Jared Kushner
Jared KushnerReuters

Israel is not responsible for all Palestinian Arab hardships, US presidential advisor Jared Kushner said on Tuesday, as the Palestinian Authority faces a crippling financial crisis.

"Israel is not the cause of all the suffering of the Palestinian people," Kushner, US President Donald Trump's son-in-law and senior adviser, told the Future Investment Initiative conference in the Saudi capital Riyadh.

"If you want to go and invest in the West Bank or Gaza, the issue that's holding you back is the fear of terrorism and that your investment could be destroyed."

Kushner unveiled the economic aspects of a US Arab-Israeli peace initiative in June with a conference in Bahrain, in which he dangled $50 billion in investment for the region if the Palestinian Authority agrees on a political deal.

The PA leadership boycotted the conference, accusing the administration of ignoring key issues and trying to buy its acceptance of Israeli rule.

Mahmoud Abbas' PA has been in deep financial crisis since February when Israel froze transfers of VAT and customs duties it collects on the PA's behalf in response to the PA's continued payments to terrorists.

His administration had to impose austerity measures, cutting almost half the salaries of its employees.