process. It would also empower Palestinian and other extremists working against peaceful co-existence, while weakening the voices of Israeli moderates who seek a two-state outcome.

Indeed, Abbas’ refusal to restart substantive negotiations since 2008, despite the Netanyahu Government’s unprecedented 10-month settlement building freeze, effectively revealed the hollowness of his claims to want progress toward peace.

Abbas’ move is therefore nothing more than short-sighted political opportunism – a distraction aimed at deferring more difficult decisions regarding the future of the Palestinian people that will loom long after the General Assembly adjourns this year or next.

It may well be the case that the political turmoil in the Middle East over the past two years, the surge of political Islamism, and the apparent retreat of US influence in the region has increased a sense of uncertainty in both the Palestinian and Israeli camps, casting a dark shadow over the peace process.

Furthermore, it is certainly true that, particularly with the ouster of Abbas’ strongest ally, Egypt’s Hosni Mubarak, the PA finds itself more politically isolated than ever, while its Hamas rivals are empowered.

Arab governments friendly to the West, whose support the PA would need in order to secure support for any peace agreement with Israel, have dwindled in number and those that remain might be reluctant to back a deal that might potentially inflame extremist anger on their own streets.

But if the conditions are not right to conclude a peace pact, there is still a third way, if only the Palestinian leadership can surmount their knee-jerk rejection of it. Abbas should incrementally engage with Israel about additional interim agreements that would lay firmer foundations for statehood and improve the quality of life of his people. Such an interim deal, leaving the hardest questions such as a refugees and final borders for later, could see the Palestinians achieving something approaching genuine statehood in the near future – instead of a meaningless recognition of shadow-statehood at the UN.

It should be for Abbas – in the twilight of his career – a defining moment. If he can break out of his cautious mould, he has the opportunity to be remembered among his people as a statesman who was capable of making far-sighted decisions – if only he will seize it.