Clearance Crisis.. An Israeli Strategy to Undermine the Authority and Impose a New Reality

Musaif Musaif: There is a continuous Israeli approach, not new to the current stage, aimed at preventing the Authority from strengthening its economic capabilities and consolidating its political presence. Jihad Harb: Israel seeks to hold the Authority responsible for any operations to push it to exert more pressure on society and prevent any acts of resistance to the occupation. Ayham Abu Ghosh: Israel's continued policy of deductions and withholding clearance funds may lead, in the coming months, to the Authority's inability to fulfill its obligations. Muhammad Al-Rajoub: The danger lies in establishing a new equation in dealing with withheld clearance funds, making them a permanent tool for pressure and blackmail, even if future understandings are reached. Hasna Al-Rantisi: The deeper danger is the decline in planning ability due to linking deductions to changing Israeli estimates, which transforms public financial management into a "monthly survival" operation. Suleiman Bisharat: These policies aim to create a state of organized collapse within Palestinian society to open the way for increased pressure and push for seeking emigration. Ramallah – Exclusive to "Al-Quds" – Fears are growing over the repercussions of the recent decision by the Israeli Knesset to deduct additional amounts from clearance funds to compensate those Israel calls victims of operations carried out by Palestinians, amid warnings that the move is not limited to its direct financial effects, but reflects a growing Israeli trend to transform the most prominent Palestinian revenues into a permanent political and economic pressure tool, deepening the crisis facing the Palestinian Authority and limiting its ability to fulfill its basic obligations. Economic experts, writers, and political analysts, in interviews with "Al-Quds," believe that the new deductions come within a continuous path aimed at tightening control over Palestinian financial resources and gradually depleting them, by expanding the scope of deductions and linking them to internal Israeli decisions and legislation, which threatens to reduce revenues that constitute the main source of financing the general budget, and places vital sectors, foremost among them health, education, and social services, under increasing pressure, warning that Israel's continued withholding of funds and accumulated deductions may push the Authority into a more critical financial stage, with rising levels of public debt and declining ability to financial planning and development spending. They point out that the repercussions of the crisis will not be limited to official institutions, but will extend to local markets, the private sector, and living standards, at a time when fears are growing of consecrating a reality in which clearance funds become a long-term tool of blackmail and pressure, threatening Palestinian economic and social stability in the coming years. Political-Economic Attack The researcher at the Palestinian Economic Policy Research Institute "MAS," Musaif Musaif, warns of the political and economic repercussions of the recent Israeli decision to deduct additional amounts from Palestinian clearance funds for those Israel describes as victims of Palestinian operations, considering that the move comes within the framework of a "political-economic attack" aimed at weakening the Authority and undermining its ability to perform its basic functions. According to Musaif, the new deductions cannot be separated from a continuous Israeli policy aimed at paralyzing the work of the Palestinian Authority and keeping it at the minimum level of ability to provide services to its citizens, explaining that the goal is to make Palestinian institutions unable to fulfill their basic obligations, especially in the sectors most closely related to the lives of citizens. He points out that the effects of the crisis have begun to appear clearly in the health sector, where the Ministry of Health and hospitals face increasing challenges as a result of the escalating financial crisis, which directly affects patients and health services, stressing that targeting this sector leaves deep effects on citizens' view of the Authority's institutions, because health and living services represent the most sensitive issues for the Palestinian public. Weakening the Palestinian Position Musaif believes that the seriousness of these measures is not limited to deepening the current financial crisis, but extends to weakening the Palestinian position in any future negotiations, considering that Israel seeks to raise the ceiling of its demands in exchange for lowering the ceiling of Palestinian demands to the lowest possible level. Musaif points out that the difficult living conditions experienced by Palestinians, including restrictions on movement and the spread of checkpoints and military gates, in addition to tens of thousands of workers stopping work inside Israel, may turn into pressure cards used by the Israeli government during any upcoming arrangements or understandings. Regarding the talk about the possibility of a breakthrough in the financial crisis before the end of the year, Musaif doubts the ability of European or American promises to bring about a real change in the Palestinian financial reality, pointing out that the crisis preceded the war on Gaza by years and continued continuously. Musaif confirms that any external financial support, no matter how large, will remain emergency and temporary support that does not address the roots of the structural crisis suffered by Palestinian public finances. Undeclared Bankruptcy Musaif explains that the Palestinian Authority faces an "undeclared bankruptcy," clarifying that financial solvency indicators have reached unprecedented levels, in light of the rise in public debt and the decline in the ability to meet financial obligations. He stresses that all