PA on Verge of Economic Collapse, Says U.N. Official

Palestinian leader Mahmoud Abbas. (Flash90)

The Palestinian Authority is facing a fiscal crisis because it refused to accept Israel-collected tax revenue, warned Nickolay Mladenov, the United Nation’s Special Coordinator for the Middle East Peace Process.

The Jerusalem Post reported that Mladenov made these comments during a virtual meeting of the U.N. Security Council. He also pointed to the coronavirus as another factor for economic struggles, as unemployment rises and businesses stay shut.

“The viability of the Palestinian Authority is being severely undermined by an economic and fiscal crisis that has been exacerbated by the Palestinian decision to end civilian and security coordination with Israel,” Mladenov said, urging the PA to renew its financial and security cooperation with Israel, and for the two to resume conversation.

The PA froze security agreements with Israel in May of this year, and the monthly $190 million in tax revenue in June, in response to Israel’s intention to annex major sections of Yehudah and Shomron. Israel has since indefinitely postponed annexation as part of its historic treaty with the United Arab Emirates.

“I appeal to the Palestinian leadership to resume its coordination with Israel and accept its clearance revenues – money that belongs to the Palestinian people and cannot be replaced by donor funding,” Mladenov said. “The U.N. stands ready to mediate solutions to the fiscal crisis and to get the Palestinian economy on better footing. I reiterate the secretary-general’s call for both sides to reexamine the nature of their economic relationship and improve it for the benefit of both peoples.”