Dr. Tariq Al-Hajj: The absence of a strong economy weakens the ability of Palestinians to achieve economic independence that enhances their political aspirations

Ayham Abu Ghosh: Releasing the withheld funds or stopping the deductions is ruled out at the current stage, and the situation requires a political solution

Dr. Thabet Abu Al-Rus: The American warning directed to Netanyahu regarding the risks of the collapse of the Palestinian economy is real and serious

Talat Alawi: The deterioration of the economic situation is not limited to the Authority alone, but extends to include various sectors of Palestinian society

The Palestinian economy is facing an unprecedented crisis, amid warnings issued by the United States of America and seven of its allies, indicating the risk of a comprehensive collapse of the Palestinian economy if the current conditions continue without addressing them.

A number of experts and economic analysts, in separate interviews with “I”, believe that these warnings are part of an implicit political message aimed at dissuading the Palestinians from taking independent political positions away from American influence.

In contrast, analysts and experts pointed to real indicators of the collapse of the Palestinian economy, including rising unemployment rates, increasing public debt, and escalating Israeli restrictions on Palestinian funds, which deepens the fragility of the Palestinian economy, which is groaning under the weight of Israeli restrictions.

Experts and analysts stressed that the Palestinian Authority finds itself facing difficult choices, ranging from seeking international support and implementing transparency measures, to strict austerity measures, at a time when it needs real international support to stop the ongoing Israeli punitive measures against the Palestinian economy.

The American warning is a veiled message to the Palestinians

The economic expert, Professor Dr. Tariq Al-Hajj, said: The warnings of the United States and its seven allies regarding the Palestinian economic situation are warnings, pointing out that they reflect real indicators of the collapse of the Palestinian economy if the current conditions continue for an additional six months.

Al-Hajj explained that this warning is based on recent reports by the World Bank and the International Monetary Fund, which addressed the state of economic contraction that the Palestinian economy is experiencing, considering that this contraction may be a preliminary stage for a comprehensive collapse.

Al-Hajj pointed out that the warnings were based on the situation in the Gaza Strip, which reflects part of this collapse, as the Strip has become completely destroyed, and international agencies are unable to work there due to the lack of food resources and the escalation of displacement operations.

Al-Hajj pointed to other foundations on which the warning of the collapse of the Palestinian economy was based, namely the recent Israeli decisions, such as controlling the surplus shekel and piracy of clearance funds, which exacerbate the economic situation and raise concerns among some Israeli parties that believe in peace.

Al-Hajj touched on another matter on which the warning was based, which is the increasing unemployment and poverty figures, as poverty and unemployment indicators have reached record levels, while the percentage of bounced checks has increased, which highlights the extent of the financial crisis. In addition, government debt has reached 140% of the GDP, which is a high percentage that reflects the size of the financial deficit of the Palestinian Authority, especially with the failure to adopt a budget for the second year in a row, which creates a state of ambiguity about the future financial situation.

Israel's control over financial resources and land

According to Al-Hajj, the American warning is a veiled message aimed at dissuading the Palestinians from seeking political solutions without the United States, as the absence of a strong economy weakens the Palestinians’ ability to achieve economic independence that enhances their political aspirations.

Al-Hajj explains that the message carries a threat that a political solution is meaningless in light of these deteriorating economic conditions, in light of Israel’s control over financial resources and land, which hinders any serious attempts to establish an independent Palestinian state.

Al-Hajj points out that despite the Palestinian leadership's commitment to international agreements, the Israeli government is seeking to exploit the situation through a plan aimed at gaining complete control over the Palestinian territories and undermining the Palestinian economy.

Al-Hajj confirms that the United States is fully aware of the Israeli measures, and that it may intervene to change the situation if it wants.

Regarding the options available to the Palestinian Authority to overcome the current financial crisis, Al-Hajj explains that they include the extent of its commitment to its understandings with the European Union to support employees’ salaries through what is known as the “Agreement of Intent.”

Among the options, according to Al-Hajj, are European efforts to establish coordination platforms to support the Palestinian Authority, then the option of rebuilding the Gaza Strip, who will manage the Palestinian Authority after this crisis, and the extent of international readiness to support its stability.

The most important options, according to Al-Hajj, are Palestinian unity, transparency in the management of public funds, and activating the Palestinian Legislative Council to assume its responsibilities.

