To circumvent a law that forbids it from making direct contributions to the Palestinian Authority, the Biden administration is trying to increase funding.
Palestinian officials have expressed concerns about the government’s financial situation, stating that vital services and wages might be cut as early as the end of February.
In the face of the warnings from Ramallah that the organization is about to run out of money, which could jeopardize the U.S. desire for it to govern Gaza after the Israel-Hamas war concludes, Biden’s hands are tied.
American officials fear that the Palestinian Authority (PA) won’t be able to sustain its present influence in the West Bank or assume a more significant role in Gaza unless its financial streams are strengthened.
Former President Trump’s administration cut aid, and Israel suspended tax revenue after the Oct. 7 Hamas attacks, putting the Palestinian Authority on the verge of financial collapse, according to a senior Palestinian official.
The PA had previously depended on payments from the US and Europe and taxes collected by Israel.
At first, Israeli Finance Minister Bezalel Smotrich halted the transfer of all tax income; later, however, the Israeli government decided to stop the transfer of earnings used to pay the workers of the Palestinian Authority in Gaza, claiming that the funds were being used to support Hamas.
With the statement that it would not accept partial income transfers, the PA rejected that proposal. According to official figures, about 150,000 public sector workers in the West Bank and Gaza are paid wages by the organization.
Until a resolution could be found, President Joe Biden requested in December that Israeli Prime Minister Benjamin Netanyahu send the blocked tax funds to Norway. The Israeli government expressed its agreement with the proposal in January, but outstanding issues still need to be resolved.
The Palestinian Authority’s (PA) unpopularity in Gaza and its aging leadership are additional issues that the Biden administration is attempting to address. Hamas overthrew it in 2007.
The Senate approved a foreign assistance package on Tuesday, allocating $14.1 billion to the Israeli battle against Hamas and roughly $10 billion to humanitarian help for people in war zones, including Gazan Palestinians.
But with the Republicans controlling the House, the measure will have a tough time passing.
