National

RAMALLAH, West Bank — The Palestinian Authority hopes to put the stifling fiscal crisis it faced in 2021 behind it, but that will depend in large part on a pledge from the European Union.

Why it matters: The U.S., EU, Israel and the PA itself all fear that failing to pay public sector salaries could trigger the Palestinian government's collapse.

The PA struggled throughout 2021 to pay its 140,000 employees in the West Bank and Gaza Strip.

In November and December, the PA paid employees between 70% and 80% of their salaries and said it would repay the difference if funds became available.

The backstory: According to Palestinian Finance Ministry, international aid to the Palestinian budget continued its steep decline from $1.3 billion as of 2013 to $129 million last year.

Meanwhile, the PA's debts to local banks amount to $2.37 billion — higher than the official borrowing limit.

Israel collects tax revenues for the PA, but has deducted $400 million since Jan. 2019, according to the Palestinian Finance Ministry. Israel claims that's equivalent to the amount the PA pays annually to the families of Palestinian prisoners in Israel — payments Israel has demanded be halted.

What they're saying: Ibrahim Melhem, spokesman for the Palestinian government, told me the government hopes to see movement in the coming months, based on promises from the Europeans to resume pumping funds to the Palestinian treasury and development projects.

Melhem said he expects European support to resume in May and that Algeria's recent pledge of $100 million "is a good indication that the Arab brothers can resume financial support" ahead of the upcoming Arab League Summit in Algiers.

Behind the scenes: The U.S. and other Western countries are closely following the PA's financial difficulties. A senior U.S. official tells me the Biden administration has asked a number of Arab countries to provide financial support.

A European source with insight into the thinking in Brussels told me the EU fears the budget crisis will have steep consequences for the PA's ability to carry out its duties to the Palestinian people.

An announcement on the EU's financial support for the Palestinians over the next four years — currently estimated at $340 million annually — has been expected for several months but not made. The source expects it to come soon.

Worth noting: President Mahmoud Abbas’ Fatah party Tuesday nominated Civilian Affairs Minister Hussein al-Sheikh to the membership of the Palestine Liberation Organization executive committee.

That means al-Sheikh is likely to take the seat of the late Saeb Erekat and officially become the chief Palestinian negotiator and primary point of contact with Washington.

Go deeper: Palestinians press Biden to take more active role in Israeli-Palestinian conflict

Palestinian Authority seeks EU aid as budget crunch deepens

The PA's inability to pay the full salaries of its employees could lead to unrest.

Mahmoud Abbas speaks in Brussels in 2018. Photo: Dario Pignatelli/Bloomberg via Getty

Palestine

RAMALLAH, West Bank — The Palestinian Authority hopes to put the stifling fiscal crisis it faced in 2021 behind it, but that will depend in large part on a pledge from the European Union.Why it matters: The U.S., EU, Israel and the PA itself all fear that failing to pay public sector salaries could trigger the Palestinian government&#x27;s collapse.

China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

World

RAMALLAH, occupied West Bank — Palestinian officials believe that the collapse of the Israeli government will delay any prospect of a “political horizon” or diplomatic process in the Israeli-Palestinian conflict. 

Why it matters: Palestinian President Mahmoud Abbas had hoped that President Biden’s upcoming trip to the region would lead to some kind of a political breakthrough in the conflict.

State of play: Since the formation of the current Israeli government a year ago, many high-level Palestinian-Israeli meetings have been held, but they were all limited to discussing daily life and economic and security issues.

Palestinian officials said that Bennett rejected many initiatives to discuss launching a political process.

The Biden administration also informed the Palestinians in the last year that despite the U.S. commitment to the two-state solution, the time was not ripe to launch a political process between the two parties, the officials said.

Yes, but: Palestinian officials see a glimmer of hope in Yair Lapid, who is expected to become acting Israeli prime minister next week. Lapid said in December 2021 that it is no secret that he supports the two-state solution.

The two Palestinian officials said that Abbas would not oppose a meeting with Lapid if he offered to meet the Palestinian president on the basis of a two-state solution.

Palestinian officials also see the political crisis in Israel as an opportunity for the Biden administration to fulfill several of its promises after postponing some steps, such as reopening the U.S. Consulate in Jerusalem — a move Israel opposes.

Waiting to reopen the consulate can create a "reality in which the elections may produce an Israeli right-wing government that makes the matter more complicated," a senior Palestinian official said.

The State Department said earlier this month that it remains "committed to reopening our consulate in Jerusalem."

The senior Palestinian official also said that the political developments in Israel put more responsibility on the Biden administration to prevent any escalation in settlement building or another escalation on the ground.

What they're saying: Palestinian officials, who are publicly calling the Israeli elections an "internal affair," said they are closely watching developments in Israel, including the prospects for a purely right-wing government after the elections.

