Despite Political Tensions, Israel & Palestinian Authority Forge Economic Ties

By Dima Abumaria | The Media Line

February 19, 2018

Palestinian women walk past a money changer in the West Bank city of Ramallah.

Meeting between Israeli and Palestinian economy ministers breaks an effective boycott imposed by Abbas in the wake of U.S.’ Jerusalem declaration

For the first time since Palestinian Authority President Mahmoud Abbas imposed a diplomatic boycott on Israel and the U.S.—this, following the latter’s recognition in December of Jerusalem as Israel’s capital—a Palestinian official met with an Israeli colleague in Paris, France.

Abeer Odeh, the Palestinian Minister of Economy, held consultations last week with her Israeli counterpart Eli Cohen. Joined by French President Emmanuel Macron, the focus of their talks was on further developing “economic cooperation” between Israel and the PA.

“The meeting was a French initiative and was held under its auspice,” a spokesperson for Cohen told The Media Line. “Both sides discussed ways to enhance and promote the Palestinian economy and it was agreed to continue the discussion either bilaterally or with French facilitation.”

The encounter comes amid moves by the Palestinian Authority to sever economic ties with Israel and follows the Palestinian Central Council’s recent recommendation to end security coordination with Israel.

When contacted by The Media Line, a spokesperson for the Palestinian Ministry of Economy refused to comment, citing a lack of information about the Paris meeting.

Last month, reports surfaced that Palestinian Prime Minister Rami Hamdallah had requested a meeting with Israeli Finance Minister Moshe Kahlon, geared towards “bridging cooperation on joint Israeli-Palestinian economic projects.”

While a source from Hamdallah’s office told The Media Line that the meet never happened, a spokesperson for Kahlon confirmed that the two will indeed convene in the coming days to discuss “a new project to create a common industrial area for Palestinian and Israeli workers [with a view to] strengthen[ing] economic relations between Israel and Palestine.”

Kahlon’s representative added that the two will discuss ways to improve existing projects, primarily in the fields of water and electricity.

The development comes after the Executive Committee of the Palestine Liberation Organization (PLO)—the umbrella body recognized by the international community as the official voice of the Palestinian people—decided on a series of steps to downgrade—if not altogether cut-off—relations with Israel, including canceling the Paris Protocol which has served as the basis for financial relations between the two sides since 1994.

The PLO said its move was a prerequisite for the establishment of a stable and independent national economy free from Israeli influence.

Shortly thereafter, Hamdallah’s office announced the formation of a committee that would begin preparing proposals to implement the PLO decisions, including the possibility of introducing a new Palestinian currency into the marketplace to replace the Israeli shekel.

Hanna Isaa, a Palestinian political analyst, reconciled the apparent paradox—that is, that economic meetings are being held between Palestinian and Israeli officials while the Palestinian leadership is calling for the severing of such ties—by explaining that the PA is acting based on realpolitik given the difficult economic conditions in the West Bank.

“These meeting have a positive effect on the Palestinian economy,” he stressed to The Media Line, while noting that the PA depends on Israel for freedom of movement and for access to resources. “Israel collects tax money [on Palestinian goods on behalf of] the PA, so maintaining relations is important.”

In this respect, Issa urged the Palestinian leadership to begin differentiating between “emotional” and “logical” policies. “Governments must talk to their own people straightforwardly so that they won’t get shocked by reality,” he concluded.

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