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

Axios Explains: Israel-Hamas war

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, 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

Israel

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.

RAMALLAH, occupied West Bank — Palestinian President Mahmoud Abbas’ meeting with White House national security adviser Jake Sullivan last week was bleak and didn't make much progress, Palestinian officials told Axios. 

Why it matters: The meeting's tenor reflects the current low point in the Israeli-Palestinian conflict. The U.S. has expressed concern over the Israeli government's policies in the occupied West Bank, and Palestinians have warned the situation is only set to get worse. 

"We conveyed to Sullivan the message that the practices of the Israeli government will become more dangerous to the point that the Palestinian leadership and people will not be able to bear them, and therefore won’t remain silent," a senior Palestinian official told Axios.

State of play: Tensions between Israel and the Palestinian Authority have been intensifying for months, but they escalated even further earlier in January when the new Israeli government sanctioned the PA over its latest push for the International Court of Justice to issue a legal opinion on the Israeli occupation of the West Bank.

The PA is concerned additional Israeli sanctions could make it difficult to pay its employees' salaries. 

"Without a doubt, the escalating financial pressures [by Israel] would undermine the Palestinian Authority and its ability to function," a senior Palestinian official warned.

At the same time, the situation in the West Bank has continued to deteriorate. 

Tensions have remained high in several West Bank cities, where the Israeli military has conducted nearly nightly raids. 

 The Israeli military killed about 150 Palestinians last year. Israel says most of those who were killed were militants, though Palestinians and human rights groups say the figure includes several children and people not involved in the unrest. Israel stepped up its operations in the West Bank following several attacks against Israeli civilians by Palestinians last year. More than two dozen people in Israel and the West Bank died in the attacks.

What they're saying: The PA will continue to raise the issue of the "political horizon" or the diplomatic process in the Israeli-Palestinian conflict, Palestinian officials say. 

The Biden administration has previously stressed that such a process is unrealistic right now, given regional tensions and how wide the gap is between the two sides. Still, the White House said in a statement that during last week's visit Sullivan and Palestinian leaders "exchanged views on measures to build trust, enhance security, and foster conditions for a political horizon."

The PA told Sullivan it will use all political and diplomatic means — in the UN and international courts — to defend itself, according to the senior Palestinian official. 

"This includes reconsidering the Palestinian-Israeli relations on the basis that the extremist Israeli government is no longer a partner in peace, but rather a colonial power that practices ethnic cleansing and apartheid, and its plans and practices must be exposed and its unilateral acts of aggression must be stopped," the Palestinian official said.

Israel has previously said allegations of apartheid are baseless and denied accusations that it persecutes the Palestinians.

The PA also plans to continue its efforts to gain full membership at the UN — a push U.S. officials have warned will only make the situation worse. 

For his part, Sullivan also reaffirmed "the U.S. administration’s interest in strengthening engagement with the Palestinian Authority," the White House said.

They also discussed "U.S. support for peace, preserving the path towards negotiations for two states, and advancing equal measures of security, prosperity, and freedom for Israelis and Palestinians," the White House readout added. 

What to watch: Many fear tensions in the region will only continue to escalate, especially during the holy month of Ramadan, which begins in March. 

Palestinian officials say the Abbas-Sullivan meeting was bleak

The meeting's tenor reflects the current low point in the Israeli-Palestinian conflict.

Sullivan meets Palestinian President Mahmoud Abbas on Jan. 19. Photo: Handout/Palestinian Presidency/Anadolu Agency via Getty Images

RAMALLAH, occupied West Bank — Palestinian President Mahmoud Abbas’ meeting with White House national security adviser Jake Sullivan last week was bleak and didn&#x27;t make much progress, Palestinian officials told Axios. Why it matters: The meeting&#x27;s tenor reflects the current low point in the Israeli-Palestinian conflict. The U.S. has expressed concern over the Israeli government&#x27;s policies in the occupied West Bank, and Palestinians have warned the situation is only set to get worse.

Abdel Raouf Arnaout

Stories

Palestinian officials say the Abbas-Sullivan meeting was bleak

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