"The elections are an internal Israeli affair that does not concern us. We do not care who will come. We will deal with any Israeli government that commits to peace," another senior Palestinian official close to President Abbas said.

Go deeper: State Department separates Palestinian office from U.S. Embassy to Israel

Israeli government collapse dashes Palestinian hopes of "political horizon"

Abbas had hoped that President Biden’s trip to the region would lead to some kind of a political breakthrough in the conflict.

Palestinian President Mahmoud Abbas. Photo: Issam Rimawi/Anadolu Agency via Getty Images

Israeli-Palestinian conflict

Israel

RAMALLAH, occupied West Bank — Palestinian officials believe that the <a class="gtmContentClick" data-vars-link-text="collapse of the Israeli government" data-vars-click-url="https://www.axios.com/2022/06/20/israel-bennett-lapid-dissolve-knesset-elections" data-vars-content-id="51c9133e-5789-48a0-ad1d-53f3b24b7dfa" data-vars-headline="Israeli government collapse dashes Palestinian hopes of &quot;political horizon&quot;" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/06/20/israel-bennett-lapid-dissolve-knesset-elections" target="_self">collapse of the Israeli government</a> will delay any prospect of a “political horizon” or diplomatic process in the Israeli-Palestinian conflict. Why it matters: Palestinian President Mahmoud Abbas had hoped that <a class="gtmContentClick" data-vars-link-text="President Biden’s upcoming trip" data-vars-click-url="https://www.axios.com/2022/06/14/biden-meet-saudi-crown-prince-mbs" data-vars-content-id="51c9133e-5789-48a0-ad1d-53f3b24b7dfa" data-vars-headline="Israeli government collapse dashes Palestinian hopes of &quot;political horizon&quot;" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/06/14/biden-meet-saudi-crown-prince-mbs" target="_self">President Biden’s upcoming trip</a> to the region would lead to some kind of a political breakthrough in the conflict.

Ramallah — Palestinian leaders had hoped for a long time to get rid of Benjamin Netanyahu, but they didn’t want to end up with Naftali Bennett as Israel's prime minister.

The big picture: The Palestinian leadership in Ramallah considers Bennett a hardliner because he has opposed the establishment of a Palestinian state and previously called for Israel to annex Area C, which constitutes 60% of the West Bank.

One Palestinian official who asked to remain anonymous told me that Bennett is an "extremist," but he's also inexperienced and surrounded by centrist and left-wing ministers. That could make it difficult for him to make decisions that were easy for Netanyahu to make, the official said.

What they're saying: The Palestinian official told me "the end of the Netanyahu era is good news."

"His only desire was to stay in power, and thus his 12-year term was a political stalemate, field escalation and settlement expansion in an attempt to maintain the right-wing support for him," the official added.

Driving the news: Contrary to the norm in such cases, no official statement on the swearing-in of the new government was issued by the office of Palestinian President Mahmoud Abbas, though Abbas' aides were watching the process closely.

One of the only Palestinian officials who went on the record regarding the new Israeli government was Hussein Al-Sheikh, chair of the Palestinian Civil Affairs Commission. He criticized Foreign Minister Yair Lapid's remark that the new government would "improve the lives of the Palestinians and the dialogue with them on civil issues."

“Palestinians are not looking for better living conditions nor for civil dialogues!! Our people are seeking their salvation from occupation, freedom and independence in their state, with East Jerusalem as its capital," Al-Sheikh tweeted.

What to watch: The Palestinians are currently watching how Bennett will deal with a number of burning issues, including the potential expulsions of Palestinian families from their homes in Sheikh Jarrah and Silwan in East Jerusalem.

"The U.S. is speaking against the eviction ... and Meretz party, which has ministers in the government, had been calling to stop the eviction. Will this stop the eviction? This is a big question mark for us," one Palestinian official told me.

What’s next: Palestinian officials say they don't know whether progress on a political solution will be possible with Bennett at the helm, but that their attitude toward Bennett will be decided by his actions, not his words.

The Palestinian leadership isn't ruling out working with the new Israeli government on confidence-building measures to improve the lives of the population, but not as a substitute for working toward establishing a Palestinian state.

Palestinian leaders are wary of Bennett but happy to see Netanyahu go

"The end of the Netanyahu era is good news."

Bennett (Right center) and Netanyahu (front left) minutes before power changed hands. Photo: Emmanuel Dunand/AFP via Getty

Ramallah — Palestinian leaders had hoped for a long time to get rid of Benjamin Netanyahu, but they didn’t want to end up with Naftali Bennett as Israel&#x27;s prime minister.The big picture: The Palestinian leadership in Ramallah considers Bennett a hardliner because he has opposed the establishment of a Palestinian state and previously called for Israel to annex Area C, which constitutes 60% of the West Bank.

RAMALLAH, West Bank  — The Russian invasion of Ukraine has put the Palestinian Authority in a serious dilemma. 