Israeli deductions from clearance funds are illegal measures and violate the Paris Economic Agreement and international norms, affirming that the Israeli government's attempts to give these deductions legal cover through Knesset legislation do not change their legal status. Musaif confirms that the policy of weakening the Palestinian Authority economically and politically is not new to the current stage, but represents a continuous Israeli approach aimed at preventing the Authority from strengthening its economic capabilities and consolidating its political presence. Tightening Control over Palestinian Revenues Political writer and analyst Jihad Harb confirms that Israel's approval of new measures and legislation related to clearance funds falls within a continuous path aimed at tightening financial and political pressure on the Palestinian Authority, by tightening control over Palestinian revenues collected by Israel under the Oslo Agreement and the Paris Protocol, and opening new avenues for their deduction and confiscation. Harb explains that one of the main goals of this policy is to push the Palestinian Authority towards a state of exhaustion and self-incapacity, by reducing its ability to fulfill its basic obligations towards citizens, pointing out that clearance funds constitute approximately two-thirds of the Palestinian Authority's revenues, which makes any additional deductions have a direct impact on its future ability to provide public services, pay salaries, and manage the work of government institutions. Holding the Authority Responsible Harb also points out that Israel seeks to hold the Palestinian Authority responsible for any operations carried out by Palestinians against settlers or Israeli soldiers, by imposing increasing financial burdens on it, with the aim of pushing it to exert more pressure on Palestinian society and prevent any acts of resistance to the occupation, regardless of their nature or forms. He confirms that these policies are part of a broader strategy to deplete Palestinian financial capabilities, both at the level of the Authority and society, through almost complete control over Palestinian financial resources and deepening the existing economic crisis. Harb notes that this approach is not new, as its features began to appear clearly in 2019 with the deduction of amounts related to prisoners' allocations and the families of martyrs, before the deductions expanded after October 7, 2023, to include funds allocated to the Gaza Strip within the Palestinian budget. Harb explains that the deductions are no longer limited to Israeli government decisions, but have also extended to judicial decisions allowing the transfer of Palestinian funds as compensation to Israelis affected by the operations. Harb stresses that the new move reflects an Israeli trend to burden the Palestinian Authority with the social compensation costs borne by Israel for its citizens who are injured or disabled as a result of these operations, which opens the door for more deductions and entrenches Israeli control over Palestinian clearance funds and deepens the financial crisis facing the Authority. Deep Impacts Economic journalist Ayham Abu Ghosh believes that the Israeli Knesset's decision to deduct more clearance funds to compensate what Israel calls victims of operations reflects the current Israeli government's continued adoption of financial and political policies aimed at weakening the Palestinian Authority and pushing it towards more financial crises, leading to threatening its ability to continue and perform its basic tasks. He explains that clearance funds represent about 68% of the Palestinian Authority's revenues, which makes any new deductions have a direct and deep impact on the Palestinian financial situation if there is a breakthrough in the crisis of withheld clearance funds. Abu Ghosh believes that all Israeli measures in recent years indicate a gradual path towards drying up these revenues or reducing them to the lowest possible extent, through multiple tools, including direct deductions and lawsuits filed against the Palestinian Authority, which are used to justify withholding more funds. Internal Israeli Political Dimensions Abu Ghosh points out that the decision also has internal political dimensions in Israel, as it may be related to the competition between the components of the Israeli right and the endeavor to gain more electoral support by adopting more hardline positions towards Palestinians. Abu Ghosh explains that some parties and forces participating in the ruling coalition previously announced their opposition to the Oslo Agreement and expressed their desire to end the role of the Palestinian Authority or reduce its presence. Regarding the economic repercussions of the new decision, Abu Ghosh confirms that the Palestinian financial crisis has reached unprecedented levels after more than two and a half years of continuous deductions and the withholding of large parts of clearance funds, which forced the Authority to rely almost entirely on local revenues. Impact on Vital Sectors Abu Ghosh explains that this reality has cast a shadow over vital sectors, foremost among them health and education, which face increasing financial pressures and real risks to the continuity of services provided in them, pointing out that the Palestinian public debt has exceeded 15 billion dollars, equivalent to about 48 billion shekels, at a time when the Authority has largely exhausted local financing and borrowing tools. Abu Ghosh warns that the continuation of deductions and the withholding of clearance funds may lead, in the coming months, to the Authority's inability to fulfill its obligations, whether towards employees or in terms of operating expenses necessary for the continuation of basic services. Abu Ghosh estimates that there is a possibility that Israel may in the future release a limited part of the withheld clearance funds, but after fixing the new deductions