New Palestinian Economic Crisis: Usual Corruption--Or Something More?

Let's face it: hearing that the Palestinian Authority is once again facing an economic crisis is not exactly news.

The Palestinian Authority has until July 26 to come up with a plan on how it intends to pay salaries, without interruption, to more than 150,000 of its civil and military personnel. Otherwise, the employees may go on an open-ended general strike.


This was the warning the Union of Public Employees conveyed to the Palestinian Authority on Monday following a meeting of its board members to discuss the authority's financial crisis and its claim that it may not be able to pay salaries anymore.

And the members of public employees union, who have lately been receiving late or half salaries and who took bank loans during a preceding period of relative financial stability, are also up in arms, worried about whether next month's salary will be paid and if they will be able to make the loan payments.

One difference this time is that Prime Minister Fayyad, who has been the paradigm of fiscal responsibility in a see of corruption and nepotism, has found himself in the thick of accusations that he is no different than the other Arab leaders that typify the failure of the Palestinian Authority. With PM Fayyad now also admitting that he might not be able to pay salaries, Bassam Zakarneh, head of the public employees union, has been accusing Fayyad of claiming to lack the money for salaries while having no problem coming up with the cash for the projects and trips for his ministers.

And that has led Zakarneh to go one step further, asking the question that should be on everyone's mind:

Zakarneh even went as far as to say that if Fayyad does not have the money and is unable to pay salaries, how he can claim that the Palestine Authority will be ready for statehood in September when it plans to ask the United Nations General Assembly to such recognition.

In response, Fayyad has claimed that the deficit was caused by borrowing made necessary by the failure of Arab states to fulfill their promises of donations--while at the same time criticizing the obvious implication that the Palestinian Authority just is not prepared for a state.

The fact is, the trend in Arab donations is down:

• In 2009, Arab countries donated $500 million
• In 2010, Arab countries donated $250 million
• In 2011, Arab countries have so far donated $100 million

While some see the economic crisis as a reason for the Arabs not to go through with plans to apply for UN membership in September, others see a different connection:

Some analysts, however, believe that the donors are using the aid to pressure the Palestinian Authority to drop plans to ask for U.N. recognition, a move strongly opposed by the U.S., Israel and their European allies, and possibly to also shelve plans to reconcile with Hamas, which the West considers as a terrorist organization. [emphasis added]

The idea of the Arab world, presumably with the US acting behind the scenes, working to apply pressure on Abbas not to go to the UN and to distance himself from Hamas is a novel development--if true.

What are the chances of using that same pressure to at least get Abbas to show up at the negotiating table?

Not likely.

The Arab world has no pressing interest in seeing the creation of a Palestinian Arab state and likewise is opposed to seeing Hamas--a client of Iran--gaining more prominence.

But that's as far as they are likely to go.

Technorati Tag: West Bank and Palestinian Authority and Abbas and Fayyad.