Driving the news: The U.S. and some European countries have asked the Palestinian leadership to issue a statement condemning Russia, a historical ally, but the PA rejected it, a senior Palestinian official said. 

The official added that the PA has good relations with Ukraine and with Russia, who both vote with Palestine at the UN, and therefore prefers not to take sides in the conflict.

The official said the Biden administration is now pressuring the PA to condemn Russia's invasion, but declined to give further details. The State Department did not reply to a request for comment.

What they're saying: "We have a Palestinian community in Russia and another in Ukraine, and we fear that any political position we may take will negatively affect these communities,” the official said.

Palestinian political analyst Hani Al-Masri said that condemning Russia means the Palestinians would lose a major ally and supporter of their political positions. Therefore, he said, it is better for the PA to distance itself from the conflict.

"On the other hand, the U.S., despite its verbal stances, did not offer anything to the Palestinians. It did not reopen the consulate in Jerusalem, nor did it launch a political process based on the two-state solution,” Al-Masri said.

Al-Masri added that many Palestinians see a double standard in how the international community quickly condemned Russia but hasn't taken similar steps to condemn the Israeli occupation and treatment of Palestinians.

Between the lines: The PA does not have a vote at the UN General Assembly and thus did not have to take a public stance on the resolution last week condemning Russia.

Most Arab countries in the UN supported that resolution.

The big picture: The developments in Ukraine have topped the headlines of Palestinian media.

Since the beginning of the crisis, the PA has been focused on efforts to evacuate Palestinians from Ukraine.

Ambassador Ahmed al-Deek, the assistant Palestinian foreign minister, said that before the crisis, there were 2,000 Palestinian citizens residing in Ukraine in addition to 600 students.

He added that 1,300 Palestinians, including residents and students, have been evacuated.

The Palestinian Authority's Russia-Ukraine dilemma

The PA has good relations with Ukraine and with Russia.

Palestinian President Mahmoud Abbas and Russian President Vladimir Putin shake hands during a meeting in Moscow in 2018. Photo: Alexei Druzhinin\TASS via Getty Images

Russia

RAMALLAH, West Bank — The Russian invasion of Ukraine has put the Palestinian Authority in a serious dilemma. Driving the news: The U.S. and some European countries have asked the Palestinian leadership to issue a statement condemning Russia, a historical ally, but the PA rejected it, a senior Palestinian official said.

Ramallah — Amid growing domestic criticism, Abbas is planning to reshuffle the Palestinian government and replace a number of ambassadors and governors.

The intrigue: A senior Palestinian official told me the changes would include appointing a new minister of the interior and a new minister of endowments, the officials responsible for the security forces and for religious affairs and Muslim holy sites, respectively.

Prime Minister Mohammad Shtayyeh held both roles himself for several years.

The Palestinian official, who asked not to be named, added that there will be a limited number of other changes in the Cabinet, all to be announced in the coming days.

Driving the news: The PA faced large protests after the death last month of Palestinian political activist Nizar Banat following his arrest by security forces.

The PA also faces criticism over its response to the recent war in Gaza, its decision to reject a vaccine deal with Israel, and Abbas' decision to delay what would have been the first legislative elections in 15 years in May.

There is also international pressure to move toward elections.

A European diplomat told me the EU has asked Abbas to set an approximate date to hold legislative and presidential elections and wants “a clear signal and commitment that the elections have been postponed and not canceled."

Behind the scenes: According to another Palestinian official, the Hamas movement rejected a proposal to form a consensus government that could be acceptable to the international community, and instead it proposed a two-year transitional council.

There are major unresolved differences between Hamas and Abbas' Fatah party over the reconstruction of Gaza.

What’s next: In the midst of all this, the PA is facing a financial crunch that may render it unable to pay its employees' salaries in the coming months.

Palestinian, Israeli and U.S. officials have been working on initiatives to help support the PA.

Palestinian President Abbas to reshuffle government amid growing backlash

The Palestinian Authority is facing international pressure to move toward elections.

Abbas (R) with Prime Minister Mohammad Shtayyeh at a Cabinet meeting.

Abbas (R) with Prime Minister Mohammad Shtayyeh at a Cabinet meeting. Photo: Majdi Mohammed/AFP via Getty

Ramallah — Amid growing domestic criticism, Abbas is planning to reshuffle the Palestinian government and replace a number of ambassadors and governors.The intrigue: A senior Palestinian official told me the changes would include appointing a new minister of the interior and a new minister of endowments, the officials responsible for the security forces and for religious affairs and Muslim holy sites, respectively.

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Abdel Raouf Arnaout

Stories

Israeli government collapse dashes Palestinian hopes of "political horizon"

The Palestinian Authority's Russia-Ukraine dilemma

Palestinian Authority seeks EU aid as budget crunch deepens

Palestinian President Abbas to reshuffle government amid growing backlash

Palestinian leaders are wary of Bennett but happy to see Netanyahu go