Jordan, Egypt said to mediate between Israel and PA over tax transfer standoff

Jordan and Egypt are reportedly attempting to mediate between Jerusalem and Ramallah over the Palestinian Authority’s refusal to accept tax dividends collected by Israel.

The two countries have stepped in because the United States is not able to help resolve the spiraling financial crisis due to the PA’s ongoing boycott of the Trump administration over Washington’s aid cuts and the recognition of Jerusalem as Israel’s capital, the Haaretz daily reported on Tuesday.

A senior PA official told the newspaper that Jordan and Egypt, as well as Israel, have a clear interest in maintaining stability in the region, but that PA President Mahmoud Abbas would not compromise on the issue.

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“For years we have been talking to Israel and the international community about the fact that the existence of the Palestinian Authority is an important element of stability in the West Bank,” the official said.

“In a state of collapse there will be no vacuum and in Israel they know very well who will rule the area. So Israel needs to make a calculation or the White House may find itself without a PA when they present the so-called ‘deal of the century,’” the official said, referring to US President Donald Trump’s upcoming proposal for a peace plan. “And Jordan and Lebanon will need to explain what they intend to do with the Palestinians in their territory.”

Palestinians protest against a government tax hike in Ramallah, West Bank, December 12, 2018. (Luke Tress/Times of Israel)

Israel announced in February that it would withhold $138 million in monthly payments to the PA — to offset the PA’s payments to Palestinians jailed by Israel for terrorism and violence, and to the families of dead terrorists.

The Palestinians have protested the law, refusing to receive any of the taxes Israel gathers for them on a monthly basis, as long as the Jewish state does not transfer them their full amount.

The taxes Israel collects and transfers to the PA make up hundreds of millions of shekels, more than half of its monthly budget.

According to the Kan public broadcaster, Israel recently tried to transfer $182 million to the PA, but the transaction was rejected.

On Monday, Abbas said the Palestinians were not optimistic that Arab states would provide them a financial safety net to overcome a steep financial crisis.

“Of course, we have asked the [Arab] brothers for a safety net,” he said. “If God wills. I mean we do not have high hopes, but if God wills, something will happen. We asked for $100 million per month. We told them we will take it as debt…I mean you give us and then we will return the money to you… Even on the debt offer, we have not received a response. But we have to bear responsibility and be patient.”

The PA president told a meeting of Arab foreign ministers and officials at the Arab League headquarters in Cairo last week that “a [financial] safety net must be provided.”

Last Sunday, the Arab League pledged $100 million per month to the Palestinian Authority to make up for funds withheld by Israel.

Prime Minister Benjamin Netanyahu and Finance Minister Moshe Kahlon have reportedly discussed emergency plans should the Palestinian Authority’s financial system collapse, according to television reports Sunday. The two met to discuss what plans to put in place and what possible moves would keep the Palestinians solvent, amid fears that financial woes could cripple the Palestinian economy and destabilize the West Bank, according to the reports.

Earlier this month, France sent an official letter to Israel urging it to “change your decision to freeze the transfer of tax funds to the Palestinian Authority,” Israel’s Channel 12 news reported. Israel rejected the request as “immoral” and against the EU’s own laws.

PA Finance Minister Shukri Bishara announced recently that Ramallah had undertaken a a series of austerity measures to mitigate against the impact of the lack of funds on government operations, including the slashing of public employee salaries.

A senior Palestinian Authority official reportedly warned that Hamas means to exploit the economic situation in the West Bank and pay off PA officers and security forces to take control of the territory.

In March, many PA employees received only half of their salaries.

The World Bank warned last week of an economic crisis, if the issue is not resolved.

Israel, which collects taxes on behalf of the PA, says the PA payments to terrorists and their families encourage further violence. The PA claims they are a form of welfare to families who have lost their main breadwinner.

AFP, Adam Rasgon contributed to this report.