and turning them into a fait accompli, which entrenches continued Israeli control over an increasing part of Palestinian revenues. Broader Israeli Strategy Academic and researcher in public administration and political science Muhammad Al-Rajoub warns of the escalating political and economic repercussions of the new Israeli Knesset approval of deducting hundreds of millions of shekels annually from Palestinian clearance funds, considering that the move goes beyond being a financial or punitive measure related to security and political circumstances, to form part of a broader Israeli strategy aimed at reshaping the relationship with Palestinians and imposing a new economic and political reality. Deep Political and Economic Messages Al-Rajoub explains that the decision to deduct amounts equivalent to the value of damages that Israel claims resulted from operations carried out by Palestinians against settlers and Israelis, and to transfer these funds to the affected parties and then to the Israeli treasury, carries deep political and economic messages that go beyond its direct financial value. Al-Rajoub confirms that Israel has moved from using clearance funds as a temporary pressure card to trying to transform deductions into a permanent and institutional mechanism based on internal legislation and laws that give it legal cover to continue withholding funds and disposing of them according to its political and security priorities. Al-Rajoub points out that the most dangerous aspect of the decision is that it entrenches the concept of "financial collective punishment," as its consequences are not borne by specific parties or individuals, but are reflected in the entire Palestinian society, from employees and retirees to workers in various sectors, which leads to transferring the conflict from its political and security level to the daily living level of citizens. Redefining the Economic Relationship with the Authority Al-Rajoub explains that this policy also seeks to redefine the economic relationship with the Palestinian Authority in a way that empties any talk of financial independence of its content, clarifying that the Authority's heavy reliance on clearance funds makes Israeli control over Palestinian revenues a more influential political control tool than many other pressure tools. He believes that the decision falls within a broader policy aimed at weakening the Palestinian Authority and reducing its ability to perform its basic functions, pointing out that deepening the financial crisis will lead to an increase in the general budget deficit, and places the government before difficult choices that include expanding borrowing, or reducing expenditures, or continuing to pay salaries incompletely and postponing financial obligations due to the private sector and various institutions. Al-Rajoub believes that the first repercussions of the deductions will appear on public employees' salaries, which will directly affect the purchasing power of citizens and the economic movement in local markets, given the pivotal role that government salaries play in driving the Palestinian economic cycle. Reducing Resources Allocated to Vital Sectors Al-Rajoub points out that the continuation of deductions will also lead to a reduction in resources allocated to vital sectors such as health, education, infrastructure, and social services, which will affect the level of services provided to citizens and lead to a gradual erosion of the ability of public institutions to perform their tasks. He notes that the social repercussions of the crisis may be the most dangerous, through increasing poverty and unemployment rates, expanding the circle of social needs, and deepening the feeling of frustration and uncertainty about the future. Al-Rajoub warns that the decline in the ability of official institutions to fulfill their obligations may lead to an erosion of trust in them and weaken institutional stability. A New Equation in Dealing with Clearance Funds Al-Rajoub explains that the new deduction gains its seriousness from establishing a new equation in dealing with already withheld clearance funds, so that these funds become a permanent tool for political pressure and blackmail, even if future understandings are reached regarding their release, considering that Israel seeks to keep the Palestinian economy hostage to its decisions, and prevent Palestinians from possessing the minimum level of financial independence and economic stability in the coming years. Impacts on Palestinian Financial and Social Stability Economic journalist Hasna Al-Rantisi warns of the escalating political and economic repercussions of the Israeli decision to deduct more clearance funds, considering that its seriousness lies not only in the amount of deducted funds, but in the political implications it carries and the long-term effects it leaves on Palestinian financial and social stability. Al-Rantisi explains that Israel deals with the clearance file as a tool of pressure and political punishment, by burdening the Palestinian treasury with the cost of what it describes as damages resulting from resistance operations, which transforms Palestinian tax funds from a due financial right into an open fund for compensating Israelis and financing obligations decided unilaterally by the Israeli government. Gradually Draining Clearance Funds Al-Rantisi believes that this policy practically opens the way for gradually draining clearance funds until they are zeroed out, which creates increasing economic and social pressures that are difficult to contain. Al-Rantisi points out that clearance funds represent more than two-thirds of the Palestinian Authority's revenues, and their value is close to the total salary and wage bill in the public sector, which makes any new deductions have direct repercussions on the lives of citizens in the future. Al-Rantisi explains that the matter is not limited to being a financial figure in the budget, but