On eve of Bahrain summit, U.N. official warns of possible PA collapse

The Palestinian Authority is in danger of financial collapse as a result of its dispute with Israel over terrorist payments, the UN’s Special Coordinator to the Middle East Peace Process Nickolay Mladenov warned the UN Security Council on the eve of a US-sponsored summit in Bahrain on the Palestinian economy.

“I am deeply concerned about developments relating to the clearance of revenues of the Palestinian Authority,” Mladenov told the council in New York at its monthly meeting on the Middle East.

“The Palestinian Government is facing a very serious financial crisis which, unless resolved, risks triggering a series of dangerous developments that will be difficult to mitigate and contain, including the potential collapse of the Authority,” Mladenov said.

The financial crisis, he said, risks the “undermining of 25 years of investment by the international community in supporting a two-state solution under the Oslo process.” This year, Israel began withholding some $140 million, approximately $11. 5 million a month, from the tax revenues it collects on behalf of the PA and then transfers to it. The 6% of the tax revenues it has withheld is equal to the sum of money that the PA give to Palestinian terrorists and their family members. To protest the move , the PA has refused to accept any of the tax revenues, even though such tax revenues constitutes 65% of its budget.

“I echo the call by Palestinian PM Mohammed Shtayyeh upon Israel to restore the revenue transfers in full and call on both sides to engage in a constructive manner to ensure compliance with the Paris Protocol on Economic Relations,” Mladenov said.

He spoke in advance of the Bahrain summit on June 25 and 26, where the US is expected to unveil an economic road map for the Palestinians.

At the same time in New York, the UN Relief and Works Agency , which provides services to Palestinian refugees , plans to hold a pleading conference to help meet its $1.2 billion budget to service 5.4 million Palestinian refugees in Syria, Lebanon, Jordan, Gaza, the West Bank and east Jerusalem.

Mladenov told the Security Council that it was important to support UNRWA’s work, explaining that it had a projected shortfall this year of $211 million and “is facing serious cash- flow issues.”

“This could impact operations, including UNRWA’s ability to maintain food assistance to over 1 million Palestine refugees in Gaza,” he said.

The US has halted all  its funding to the agency and has called on the UN General Assembly to shut down the organization, noting that the Palestinians can be better serviced through other venues.

At the Security Council, US political coordinator for its New York mission Rodney Hunter spoke of the upcoming “peace to prosperity” economic workshop in Manama, Bahrain.

Israeli government officials have not been invited. Palestinian leaders – and the vast majority of its business community – are shunning the conference spearheaded by Trump’s son-in-law, Jared Kushner. Businessmen from Saudi Arabia, Turkey, Russia, the United Kingdom, Nigeria, Columbia and the United Arab Emirates are also expected to attend, along with former British prime minister Tony Blair.

In New York, Hunter characterized the summit as “a pivotal opportunity to convene government, civil society and business leaders to share ideas, discuss strategies and galvanize support for potential economic investments and initiatives that could be made possible by a peace agreement.”

He continued : “The workshop will facilitate discussions on an ambitious, achievable vision and framework for a prosperous future for Palestinians, including enhancements to economic governance, development of human capital, and facilitation of rapid private-sector growth.

“We’ve been very clear that our full plan will address all final status issues ; the economic plan is a complement to the political plan. We understand that only through a solution to the final status issues will the economic vision be possible,” Hunter said.

“Sustainable Palestinian economic growth is not achievable in the current environment. The economic vision is a road map , which includes a detailed portfolio of real projects and capacity- building programs, which have the potential to unleash sustainable, private sector-driven growth – if and when there is peace,” he said.

Reuters contributed to this report.