Abbas Seeks Qatar’s Money as PA Faces Financial Crunch

Donor countries have reduced aid, leading to massive budget crisis

Palestinian Authority President Mahmoud Abbas is on a visit to the Gulf state of Qatar for talks with the country’s ruler, Emir Tamim bin Hamad Al Thani.

“The main objective of the visit is to seek financial help for the Palestinian Authority, which is suffering from a severe financial crisis,” Hasan Awwad, an expert on Palestinian affairs, told The Media Line.

Some observers say a lack of aid from wealthy Gulf states has exacerbated the PA’s budget quandary.

Abbas is politically isolated. He doesn’t travel as much as he used to, in part because of his advanced age (he turned 86 on November 15) and failing health, and also due to lukewarm relations with these countries, especially Saudi Arabia and the United Arab Emirates, formerly major supporters of the PA budget.

“The heads of these states don’t like Abbas and want to see him go. They will not give him money and provide him with the life support that he needs to stay in power,” says Awwad.

There’s a drastic decline in the level of donor countries’ aid to the Palestinians, and it’s worrying

A source in the PA told The Media Line that Palestinian officials were in a state of panic regarding the authority’s finances.

“There’s a drastic decline in the level of donor countries’ aid to the Palestinians, and it’s worrying,” the source says.

The PA is experiencing the worst fiscal difficulties since its establishment more than a quarter-century ago. The treasury is facing a severe cash crunch, and this could soon reflect on its ability to pay government salaries and conduct daily business, top officials say.

Dr. Nasr Abdel Kareem, professor of finance and economics in the Graduate Studies Department at the Arab American University in Ramallah, says the next few months will be critical for the PA.

“No doubt the PA is going through a tough financial period and for the next five months a state of anxiety will remain in the PA until they secure the needed money,” Abdel Kareem says.

The Palestinian Authority hasn’t received any financial aid from the Arab states for two years

PA Prime Minister Mohammad Shtayyeh told an emergency session of his cabinet on November 9 that “the financial situation is the most difficult one in many years, the financial aid that we had received was less than 10% of what we used to receive in the past years.

“The Palestinian Authority hasn’t received any financial aid from the Arab states for two years,” he complained.

Abbas sent Shtayyeh to the meeting of the Ad Hoc Liaison Committee international donors in Norway on November 17, in the hope of persuading attendees to open their checkbooks.

He urged donor countries to increase their aid so that the government can fulfill its obligations.

But the meeting at Oslo City Hall yielded little comfort for Palestinian officials, as no major financial commitments were made.

“The aid came way below expectations. This will push the authority to take unpopular decisions such as deducting employees’ salaries,” says Abdel Kareem.

One big reason EU countries have been reluctant to send financial aid to Ramallah is institutional corruption.

They have repeatedly called on the PA to take serious and tangible measures to confront the huge financial corruption, which Palestinian officials deny is as widespread as the US and EU believe.

The aid came way below expectations. This will push the authority to take unpopular decisions such as deducting employees’ salaries

Palestinian officials had publicly complained of a steep drop of about 90% in international aid to the PA treasury this year, and about Israel’s continued deduction of Palestinian tax funds.

The PA warns of a crisis that may last for months.

The World Bank warns that the Palestinian government may not be able to fulfill its obligations by the end of this year unless Israel ends its tax deductions and donors resume aid.

The World Bank expects that the PA will face a deficit of about $1.36 billion this year.

Last week, Abbas met with Russian President Vladimir Putin in Moscow where the Palestinian leader called for support of the Palestinian people and demanded an international peace conference.