Palestine Monetary Authority Governor Quits Abruptly

Crises at Palestinian Authority institutions behind central banker’s surprise move, expert says

President Mahmoud Abbas has accepted the sudden resignation of Azzam Shawwa, the governor of the Palestine Monetary Authority (PMA) – the Palestinian Authority’s Ramallah-based emerging central bank.

On Sunday, Abbas assigned Shawwa’s duties to Dr. Firas Melhem, a member of the PMA’s board of directors.

Melhem led the Rule of Law team at the east Jerusalem-based office of the Middle East Quartet, focusing on justice and security, for more than four years and was in charge of the Complaints Division of the PMA for four years. He graduated from a Moroccan university undergraduate program in 1993, received a master’s degree from Birzeit University in 2000, and earned a doctorate in law from a Belgian university in 2004.

Shawwa’s office declined to comment on the resignation when contacted by The Media Line. According to the PMA website, he stepped down for “personal reasons.”

The ministry itself is not in a good position, and maybe that affected Shawwa and exhausted his patience. Not to mention that his powers were limited

Dr. Hisham Awartani, director of the Palestine Governance Institute in Nablus and a former professor of economics for over two decades at Al-Najah and Birzeit universities, both in the West Bank, told The Media Line that Shawwa’s resignation was likely due to his inexperience and the difficult situation in the PMA.

“Not that I’m blaming the [Monetary] Authority, but all of the PA institutions are in an unenviable position,” Awartani said.

He added, however, that even when the PMA’s situation was fine, Shawwa, a former PA energy minister, was not up to the job because of his limited experience in finance and in interacting with businesses.

“The reality of the situation is that the monetary authority has fallen short in its dealings with banks and with the private sector as well,” he said.

Awartani, who was a member of the Palestinian economic team during the Oslo peace process, stressed that there are several factors behind the sudden resignation, chief among them that the general situation for the Palestinians, both economic and non-economic, is not good. Therefore, the PA needed more efficient management, “not only for the monetary authority, but for other [non-ministerial] institutions … for example the [Palestinian] Water Authority, all of whom are in a very difficult position.”

He added that there has been a communication gap between Shawwa and the private sector, including the banks. “His resignation came at a good time for him, as it came at a time of retrenchment in ministerial and non-ministerial institutions,” he said.

Awartani indicated that the intervention of the PA finance ministry in the PMA’s work and its board of directors created another issue. “The ministry itself is not in a good position, and maybe that affected Shawwa and exhausted his patience. Not to mention that his powers were limited,” he said.

Shawwa is not the first senior official to leave the Palestinian leadership in the last month. On December 9, Hanan Ashrawi, a veteran member of the Palestine Liberation Organization’s Executive Committee, submitted her resignation to Abbas, who serves as the chairman of both the PLO and the PA’s ruling Fatah movement.

Since we don’t have the full picture about the affair, it would be hard to reach an accurate conclusion about what was behind the resignation

Adel Shadeed, a Palestinian political analyst and freelance writer for the London-based New Arab news website and other media outlets, told The Media Line that Shawwa’s sudden resignation and the PA president’s rapid acceptance and assigning of a new chairman indicates a hidden story.

Shadeed pointed to the lack of information about the resignation, and how the public first learned about it through leaks, which he said confirms that there is more behind it than is known publicly.

“And since we don’t have the full picture about the affair, it would be hard to reach an accurate conclusion about what was behind the resignation,” he added.

Shadeed said, however, that given Shawwa’s sudden resignation and its quick acceptance, and his replacement by a man with a legal background who is unknown to the wider Palestinian public, confirms that there is “something cooking,” and that “the matter might go beyond the Palestinian arena. External parties may have a hand in this matter.”

Both the PMA and banks operating in the West Bank have been facing tremendous pressure, after the Israeli Defense Ministry’s Office of the Coordinator of Government Activities in the Territories (COGAT) in May ordered the banks to freeze accounts held by the families of security prisoners in Israeli jails and of those killed in clashes with Israel, in order to prevent the PA from paying them stipends. Some banks have already frozen some of these accounts, generating a wave of anger among Palestinians.

Israel has long objected to the PA’s payments to the families of prisoners held in its jails, saying they encourage terrorism. Palestinians view the stipends as social assistance for those living under military occupation.

Melhem worked for three years as a deputy team leader and a principal expert for the European Union’s Seyada II project, designed to strengthen the Palestinian judicial system. He worked for nearly 18 years on several projects, including as a trainer in drafting legislation, as a legal adviser to several reform projects, and as a principal researcher, with some of the projects funded by the EU and others by Transparency International in the United Kingdom.