is reflected in the income of thousands of Palestinian families, and leads to a decline in purchasing power, market contraction, and a decline in the level of basic services, especially in the health and education sectors. Towards Making the Ceiling of Deductions Open Al-Rantisi confirms that one of the most dangerous aspects of the new decision is making the ceiling of deductions open and subject to annual increases according to Israeli estimates and internal decisions that Palestinians have no ability to review or object to, especially after the introduction of new items including property tax compensation and compensation for injured Israelis and families of those killed. Al-Rantisi points out that the repercussions of these policies have become clear in the salary file, as the Palestinian Authority has been experiencing incomplete salary payments since 2023, which has directly affected employees and economic activity. Al-Rantisi explains that government salaries constitute one of the most important drivers of the Palestinian economic cycle, and any decline in them affects consumption, merchants' sales, and families' ability to meet their financial obligations, and also increases pressure on the banking sector. The Crisis Extends Beyond Salaries Al-Rantisi notes that the crisis due to the withholding of clearance funds extends beyond salaries, as it affects health and educational services and service infrastructure, and leads to the accumulation of debts between the government, the private sector, and citizens, which creates a continuous series of economic crises. Al-Rantisi confirms that the deeper danger lies in the decline in financial planning ability as a result of linking deductions to changing Israeli estimates, which transforms public financial management into a "monthly survival" operation instead of planning for development and investment, and deepens the crisis of trust between citizens and the government, with an increasing feeling among citizens that they are fulfilling their financial obligations at a time when the government is unable to fulfill its basic obligations, which threatens to accumulate increasing social and economic pressures in the coming period. Institutionalization and Legitimization of Financial Piracy Political writer and analyst Suleiman Bisharat believes that the Israeli Knesset's approval of new deductions from clearance funds to compensate what it calls victims of operations carried out by Palestinians represents a transition from individual and temporary measures to a stage of "institutionalization and legitimization" of the financial piracy practiced by Israeli governments in recent years, especially through the decisions of Israeli Finance Minister Bezalel Smotrich regarding the seizure and deduction of Palestinian funds. Bisharat explains that the decision establishes a systematic process aimed at the main financial resource of the Palestinian Authority, which is clearance funds, pointing out that this step directly contradicts the Paris Economic Protocol and the agreements signed between the Palestine Liberation Organization and Israel, which stipulate that Israel collects taxes and transfers them to the Palestinian side in exchange for specific fees related to the collection process, and not disposing of these funds or deducting them for political and security purposes. Undermining the Entire Palestinian Structure Bisharat believes that the issue goes beyond the framework of financial pressure or traditional political blackmail, to fall within a broader policy aimed at undermining the entire Palestinian structure. According to Bisharat, the economy constitutes the backbone of Palestinian society, and its continuous targeting aims to weaken the ability of Palestinians to withstand and continue, and to transform society into a fragile structure suffering from accumulated crises that make it less able to face political and economic challenges. He confirms that these policies fall within Israeli efforts to create a state of organized collapse within Palestinian society, which opens the way for increased economic and social pressures that may push numbers of Palestinians to seek opportunities for emigration or departure as a result of the decline in living standards and economic stability. Bisharat explains that the targeting is not limited to the economic aspect only, but extends to the Palestinian institutional structure, as continuous deductions lead to weakening the institutions of the Palestinian Authority and reducing their ability to work and provide services, which hinders the building of stable institutions capable of performing their functions according to the Palestinian political and administrative system. Deepening the Escalating Economic Crisis Regarding the financial repercussions, Bisharat warns that the decision will deepen the already escalating economic crisis, in light of the difficult financial reality that the Palestinian Authority has been experiencing for years. He points out that the continued deduction of clearance funds will increase the fragility of the Palestinian economy and limit its ability to manage daily life requirements, in addition to its direct impact on vital sectors. Bisharat notes that indicators of decline have begun to appear clearly in basic sectors such as education and health, which face increasing pressures due to a lack of financial resources, warning that the continuation of these policies may push these sectors to more dangerous levels of decline, leading to a state of gradual collapse. Bisharat confirms that Israel, by continuing to deduct and withhold clearance funds, seeks to perpetuate the state of Palestinian economic and institutional weakness, and push Palestinians of all components towards a comprehensive crisis affecting the economy, public services, and societal structure, as part of a policy aimed at creating a state of organized and continuous collapse of the Palestinian reality.