After discussing a Draft Report on the Level of Transparency of the Financial Relationship between the Palestinian Authority (PA) and Israel:
The Civil Society Team calls on the new government to prepare an integrated national strategy that clashes with the Occupation in the international arena and eliminates Israeli control over the resources of the Palestinian people, so that they attain their economic and financial rights
Ramallah – The Civil Society Team for Enhancing Public Budget Transparency held a panel discussion on a draft report titled: “Regarding Transparency in the Financial Relationship between the Palestinian National Authority and the Occupation State”. The session shed light on the level of transparency in the financial relationship between the Palestinian Authority and Israel in several fields. It also provided recommendations and suggestions to develop policies and procedures for managing public funds connected to the Israeli side, for the purpose of strengthening the governance of public fund management.
AMAN: Tackling some unresolved financial issues can provide the Public Treasury with revenues that would mitigate the impact of the financial crisis:
The session was inaugurated by AMAN Coalition Director of Operations, Hama Zeidan, who noted that the Civil Society Team is currently preparing public fund-related reports, and that the said report is important because it diagnoses the current reality and provides recommendations to stakeholder parties. She also pointed out that the Oslo Accords and their resulting economic protocols, which govern the financial relationship with the Occupation, are no longer valid and suitable for controlling the current situation. Ms. Zeidan added that the report comes at a time when the new (19th) Palestinian government is under formation, hoping that the latter would be more open and cooperative with civil society, while acting in accordance with the report’s outputs and recommendations of clashing with the Occupation in the international arena, as done by Palestine at present. Examples of this include the lawsuit filed by South Africa, which accuses the Israeli occupation state of committing genocide in the Gaza Strip, along with addressing the outstanding financial issues raised in the report which, if resolved, would feed the Public Treasury with great revenues that would alleviate the financial crisis of the Palestinian Authority.
The report was presented by researcher Muayad Afaneh, [who is] a member of the Civil Society Team. Afaneh mentioned the various aspects of the financial relationship between the Palestinian Authority and Israel, through which the Occupation perpetrates continuous thefts related to clearance revenues; workers’ income tax; medical transfers; Net Lending from electricity, water, and sanitation; frequencies and communications; and miscellaneous issues not illustrated therein.
The level of Transparency in the financial relationship between the Palestinian Authority and Israel is “low”
The report concluded that the level of transparency in the financial relationship between the Palestinian Authority and the Occupation state is “low” in the different items, areas, and subjects. This is because Israel (the Occupying power) adopts a unilateral and selective approach in its financial relationship with the Palestinian Authority. This financial relationship is also strongly linked to the political trajectory, and it cannot be conducted from a strictly economic viewpoint, as increased deductions have been constantly used as a tool of blackmail at every political stage.
The report also concluded that the Paris Economic Protocol, which was adopted for the interim period between 1994-1999, is a loose and vague protocol based on the meetings of the Joint Economic Committee, which is no longer valid; not to mention that Israel does not adhere to the said protocol but breaches it continually.
The Israeli occupation uses clearance funds as a tool to punish the Palestinian people:
Clearance revenues, which constitute the backbone of the Palestinian General Budget (comprises two-thirds of public revenues and 75% of total tax revenues) is being used as a tool for Israel to punish the Palestinian people. This is done by means of cuts and deductions and the withholding of funds which, prior to the aggression on Gaza, amounted to about 23.2% of total clearance revenues. The said amounts, together with the withholding of expenditures related to the Gaza Strip, reach more than 50% of clearance revenues. Israel aims to steal even more funds in this regard, not to mention Net Lending thefts, which have seen an unprecedented increase in the last five years.
Economic disengagement requires effective work mechanisms that are reflected in quantitative data in all fields:
Despite that the National Development Plan of 2021-2023, reform plans, and the sectoral strategies for public fund management and the National Economy all mention economic disengagement from Israel, quantitative data indicate the contrary. This is because there is an intertwinement and overlapping in the financial relationship between the Palestinian Authority and Israel in several areas of that relationship, thus decreasing transparency and increasing dissipation. Examples of this include the electricity connection points of local authorities, distribution companies, and the private sector; which total about 250 points.
World Bank report: Israel receives 500% of the estimated fee for administering clearance revenues:
The report concluded that the Occupation state collects 3% of clearance revenues as an “administrative fee”, which is a very high percentage. This number was approved in 1994 when clearance revenues were low and transactions were made on paper copies and manually. Hence, the 3% administrative fee is not proportionate because clearance revenues have increased eightfold (8x) since then. According to World Bank assessments, due to digital transformation, clearance revenue administrative fees should not exceed 0.6%, meaning that Israel is receiving 500% of the estimated fee for administering clearance revenues.
The Palestinian internal division wastes a large amount of accrued revenues from the Public Treasury:
The Palestinian division weakens the transparency of the financial relationship between the Palestinian Authority and Israel, especially because the financial transaction documents of companies in the Gaza Strip and Israel are not available to the [Palestinian] Ministry of Finance. Additionally, Israel does not recognize the transfer of invoices and clearances, except for companies registered by the Palestinian Authority (i.e., before the division of 2007). This deemed many companies that were established afterwards “unregistered”, thus wasting many revenues that should have been accrued for the benefit of the Public Treasury.
The need for a political will to end the financial deterioration and return the embezzled funds to the Public Treasury:
The report made several recommendations to consolidate the work of eliminating the financial deterioration and breaking free from Israeli control over the Palestinian people’s economic resources. This cannot be enforced without having a political desire and cooperation between the different components of the Palestinian people. The report also called for formulating and implementing an integrated national strategy that enables the Palestinian people to attain their economic and financial rights violated by Israel. The said strategy should be based on a holistic examination of all areas of the financial relationship between the Palestinian Authority and Israel. This should also include organizing a lobbying and advocacy campaign to enforce economic rights through a special committee (comprised of government representatives, civil society organizations, private sector, the media, diplomatic corps, and human rights institutions) which manages that campaign. Moreover, the report recommended filing international human rights lawsuits against Israel and its overt piracy and theft of the Palestinian people’s funds and resources, and to engage friendly states and human rights organizations in these lawsuits.
Formulate public policies that simulate the local economy and enhance national products:
The report recommends shifting towards a modus operandi that guarantees the independence of the Palestinian Authority and its right to obtain its resources and revenues, with the aim of economic disengagement from the Occupation. This is pivotal because Israel does not adhere to the Paris Economic Protocol, which included the adoption of a Value-Added Tax (VAT) Law that corresponds to the Palestinian situation, along with disregarding other laws. There were also recommendations to support local products, formulate public policies to stimulate the local economy, boost local revenues, decrease dependence on clearance revenues, enforce the principle of Transparency (even if unilaterally) by publishing agreements, and make information available to the public.
Adopt an computerized system to link financial transactions electronically (Online Clearance):
To work on standardizing the [Palestinian] government’s financial files connected to Israel, and not to disperse them between different ministries, authorities, and bodies. It is also recommended to digitally transform the financial dealings between the Palestinian Authority and Israel, by means of a computerized system (electronic clearance), where the different transactions are linked electronically. This should include all areas of the financial relationship, including medical transfers; income tax for Palestinians working within the Green Line; electricity and water services; and other aspects.
Furthermore, a financial controller should be assigned in the local bodies [that are] directly connected to the Israeli electric supply company. It is also vital to enforce governmental decisions related to linking local authorities to unified electricity connection points, without granting any exceptions. This is essential to reduce the fragmentation of this sector and promote its governance.