Palestine at risk of economic collapse, UN warns

Palestine at risk of economic collapse, UN warns
The Palestinian economy is at risk of collapsing UN political chief Rosemary DiCarlo has warned.
2 min read
30 April, 2019
The Palestinian Authority is at risk of 'economic collapse' [AFP]

A worsening Palestinian financial crisis has led to a growing risk "of a financial collapse of the Palestinian Authority" after crippling aid cuts, the UN political chief warned Monday.

Rosemary DiCarlo told the UN Security Council that "a sustainable resolution" to the authority's funding crisis is urgently needed with Israel withholding Palestinian aid and the US drastically cutting its contribution to Palestinian aid.

Israel is withholding around $11 million of the roughly $180 million a month in tax funds that it collects for the Palestinians, claiming that money was being used to support families of terrorists.

The Palestinians, in protest, have refused to accept any of the tax transfers.

"Israel's so-called 'withholding' of Palestinian tax revenues is blatant theft, violating bilateral agreements and the Geneva Convention prohibition on the pillaging of the occupied people's resources," Riyad Mansour, Palestine’s UN ambassador at the UN, told the council.

Without the funds, the Palestinian Authority has cut most workers' salaries in half since March, though salaries will be raised to 60 percent this month because of the Muslim holy month of Ramadan. The lowest paid employees who earn less than $600 a month continue to get full pay, but most civil servants have higher salaries.

DiCarlo called on both sides to address the underlying causes of the financial crisis, implement their bilateral

agreements, and avoid actions that undermine security and stability for Palestinians.

She also urged the Ad Hoc Liaison Committee, which coordinates development aid to the Palestinians, to use its meeting Tuesday in Brussels to work with Israel and the Palestinian Authority to resolve the crisis.

In addition to the tax revenue, the Trump administration sparked outrage after cutting hundreds of millions of dollars in funding for Palestine.

Last month, the head of UNRWA, the UN agency that helps 5.3 million Palestinian refugees, called for equal generosity from donors who filled a $446 million hole in its budget last year after the US drastically cut its contribution.

Pierre Krahenbuhl said donors funded the UN Relief and Works Agency's $1.2 billion budget for 2018 after the US reduced its $360 million contribution in 2017 to just $60 million.

He said the UN agency also adopted a $1.2 billion budget for 2019, and this year it is getting nothing from the United States.