So how many housing units is the Israeli government really letting the Palestinians build in the West Bank? The screaming headlines say 1,300, but these are homes approved for entry onto a long queue and could need years for final approval. Does this number include units that were approved in 2017, 2019 and earlier but have never come to be?
And what are 1,300 units considering the shortage of tens of thousands of homes in the West Bank and East Jerusalem? It was no coincidence that the defense minister unveiled this vague approval along with 3,300 new units in the settlements, so that nobody, God forbid, could suspect the minister of discriminating against the Palestinians.
In the meantime, Palestinians in East Jerusalem are reporting that they have to leave their homes in an area annexed to Israel and move to unannexed neighborhoods. The high rents, let alone the high purchase prices, are well beyond an average family’s means.
The Palestinian media is reporting monthly rents between 2,500 and 4,000 shekels ($1,280), with the average monthly wage at 5,500 shekels. Rents are significantly lower in cheaper neighborhoods, but these are accompanied by shoddier municipal services, lower personal security and problems with transportation.
Construction at the Israeli settlement of Givat Ze’ev near Ramallah in late October.
Ahmad Gharabli / AFP
The housing shortage is one of many acute problems the Palestinian Authority and the private sector are facing. The ever-darkening shadow over the PA is the shortage of funds for salaries. The PA worries that if aid from donor countries and Arab states isn’t renewed, the authority will soon face a crisis like the one in the Gaza Strip in 2016 and 2017 that ultimately led to violence.
In the meantime, we have a partial solution to paying government employees in Gaza thanks to massive aid from Qatar, but now the PA has to find a solution for its employees in the West Bank.
Most of the aid provided by European countries, 600 million euros, has been frozen and only a few tens of millions have been transferred as humanitarian aid to deal with COVID. U.S. aid that was suspended by Donald Trump has been released by Joe Biden, but most of it, $235 million, is earmarked for the UNRWA refugee agency.
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Before 2018, UNRWA received $360 million a year, before this was halted by Trump. The biggest blow to the PA came from the Arab states, which committed to providing a safety net of $100 million a month, but this was halted in 2020 without any explanation. The PA then had to cut public sector wages by 50 percent.
This year, Arab donor countries have transferred only $32 million, compared with the $265 million of 2019. The only explanation for this decision, mainly by largest donor Saudi Arabia, is the PA’s opposition to Trump’s “deal of the century.” That deal has evaporated and Trump is gone, but Arab aid has been slow in coming.
Palestinians at a market in Ramallah last month.
Abbas Momani / AFP
Corruption remains an obstacle
Palestinian Prime Minister Mohammad Shtayyeh visited several European capitals last month in an effort to persuade them to renew their assistance. When he returned he called the visit a success, noting that sums that were frozen in 2020, along with allocations for 2021, would start arriving in the first quarter of 2022.
But in the meantime, Swedish Foreign Minister Ann Linde has said the rampant corruption in the PA is an obstacle for transferring the money. Sweden is one of the more important donor countries. Linde has slightly softened her wording, saying she meant that the PA must take action against corruption so that it can effectively use the aid.
But Linde expressed dissatisfaction with the way Palestinian affairs are conducted – the inadequate oversight and the PA’s priorities for using the aid money. In any case, until the aid resumes, the PA will have to continue borrowing from Palestinian banks, as it did last year, with the banking system warning about a downward slide in their liquidity, risking their stability.
Swedish Foreign Minister Ann Linde, center left, meeting with Palestinian officials in Ramallah last month.
Ahmad Gharabli / AFP
On October 27, The Media Line website quoted an administrative board member of the gas-station-owners’ association, Nizar al-Jabari, saying the PA owes gas station owners 50 million to 60 million shekels for filling the PA’s cars. He said stations in the Bethlehem area have refused service until the debt is settled. The PA then coughed up only 3 million shekels.
In another interview, Jabari said the revenue the PA generates from excise tax on gasoline tops $1 billion a year, one of the highest revenue sources in a budget that expects revenue of $3.9 billion this year.
On the other hand, fuel smuggling from Israel has deprived the PA of revenue in the hundreds of millions of dollars annually. According to a 2018 study by the Palestinian Economic Policy Research Institute, most of the smuggling passes through Jewish settlements. With the entire budget at $5.6 billion, and an expected deficit topping $1 billion and an unknown donation outlook, very little was left for development and the creation of jobs.
Gantz’s loan isn’t enough
These numbers should worry Israel, which has been chipping away at value-added-tax money and other duties it collects for the PA because of the law prohibiting Israel from transferring funds that would go to prisoners and kin of terrorists killed by Israeli forces.
Palestinians walking near a currency exchange counter and ATM machines in Ramallah last month.
Abbas Momani / AFP
If the PA indeed faces bankruptcy – or its gravest economic crisis, as Shtayyeh warned about recently – the inability to pay full salaries will get out of hand, with consequences for the government’s stability and quiet on the streets. Palestinian commentators warn of a Lebanon-like situation in the West Bank, of protests and perhaps a civil disobedience campaign like the one Lebanon has witnessed over the past two years.
Israel, which has been marketing the idea of an “economic peace,” isn’t offering any real solutions. The 500-million-shekel loan promised by Defense Minister Benny Gantz to Palestinian President Mahmoud Abbas in August can’t meet all the PA’s needs because it will increase its debts.
“We need investments of hundreds of millions of dollars, not Israeli charity that comes from money that Israel owes the PA anyway,” an official in the Palestinian Finance Ministry told Haaretz. “Construction can be an important lever in developing the Palestinian economy, but if the banks are lending to the government, what will they have left for mortgages? Where will contractors get their funding? How can we increase our output and exports if factory owners are having a hard time getting credit?”
He adds that an increase in the number of work permits for Palestinian laborers is important, but with thousands of them without permits already in Israel, there’s an urgent need for a much wider solution addressing the growth in the number of workers entering the workforce every year.
Israel perceives the West Bank as a flourishing place, with the media reporting lavish construction and new cars filling the roads. But underneath, the economic unrest is seething, threatening to shatter the deceptive calm.
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