Fed up, West Bank Palestinians tell leaders to fix the economy

The Palestinian Authority is on what observers say may be its shakiest ground yet as it faces a monthly $100 million shortfall and a population floundering amid economic hardship.

As many as 24,000 Palestinian public transportation drivers launched a strike across the West Bank today, capping a week of public unrest that some say poses a significant threat to the Palestinian Authority – and potentially to Israel. 

Palestinians have taken to the streets to protest a spike in prices that has intensified a long-simmering economic crisis. The cost of a carton of eggs has jumped from 12 to 20 shekels ($3 to $5); a box of tomatoes now costs 120 shekels ($30), a six-fold increase; and gas has just topped $8 a gallon.

The Palestinian Authority, which is no stranger to economic crises, is now in particularly dire straits.  It is $100 million short each month, and has had to delay paying August salaries, due in part to a sharp drop in aid from Arab donor countries. Locals blame PA mismanagement and corruption, pointing to the stone villas and sleek Mercedes vehicles that have sprouted in Ramallah since the PA took over.

“What happened in Tunisia and Egypt will happen here. We will chase them out,” says vegetable grocer Mohammed al-Qatari, tending to a trickle of customers in Ramallah’s Al-Amari refugee camp. “I don’t want them. I’d rather have the Israeli occupation.”

Just up the hill, past two open manholes and the wafting smell of sewage, a roundabout bears the charred pockmarks from protesters burning tires. In the middle stands a crooked olive tree, denuded of almost all its branches, with just a few leaves.

It is, in some ways, a poignant symbol of the prospects for Israeli-Palestinian peace, nearly two decades after the Oslo Accords were signed. Under those accords, the PA was meant to serve as an interim government during the transition from Israeli occupation to Palestinian statehood. Today, hopes for peace are not totally dead, but there are few olive branches to be found and the PA is struggling to address the demands of its people.

“I think that [the unrest] is very, very serious, because it all can lead to the collapse of the Authority,” says Ron Pundak, an Israeli historian and key player in the Oslo negotiations. “One of the options, which I think is quite realistic, is that it could become a situation of chaos, in which Palestinian security forces could disappear. That might lead to the need of Israel to reoccupy the West Bank.” 

Fayyad's fault?

Much of the public anger has targeted PA Prime Minister Salam Fayyad, now in his sixth year on the job. A former International Monetary Fund official, he is seen by the West as serious about rooting out corruption, but he has faced increasing opposition from within the dominant Fatah party, of which he is not a member. Some say Fatah is fomenting the unrest, possibly by paying Palestinians to take to the streets.

But Fatah member Azzam Abu Bakr says it’s coming from the people.

“This is a Palestinian popular commotion, which is justified. There are genuine and serious reasons for initiating such a popular commotion,” says Mr. Abu Bakr, director general of the Ministry of Education. “The first reason is the failure of the Fayyad government in managing the economic situation.”

Others say the problem is the Paris Protocol, an Oslo-era framework that governs economic dealings between Israel and the Palestinian territories. Under the agreement, Israel is required to collect certain tax revenues on behalf of the PA and transfer those revenues to the PA. But Palestinians say that the protocol, which was signed at a time when people and goods could move freely between Israel and the Palestinian territories, has become outmoded and needs to be revised.

Israel’s deputy foreign minister, Danny Ayalon, rejected those calls today.

"There is no room to fix it when there is no progress in the political channel, and the Palestinians have huge debts to Israel for transferring gas and electricity, for example," he said.

Arab donors withhold promised aid

Dr. Pundak, the Oslo architect, says the real issue is Arab countries falling to make good on their promises of aid.

Criticizing the Paris protocol, he says, is “similar to criticizing Salam Fayyad, as if Fayyad is the problem. As if someone else will replace him, and money will pour into the hands of protesters in Nablus and Ramallah."

“The problem is the bigger situation, the fact that Arab countries are not sending the money that they have pledged. [Palestinians] should protest against the donor countries and not against the poor man who is trying his best,” says Pundak, praising the “quite radical and positive moves” Fayyad’s government has taken to minimizing corruption and inefficiency.

As Arab countries grapple with fallout from the Arab Spring, and frustration mounts with the Palestinian leadership and the stalled peace process, international aid has fallen to roughly $500 million. That’s about a quarter what it was in 2008, according to the Los Angeles Times.

More self-reliance?

Samir Barghouti, an economist with the Arab Center for Agricultural Development in Ramallah, agrees international support is crucial but says the PA could become more self-reliant through improved efficiency. The PA currently covers about 65 percent of its expenses, with 35 percent coming from foreign aid, he says. Through better management and the elimination of corruption, Mr. Barghouti says the PA could increase its revenues to cover 85 to 90 percent of its expenses – and thus put it within reach of controlling the deficit.

Part of the drain on the PA is that nearly half of its revenues go to the Hamas-run Gaza Strip, while less than 5 percent of its income comes from the coastal territory. In addition, the PA’s ranks have swelled to 180,000 civil servants and 24 cabinet ministers – for a population of only 3.5 million in the West Bank.

Another problem, in the eyes of some Palestinians, is the very paradigm of a donor-based economy, which has prevailed here since the PA took over.   

“This is not the way we should build a country,” says Amal Daramegh Masri, a Sorbonne-educated economist and editor in chief of the Palestine Business Focus magazine, which promotes investment in the Palestinian territories. As a mother of three, she sees trouble brewing among the rising generation. Even her own son has said he wants to grow up to kill Israelis, despite her efforts to dissuade him.

“You’ll see a volcano very soon,” she says. “And it won’t be against Palestinians only – it will be against Israel.”