Tex revenues collected by Israel help guel PA
Tex revenues collected by Israel help guel PA Israel news photo: Flash 90

The Palestinian Authority is on the verge of collapse, says a PA economist, who warns that the later it happens, the harder it will be.

“It will mean that people will lose their homes. They will lose their cars. They will lose their land sometimes because of the collapse of the bubble,” Birzeit University economist Tareq Sadeq told the global InterPress Agency. “This will affect the whole economy and will also reflect on the Palestinian Authority. So this may be a collapse of the PA itself.”

He blamed the administration under PA Prime Minister Salam Fayyad, which he says needs to change its policies in order to alleviate the financial burden many Palestinian families now face.

“The gap is growing,” he explained. “There is frustration in the street but what matters for people now is that they don’t want to lose; they want to get their salaries and they want to keep their homes and the things that they bought.”

The Palestinian Authority has been relying on massive foreign aid ever since it was created as an entity under the ill-fated Oslo Accords, which literally blew up with the Second Intifada in 2000, also known as the Oslo War. Corruption, PA policy against working in Israel, discrimination against women in the work force and preoccupation with avoiding peace instead of reaping its benefits are some of the reasons for the bankruptcy.

“The Palestinian economy has become more and more dependent on wages, on salaries, for the whole economy, not just for the public sector; around 70 percent of all employees are wage employees. As a result, there is no production in the Palestinian economy. People consume and consume and consume and there is nothing to produce,” Sadeq says.

The International Monetary Fund two weeks ago warned that the Palestinian Authority “economy is currently not strong enough to support” itself as an independent country.

The PA Gross Domestic Product grew 7.7 percent between 2008 and 2011, but its official development plan estimates a grossly optimistic growth of 12 percent in only two years, a rate that is huge even for emerging nations.

As usual, the “occupation” is being blamed by many for the Palestinian Authority’s economic problems. InterPress quoted PA-American businessman Sam Bahour as saying, “If you go into the private sector today and ask them what’s your biggest issue, it’s that we can’t find the people we need. Israel controlling all the points of entry and exit not only for goods but for people. [It] basically regulates the pace of our development through the blockage of human resources.”

Sadeq concluded, “We have to think…how to help people sustain and stay in their lands and resist occupation.”

Israel maintains that the PA economy has grown because of Israeli cooperation. The Paris Protocol in 1994, past of the Oslo Accords, created a system whereby Israel collects and hands tax revenues over to the PA on goods shipped to Judea and Samaria.

The tax revenue occasionally has been frozen following the Palestinian Authority’s frequent violations of the Oslo Accords, particularly its failure to stop inciting terror and incitement.