Protests shake West Bank as Palestinians hit by rising prices

For Palestinians who are struggling to survive, the increasingly dire economic situation and the Palestinian Authority¿s financial crisis is a more pressing concern than Mahmoud Abbas's promise to revive his bid for further recognition at the United Nations.

RAMALLAH // In a backlash against lighter wallets and rising prices in the West Bank, Palestinians burnt effigies of their prime minister and striking taxi drivers blocked traffic.

As the unrest shook the West Bank, President Mahmoud Abbas promised to revive the Palestinian bid for recognition at the United Nations.

For Palestinians who are struggling to survive, the increasingly dire economic situation and the Palestinian Authority's (PA) financial crisis is a more pressing concern than Mr Abbas's move.

"We were looking for Palestine, but now we are looking for a sack of flour" went one chant by demonstrators in the PA's administrative capital Ramallah on Wednesday.

The protests this week took aim at PA leaders, especially the prime minister, Salam Fayyad.

The western-backed premier led a reform agenda over the last few years that helped bring economic growth and prosperity to the West Bank's 2.5 million Palestinians.

The fruits of those reforms have spoilt of late, however, and protesters caused disruptions in several cities including Hebron, Nablus and Bethlehem. Demonstrators in Ramallah reportedly stopped one man from setting himself and his six-year-old daughter on fire on Wednesday. "I can't fuel my car, so Fayyad can take it," striking drivers chanted in the city. Compounding the problems, Israel last week raised its value-added tax from 16 to 17 per cent, which prompted the PA to respond with a one-per cent increase to its VAT.

That has translated into higher prices for Palestinians in the West Bank, who have been a part of a customs union with Israel since the PA signed the Paris Protocol of 1994.

Palestinian leaders have been complaining for more than a year of ballooning debts - approaching US$3 billion (Dh11bn) - brought on by undelivered aid payments from abroad and, above all, an Israeli occupation with no apparent end in sight.

The effects may be worsening.

The Israeli company that provides the PA with electricity has threatened to cut off its power supply because of an outstanding bill of $80 million. Economic growth rates in recent years that had reached about 10 per cent slowed to 5.2 per cent last year, according to statistics released on Wednesday by the UN's Conference on Trade and Development agency.

The agency warned of worsening unemployment and poverty because of Israel's "restrictions on movement, faltering aid flows, a paralysed private sector and a chronic fiscal crisis cloud the horizons".

The PA's financial woes are nothing new, but hopes of resurrecting a lifeless Israel-Palestinian peace process remain dim.

A similar bid by Mr Abbas to upgrade the Palestinians' status at the UN failed last year after the United States threatened to veto a resolution in the Security Council requesting full Palestinian statehood membership in the world body.

"I am going this month to the UN General Assembly," Mr Abbas told reporters at an Arab League gathering in Cairo on Wednesday. He was likely referring to an upgrade to non-member state status, not full membership. The former would probably win enough support to pass in the 193-member Assembly.

The PA, meanwhile, continues to seek outside assistance to pay its bills. An emergency injection of $100m from Saudi Arabia helped the PA pay salaries for about 150,000 employees for June and July. Paying August's salaries will be another challenge because no donor has stepped in to fill the gap, said Samir Abdullah, the general director of the Ramallah-based Palestine economic policy research institute.

"We're living month-to-month, which isn't living - it's getting by," he said.

"Donor countries are increasingly asking themselves: 'Why are we continuing to pay this Palestinian Authority when Israel's occupation isn't ending and while Israel isn't being forced to pay up for what it does'?"

* With additional reporting from Reuters