Palestinian Economy and Political and Security Tensions

In turn, the journalist specializing in economic affairs, Ayham Abu Ghosh, pointed out the fragility of the Palestinian national economy, which suffers from the effects of political and security tensions, with the escalation of risks that have begun to threaten its structure.

Abu Ghosh pointed out that the American warnings, as well as the warnings of Washington's allies to Israeli Prime Minister Benjamin Netanyahu, about the danger of the collapse of the Palestinian economy, are putting the economic reality in a dangerous and unprecedented phase.

Abu Ghosh explained that the latest figures announced by Prime Minister Dr. Mohammad Mustafa show the extent of the crisis, as he pointed out that the Palestinian economy has contracted by 35%, a figure that has never been seen before, which increases the indicators of the crisis and confirms the seriousness of the situation.

Abu Ghosh believes that the continued multiple pressures on the Palestinian economy, including Israel’s withholding of clearance revenues, preventing some 200,000 Palestinian workers from reaching their jobs within the Green Line, in addition to the restrictions imposed on trade and investment, including Israeli checkpoints and the siege imposed on the territories, all contribute to the aggravation of the Palestinian economic crisis and push it to the brink of collapse. These pressures are also reinforced by the threat by Israeli Finance Minister Bezalel Smotrich to sever banking relations between Israel and the Palestinian Authority, a measure that, if implemented, could exacerbate the crisis and lead to the collapse that the international community, especially the United States, fears.

Abu Ghosh said: "Washington, despite its negative stance towards the Palestinian issue in general, does not want the Palestinian economy to collapse, because of the consequences that could lead to chaos in the West Bank.

Accordingly, Abu Ghosh believes that serious American pressure is directed towards preventing this collapse by pressuring the Israeli side not to sever banking relations, stressing that the banking relationship will likely remain in place thanks to American pressure.

Abu Ghosh pointed out that these relations have become a political pressure card used by Smotrich and the Israeli right in an attempt to blackmail the Palestinian side.

Releasing the withheld funds or stopping the deductions is still unlikely.

As for Israel’s decision to deduct the clearance funds, Abu Ghosh explained that American and international pressure on Israel may remain limited in effect at present, as the decision depends on the approval of the Israeli Knesset, and therefore releasing the clearance funds or halting the deductions from them may remain out of reach at the present time.

But Abu Ghosh pointed out that international pressure may achieve some mitigation in Israeli trends or limit their escalation, especially with regard to the continuation of the banking relationship, although the release of the withheld funds or the cessation of deductions is still unlikely at the current stage.

Regarding the financial options available to the Palestinian Authority, Abu Ghosh confirmed that they are very limited, as the possibility of local borrowing has reached its maximum, which prompted the Authority to seek a syndicated loan from banks operating in Palestine, similar to the loan it obtained last year, to cover some obligations such as paying installments due on employee loans, or obtaining a direct loan and rescheduling its obligations. However, these solutions remain temporary and not radical.

Abu Ghosh explained that the situation requires a comprehensive political solution that ends the aggression and addresses the economic crisis from its roots, in addition to the return of international financial support, and the resumption of financial aid to the Authority, while exerting real pressure on Israel to release the withheld tax funds and stop the deductions from them.

Abu Ghosh believes that the Palestinian Authority, in light of the continuation of these pressures, will remain stuck in a stifling financial crisis that may worsen over time if radical solutions are not available that guarantee international support and Israel assumes its economic responsibilities towards the Palestinian territories.

Urgent international action required

For his part, economic analyst Dr. Thabet Abu Al-Rus said: The American warning directed to Israeli Prime Minister Benjamin Netanyahu regarding the collapse of the Palestinian economy is real and serious, as this warning is supported by the positions of seven countries allied with the United States. This warning indicates that the Palestinian economy is facing the risk of imminent collapse, which reflects widespread international concern about the repercussions of this deterioration on the political and security situation in the region.

Abu Al-Rus stressed that this warning is based on reports issued by high-level international institutions, including the World Bank and the European Union, which Washington relies on primarily to form its vision regarding the Palestinian economy.

According to Abu Al-Rus' analysis, there is a close connection between the economic warning and the expected political impact, noting that international reports that have been following the situation since October 7th confirm the increasing threat of the collapse of the Palestinian economic system.

