Palestine’s reliance on US stretched

For several months, measures to reduce aid to the Palestinian Authority
have been on the minds of many lawmakers in the United States. In
August, the measures were actually implemented, effectively cutting off
roughly $200m in aid to the PA. In addition, measures were also put in
place to freeze the distribution of a further $200m. While the attempt
had been dismissed as political posturing on the part of a number of
lawmakers under the guise of balancing the US budget, there was a
general feeling that enough opposition to any cuts existed in Congress
and the measure would be defeated; unfortunately, that was not the case.

Prior to the freeze, Palestinian Monetary Authority Governor
Jihad al-Wazir commented on what the action would mean for the financial
stability of the PA. “It would have a major impact on the economic
situation in the West Bank, if the you lose $500m [in US aid] from
financial support for development in the West Bank… really, the risk of a
PA collapse is very real under the financial strain, without US
assistance, without donor assistance in general.”

There has been
speculation that the underlying reason for the measure was the intention
of PA president Mahmoud Abbas to ask the United Nations to recognise
Palestine as a state, sometime in September. The cut off of the funds
came before the end of the governmental fiscal year, which was on 30th
September and would also affect the potential for any funds to be
disbursed during the upcoming fiscal year.

The response to the
measure was swift, with a statement issued by the PA’s spokesperson,
Ghassan Khatib. “It is another kind of collective punishment which is
going to harm the needs of the public without making any positive
contribution,” stated Khatib. “It is ironic to be punished for going to
the United Nations”.

While the measure did not have the backing
of many members of Congress, the process to overcome the freeze took
time. Attempts by President Obama to work with Congress to lift the
freeze were partially successful on November 7, when a decision was made
to release $200m that had been set-aside as security funds for the
Palestinian Authority. Still to be settled is the additional support,
which is earmarked as economic funds and is still considered frozen at
the present time.

Whether the remaining funds will be released is
still a matter for debate. Regardless of the outcome, there is no doubt
that the freezing of the aid has done nothing to enhance the image of
the United States among other world powers. Approval of unilateral
recognition of the PA by the UN also triggered a reduction in financial
support by the US to UNESCO, owing to a 1994 law that prohibits the
country from providing funds to any United Nations organisation that
supports a unilateral recognition of statehood in Palestine. Depending
on how lawmakers in the US move to deal with the new circumstances, the
potential for economic collapse remains a real possibility in the PA,
along with further damage to the international reputation of the United
States.