The debt crisis gripping the Palestinian Authority has forced Ramallah to turn to Israel for funding as it struggles to stay solvent.The Palestinian economy could not survive with the largesse of foreign donors. The dependence on foreign aid has been heightened in the past decade as Israeli restrictions on movement and activity in the West Bank and Gaza forced millions of Palestinians into a crushing economic recession.
Despite being the source of Palestine’s economic decline, Tel Aviv has also become the most dependable source of funding for the Palestinian Authority. Prime Minister Salam Fayyad and Israeli Finance Minister Yuval Steinlitz agreed to terms of a new financial agreement to go into effect in January 2013, reports Ma’an News.
The new agreement with create a larger monitoring infrastructure to track the flow of goods into and out of Palestine. It will also construct pipelines to deliver Israeli petroleum products to Palestinian markets.
This is not the first time the Israeli government has offered to cover the PA’s administrative costs, but the new trend is important for the peace process and further negotiations about Palestinian statehood. By agreeing to cover some of the financial burdens of the Palestinian Authority, Tel Aviv is ensuring Palestine’s dependence on Israel for its survival.
This was the conclusion of the World Bank just last week when it released a comprehensive report on the Palestinian economy. The World Bank concluded that the deepening occupation of Palestine was both hindering economic growth and undermining the future of a stand-all state in the West Bank and Gaza.
Israeli media disagreed with the spirit of the World Bank conclusion as every major national publication denounced the organization’s motives. However, Israeli media have not necessarily disagreed with the substance of the World Bank report. David Rosenberg, writing for Haaretz, agrees that with foreign aid from Arab nations drying up as a result of the Arab Spring the Palestinian economy does not have what it takes to survive on its own. His column did not address the main reason for Palestine’s lack of sustainability – the occupation.