Abu Al-Rus pointed out that there is a fear that any collapse in the Palestinian economy would increase tensions in the West Bank and Gaza Strip, which threatens to create a state of "security deterioration," a scenario that neither the United States nor Israel wants to see happen, given the undesirable security repercussions it could bring.

In this context, Abu Al-Rus believes that the American warnings are serious, and that they are directed primarily to the Israeli government to take appropriate measures.

Israel realizes the seriousness of the Palestinian economic situation

Abu Al-Rus pointed out that Israel is well aware of the seriousness of the Palestinian economic situation, and this is evident from its ongoing dealings with the Palestinian Authority’s financial clearance file, as Israel either transfers clearance dues intermittently or withdraws the surplus shekel currency.

Abu Al-Rus noted that these moves reflect the Israeli government's awareness of the consequences of the collapse of the Palestinian economy on its security and stability, even its economic one, especially since the Palestinian market is the third largest market for Israeli products, and therefore any economic imbalance among the Palestinians will also have a negative impact on the Israeli economy, especially in light of the current circumstances.

Regarding whether the United States is serious in its warning to Israel, Abu Al-Rus stressed the seriousness of this warning, noting that several countries, including European and Arab countries, share this concern with the United States, due to the potential negative impact of the collapse of the Palestinian economy on regional stability.

Punitive economic policies to achieve political gains

However, Abu Al-Rus pointed out that the actual ability of the United States and its allies to force Israel, and specifically Israeli Finance Minister Bezalel Smotrich, to back down from his punitive policies against the Palestinian economy, remains limited so far, especially since Smotrich and the Netanyahu government are using punitive economic policies to achieve political gains from the Palestinian Authority.

Abu Al-Rus explained that the greatest danger does not lie only in the current punitive measures, but in the accumulation of these measures over the years, which has led to a significant deterioration in the Palestinian economy.

Abu Al-Rus stressed that Israeli policies, especially with regard to deductions from clearance funds, represent an increasing burden on the Palestinian Authority, which is now in a very difficult economic situation.

Abu Al-Rus believes that the United States of America believes that the current time is not appropriate to force Israel to cancel these measures, pointing out that Tel Aviv is well aware of what it is doing, as it is exploiting economic sanctions as a political pressure tool on the Palestinian Authority to make political concessions or change its positions.

International warnings are informational, not actual.

Abu Al-Rus pointed out that international warnings, despite their seriousness, are mostly media-related and do not have any real impact on the ground. He explained that major countries could have stopped the Israeli aggression on Gaza if they wanted to or intervened directly to cancel the punitive measures. However, international action has so far been limited to media messages without taking practical steps to change the status quo, which, according to Abu Al-Rus, reflects the lack of real political will to pressure Israel.

In his analysis, Abu Al-Rus presented some of the options available to the Palestinian Authority to confront the expected financial challenges, stressing that the Palestinian Authority is in a critical economic position in light of the “uncertainty” surrounding the political and economic scene.

Abu Al-Rus suggested that the Authority begin activating Palestinian diplomacy at the highest levels, with the aim of shedding light on the punitive Israeli practices and mobilizing international support for its position.

Abu Al-Rus pointed out that the Palestinian government's efforts to implement austerity policies and rationalize government spending are no longer sufficient alone to confront the financial crisis.

Palestinian plan to face challenges

Abu Al-Rus believes that the Palestinian government, led by Dr. Muhammad Mustafa, has developed a two-year economic plan to confront the growing challenges, which included seeking funding from the European Union and the Gulf States to support the Authority’s treasury, and has achieved some success in this regard, although this aid does not constitute a long-term solution.

Abu Al-Rus stressed that the ideal solution should begin with collecting the “Palestinian right” of financial dues, instead of relying solely on foreign aid, because that weakens the independence of the Palestinian economic decision.

Abu Al-Rus believes that the Palestinian economic situation is going through a serious crisis that could lead to a comprehensive collapse if urgent measures are not taken by the international community, stressing that Washington and its allies are required to take practical steps that go beyond media warnings, to pressure Israel to end its punitive measures against the Palestinian economy.

Warnings Free of Active Pressure Tools

Commenting on the repeated international warnings about the collapse of the Palestinian economy, journalist and economic media figure Talat Alawi said: These warnings are nothing more than threats that are repeated with every political escalation, and he considered them “political messages” devoid of effective pressure tools on Israel to stop targeting the Palestinian economy.

