Donor funding to the Palestinian Authority has dropped by one-third in the last decade, the United Nations said on Wednesday.
It spoke out on the matter as the UN and the PA are scrambling to make up for the Trump Administration’s decision to halt funding to the Palestinians, both in direct bilateral assistance and through UN contributions.
“In 2017, budget support from donors dropped by 10.5 per cent from the 2016 level,” the UN Conference on Trade and Development (UNCTAD) stated in a 16-page report it published on the Palestinian economy.
“Total international support was $720 million, only one-third of the $2 billion in 2008.
“For the same period, budget support shrank from $1.8 billion to $544 million, a 70 per cent decrease,” the UNCTAD said.
It did not break the data down by donor country. But according to a Congressional report, the US in 2012 set aside $396 million in bilateral assistance to the PA through its Economic Support Fund.
That number dropped to $290 million in 2015, $370 million in 2015 and $230 million in 2017, before the US said it would not pay out $200 million of that sum.
The UNCTAD stated that in addition the Palestinian Authority lost about $300 million a year because of its shared custom envelop with Israel, which collects taxes on behalf of the PA.
“Palestinian fiscal resources, in the range of $300 million per year, continue to be leaked to Israel because of the arrangement whereby the Government of Israel collect taxes on Palestinian international trade on behalf of the Palestinian Government and then transfers the revenue from such taxes,” the UNCTAD stated.
It called for a reassessment of the 1994 Paris Protocol that governs economic relations between Israel and the PLO, including free tree, custom setting, tax collections and work permits for Palestinians in the territories.
UNCTAD took issues, however, with aspects of the agreement that give Israel the power to set external trade tariffs and conditions for the PA.
“The negative consequence of the customs union for the Palestinian economy cannot be overstated,” UNCTAD said.
In the Palestinian territories, “the terms of the customs union are set unilaterally by Israel without regard to the vastly different needs of the Palestinian economy,” the UNCTAD said.
It called on Israel to ease Palestinian trade restrictions, particularly in Gaza, nothing that this could allow the Palestinian economy to grow by about 10%.
Overall, the report noted, “Economic prospects are bleak due to risky political horizons and unfavorable trends in aid, Gaza’s reconstruction and credit-financed expansion in consumption.”
The report, which was prepared in July and published on Wednesday primarily blamed the international community and Israel for the harsh economic conditions in the Palestinian territories.
“Under international law, Israel and the international community have responsibilities not only to avoid actions that impede development but to take affirmative steps to foster development in the Occupied Palestinian Territory,” said Mahmoud Elkhafif, coordinator of the UNCTAD Assistance to the Palestinian People Unit.