As Israel threatens power cuts, how can Palestine pay its bills?
The Palestinian Authority’s finances are at a “breaking point”, a United Nations official warned on October 20th. But that didn’t stop Israel’s state-owned electric company from reportedly threatening a week later to cut power to the occupied West Bank if the PA didn’t pay $120m in overdue bills.
The threat to plunge Palestine into darkness is a recurring one, but it has renewed focus on the increasingly dire state of the PA’s books, and the role Israel continues to play in further hobbling the occupied West Bank’s already crippled economy when it can least afford it.
Like all governments, the PA has had to contend with the economic fallout of COVID-19. But analysts are quick to note that the pandemic only worsened long-standing structural issues stemming from the decades-long Israeli occupation and a reliance on foreign aid.
“This does seem like an acute crisis, but I think it is exactly in line with where the Palestinian economy has been going,” Yara Asi, a fellow at Al-Shabaka policy network, a Palestinian think-tank, told Al Jazeera.
The World Bank estimated in April that Palestine’s economy shrank 11.5 percent last year. And though it sees growth rebounding to 2.9 percent this year, that rate still implies “a near stagnation in real per capita income and worsening social conditions”, said the development bank.
In late October, Tor Wennesland, UN special coordinator for the Middle East peace process, sounded the alarm, warning that with a growing budget deficit, dwindling donor support and an “exhausted” borrowing capacity, the PA’s fiscal situation is nearing a “breaking point”.