Alawi pointed out that Israeli Finance Minister Bezalel Smotrich, who has always issued warnings and escalatory decisions, is not only acting as a finance minister, but is also interfering in security and political issues, which reflects the Israeli government’s support for these expansionist policies without any real international deterrent.

Alawi considered that these international warnings regarding the collapse of the Palestinian economy come in light of the failure of the international community to reconcile the economic and political files in Palestine, and are nothing more than an expression of "economic fears" that reflect the international community's concern about the deterioration of the situation in the Palestinian territories.

Alawi stressed that the warnings of the United States and its allies are not new, pointing out that these warnings did not go beyond their theoretical framework and were not accompanied by practical measures on the ground, considering them attempts aimed at "whitewashing" the West, especially during the US elections, and some Western governments in front of their people in light of the difficulty of actually pressuring Netanyahu's hardline government.

Alawi stressed the need for international warnings to go beyond mere "political movements" and for there to be clear, time-bound measures to pressure Israel.

Alawi believes that the international community is required today to prove its seriousness through actual tools to pressure the Israeli government, and not just warning messages for media consumption.

The Palestinian Authority is in a state of "semi-collapse"

Explaining the impact of these Israeli policies on the Palestinian economy, Alawi said that the Palestinian Authority is in a state of “semi-collapse,” and that the deterioration of the economic situation is not limited to the Authority alone, but extends to include various sectors of Palestinian society.

Alawi believes that the restrictions imposed by Israel on the banking sector are part of a broader plan aimed at “strangling” the Palestinian economy completely, as some Israeli banks impose restrictions on banking transactions with Palestinian and foreign banks.

Alawi stressed that these restrictions harm key sectors, starting with salary transfers and universities, all the way to the real estate and fuel sectors, which puts the entire Palestinian economy in a state of partial paralysis.

Alawi pointed out that Israel's economic policy in the West Bank and Gaza Strip aims to create "economic paralysis" that targets the basic pillars of the Palestinian economy, through deliberate strangulation policies in the banking sector and other vital sectors.

economic war of extermination

Alawi explained that there is an "economic war of extermination" being waged by the Israeli government against the Palestinians, which comes in parallel with the military operations in the Gaza Strip, where the infrastructure there is facing almost complete destruction in addition to targeting the Palestinian economy as a whole.

Alawi believes that the American warnings are not serious enough, especially since Israel keeps “part of the tap open” to ensure a limited flow of money into the West Bank, which he considers a strategy aimed at “keeping things under political control.”

Alawi stressed that the West is fully aware of the seriousness of the situation, but is content with issuing warning statements, without taking any practical steps to pressure the Israeli government.

Alawi considered that these countries lack the political will and credibility to pressure Israel.

Alawi explained that the continuous warnings issued by international bodies for more than two years lack actual measures on the ground, which makes them useless in stopping the Israeli escalation.

Alawi believes that the international community, despite the addition of several countries to the list of countries under warning, has not yet succeeded in taking any tangible steps to pressure Israel.

Alawi said that the ability of Israeli Finance Minister Bezalel Smotrich, along with other ministers such as Itamar Ben-Gvir, to implement these policies without any deterrent, reflects the strength of their influence within the current Israeli government, which strengthens their political control.

The authority's options to confront the risk of economic collapse

Alawi pointed out that the partisan balances within Israel allow them to implement their political and economic plans without fear of sanctions or external pressures, which makes this government more stubborn towards any international criticism.

As for the Palestinian Authority's options to confront the threat of economic collapse, Alawi considered that the current Palestinian government is making some efforts to confront this crisis, but they are "insufficient" in light of a clear and declared economic war.

He stressed that the Palestinian Authority lacks comprehensive national solidarity and coordination with all Palestinian components, which makes it unable to confront this economic war imposed by Israel.

Alawi believes that the Palestinian Authority needs a unified strategy that includes all components of the Palestinian people to confront this challenge, but these efforts must be strong and thoughtful, far from being satisfied with media statements, and the Palestinian government also needs economic hedging.

Alawi explained that the Palestinian economy, despite its limited size, has the ability to recover and rise, but on condition that there is a real Palestinian political will to adopt new tools to increase revenues, reduce expenses, and involve the entire economy in policies and trends.

Alawi stressed that there is a need to create an integrated and comprehensive national situation, based on a unified vision that includes all components of the Palestinian economy, and that it be built on new economic foundations capable of withstanding challenges.