In one very specific international arena, the Palestinian Authority has found a champion in Israel. At a meeting of the Ad Hoc Liaison Committee (AHLC), a body established during the 1990s to coordinate foreign aid to the PA, Israeli Minister of Regional Cooperation Essawi Frej appealed to donor states to pick up their contributions to the PA. The relationship isn’t so surprising given Israeli interests in the area: even in the absence of a negotiation process, Israel, the U.S., and other countries see a value in the PA picking up day-to-day tasks in much of the occupied territories, ranging from basic social services to security. If the PA were to fall, Israel might find itself with unwanted responsibilities or, worse, a more radical regime on its doorstep.

The AHLC is therefore important to Israel because of the centrality of international funding in the Palestinian economy. Predictions of the Palestinian Authority’s collapse—and the imminent demise of its aging strongman—have popped up from time to time for years, but whether the PA plods along for another two months or two decades, it is clearly having difficulty soliciting outside financial support. This portends trouble for the West Bank-based government.

Frej is a sensible representative for Israel in a setting like the AHLC. The minister of regional cooperation is a Palestinian-Israeli, a member of the left-wing Meretz party, and a longtime and sincere supporter of a two-state solution.

(From right to left) Meretz MK Essawi Frej, Former Meretz MK Ilan Gilon, Former President of Israel Reuven Rivlin. Photo Credit: Mark Neyman / Government Press Office (Israel) 2015.

Frej’s presence is also an indicator of the peculiarities of current Israeli politics and the Israeli-Palestinian conflict. A November report addressed to the AHLC from the United Nations Special Coordinator for the Middle East Peace Process (UNSCO) flagged as harmful Israel’s policy of deducting from Palestinian customs revenues an amount equivalent to PA payments to prisoners in Israeli jails. This practice was  enshrined in Israeli law in 2018 under legislation Meretz opposed at the time. That Frej represented Israel at the AHLC is a product of the mixed ideological composition of the current Israeli coalition, but it also means he is in a position of defending, at least implicitly, a policy with which he disagrees. Taken a step further, Israel now finds itself having to ask other countries to stabilize the PA’s finances in part because other governments have been too receptive of previous Israeli and American administrations’ criticisms directed at Ramallah.

The latest AHLC meeting comes amid an international donor environment increasingly disinterested in funding the PA. According to the Palestinian Finance Ministry, direct budgetary support from the Gulf Arab states, including Saudi Arabia, dropped sharply over the last year—down roughly 85% in 2020 from 2019 levels. This dramatic reduction cannot be separated from the context of the Trump administration’s policy of cutting all American aid bound for the West Bank and Gaza. This went beyond what even former Prime Minister Benjamin Netanyahu likely desired, but was fully consistent with public Israeli admonishments of the PA, echoed by American politicians who subscribe to the Israeli right’s perspective on the conflict.

But it’s not just Arab governments that are drawing down their support for the PA. According to the latest UNSCO report, overall external government aid to the PA fell from over 30% of gross national income in 2008 to barely more than 10% by the end of the last decade—and is trending downwards. European countries—many of which stepped up to fill gaps left by U.S. withdrawal from agencies like UNRWA during the Trump years—are now scaling back their contributions as well. Now, the PA reports lower support from states like Germany, Italy, and France. Meanwhile, direct European Union support, which goes to paying out the salaries of PA civil servants, has been suspended since the beginning of this year. This has a particularly acute effect on the Palestinian economy, as the public sector is the largest employer in the West Bank and Gaza. 

Brussels reports that the current hold on European funds is due to “technical issues,” but there is undeniably impatience with the PA over corruption, kleptocratic practices, and authoritarian rule. Sweden’s Foreign Minister Ann Linde recently said in an interview that in order to continue aiding the PA, “we cannot have corruption at such a level as exists in Palestine.” Abuses like PA forces’ killing of activist Nizar Banat earlier this year drew censure as well.

Palestinian President Mahmoud Abbas puts his state’s case to European Parliament. Photo Credit: © European Union 2016 - European Parliament

External funding for the PA is always going to be a tricky matter for donor countries because of the anti-democratic nature of Mahmoud Abbas’s rule, but the Palestinian Authority is not the only non-ideal government in the world. The most compelling case for continuing support is the absence of a viable alternative in Palestinian politics. If Israel wants to encourage other countries to support the PA, then it cannot have it both ways: public political campaigns against Abbas and his government will inevitably deter potential donor states, as recent trends illustrate. 

Outside donors may also grow fatigued with the conflict if Israel calls for funding for the Palestinian proto-state while entrenching a one-state or de facto one-state situation. That is why it’s important that Frej pledged before the AHLC that Israel would not take any steps to interfere with a future partition, though action will be needed to back up that commitment. More than money, Israeli policies that help preserve the possibility of a two-state outcome can stabilize the PA by lending credibility to its original purpose: facilitating the creation of an independent Palestinian state.

Banner Photo credit: © European Union 2016 – European Parliament