Palestinians still waiting for Arab safety net

Arab foreign ministers declared they would create an emergency fund to help the Palestinian Authority deal with its financial crisis, but finance minister Nabeel Kassis said his ministry has yet to receive any money.

Palestinian Authority Finance minister, Nabeel Kassis, says donor fatigue might explain why his ministry has not received funding.

RAMALLAH // Arab states have not yet paid money into an emergency fund that they formed to alleviate the economic crisis facing the Palestinian Authority, its finance minister has said.

The PA is in desperate need of a cash injection because Israel has withheld its tax revenues after the Palestinians gained observer status at the United Nations.

Arab foreign ministers declared in December they would implement a US$100 million (Dh367.3m) monthly emergency fund for the PA that was created earlier last year, but Nabeel Kassis said his ministry had not received any money.

"There is the so-called Arab safety net of $100 million that was pledged in case the Israelis withhold payments of revenues collected on our behalf by Israel, and that was not paid," Mr Kassis said in an interview with The National on Thursday at his office in Ramallah, the PA's administrative capital.

The Israeli measure has exacerbated Palestinian financial woes and forced the PA to curtail public works, such as road repairs, and repeatedly delay payment of salaries to its some 150,000 employees.

Israel is allowed by economic agreements brokered with the Palestinians in the 1990s to collect these tax revenues, such as import duties, on the Palestinians' behalf. But it stopped disbursing the funds - totalling $100m a month - after the Palestinians secured recognition in the United Nations as a non-member-observer state on November 29.

Mr Kassis attributed the non-payment of Arab emergency funds, as well as a general decline in foreign donations to the PA, to concern over the Palestinians' prospects of becoming independent, which have dimmed because of Israeli policies of punitive financial measures and settlement expansion.

"There is some donor fatigue with funding a country under occupation, year after year, without any political horizon in sight," he said.

Mr Kassis credited Arab states for recent individual contributions not made as part of the Arab emergency fund. These included $100m from Saudi Arabia, $42m from the UAE and $26m from Algeria.

He added that preliminary estimates put the amount of foreign aid to be given to the PA by foreign donors, including the European Union and the United States, in 2013 at about $1 billion. In 2008, the amount was about $1.8 billion.

Last month, Israel agreed to hand over about $100m in taxes to the Palestinians as a "one-off" payment to help the PA cope financially. However, Yuval Steinitz, Israel's finance minister, said earlier this month that his government would continue withholding the tax money, although he did not give details.