Ramallah—Once again, Palestinian tax revenues held by the Israeli occupation (clearance funds) have come under the spotlight after the Israeli government announced its approval, on Sunday, for a new mechanism to transfer these funds via a third party until the day after the war.
Two Palestinian analysts see in the new mechanism an “international legalization” to deduct Palestinian funds, giving extremist ministers in the Israeli government the right to determine the fate of Palestinian money “under international sponsorship and approval.”
The Palestinian Authority announced its rejection of any Israeli conditions on Sunday, but it did not declare whether it would accept its funds partially or not.
Clearance funds are a collection of taxes, customs, and excise duties imposed on goods imported to the Palestinian side, collected by Israel at border crossings on behalf of the Palestinian Authority, in exchange for a commission of 3%.
The Israeli occupation compensates its “victims” with the tax revenues it collects on behalf of the Palestinian Authority. What is meant by “clearance funds”?
— Al Jazeera Channel (@AJArabic) January 16, 2024
New Mechanism
The clearance should be transferred monthly to the Authority, but the occupation authorities have started in recent years to deduct from it amounts equivalent to what the Authority pays to the families of prisoners and martyrs, then they added the Gaza portion to the deducted amount after the ongoing aggression since October 7th.
The total value of clearance funds is estimated at around $257 million monthly, with about $200 million going to Gaza for salaries, fuel, and electricity.
The Israeli Broadcasting Authority reported that the cabinet “Cabinet” had “approved the transfer of funds to the Palestinian Authority via Norway.”
It stated, “A report on the state of these funds will be presented every month, and if there is a violation, Norway will transfer the funds to the Palestinian Authority as a loan or in any other way, while the Finance Minister Bezalel Smotrich has authority to freeze all the funds transferred to the Authority.”
According to the Palestinian official news agency, Israel’s decision came at the request of the American administration and entails depositing clearance funds between 750 and 800 million shekels per month ($200 and $213 million) in a Norwegian account, allowing the Palestinian Authority to receive the West Bank portion from Norway, with Gaza’s portion remaining in this account.
However, Yedioth Ahronoth reported that the security cabinet had approved “the transfer of tax funds to the Palestinian Authority, with Gaza’s allocations transferred to Norway.”
Prime Minister Mohammad Shtayyeh had previously announced the Palestinian Authority’s approval of the American proposal (social media).
PA’s Response
In the first official Palestinian response, the Secretary-General of the PLO Executive Committee, Hussein Al-Sheikh, rejected any diminishment of Palestinian funds in a tweet on the X platform. He emphasized that “any diminishment of our financial rights, or any conditions imposed by Israel based on preventing the Authority from paying our people in Gaza are rejected by us.”
Al-Sheikh called on the international community “to stop this behavior based on piracy and the theft of Palestinian people’s money and to compel Israel to transfer all of our money,” without referencing whether the Authority would accept the funds reduced or not.
The financial analyst Nasser Abdel Karim believes the problem with the agreement is not the withholding of Gaza’s share of government spending as with the deductions for prisoners and martyrs but in “preventing the Authority from freely using its funds whether in Gaza or elsewhere.”
Karim added, “It is clear that the Authority is forbidden from spending in Gaza, with American guarantees that will be presented to Israel in reports, and if this happens, the agreement gave Smotrich the right to stop transferring the funds to the Authority once again.”
Karim sees a significant political injustice in the disclosed conditions, asserting that “While the Palestinian Authority is experiencing a deep crisis, politically, the cost of approval is far greater.” He mentioned that Al-Sheikh’s statement did not clarify whether there is a rejection of receiving the reduced funds or not.
Israel annually deducts a billion dollars from Palestinian traders’ funds. What are the clearance funds? Why does the occupation confiscate them?
— AJ+ Arabic (@ajplusarabi) January 20, 2024
Better to Refuse
Karim’s opinion is that the Authority should try to change the terms of the agreement, clarify to America and Norway the implications of the plan, and attempt to present a model closer to that of the prisoners, where it accepted the Israeli deductions while continuing payments to prisoners and martyrs.
Karim also urged the Authority to work diplomatically to convince the world that it deals with retired employees in Gaza who have normal civilian rights, and that no one should prevent this right, considering the current situation to have significant political meaning. “If Gaza becomes separated at this level, what remains of the entire national project?” he questioned.
He called on the Authority to work on other alternatives that should be ready in case of refusal to accept the funds, “It is possible to work with Arab states and Europeans who will soon pay $130 million, in addition to the option of borrowing from banks.”
Karim stated that accepting the clearance according to the current agreement “is humiliating and disturbing,” urging for a resolution of this dilemma under conditions that are not dominating or politically troubling.
He pointed out that Israeli deductions are illegal and any new agreement that does not ensure their payment grants acceptance and international coverage. He did not rule out American pressure on the Authority to accept them reduced under the pretext that Washington convinced Israeli Prime Minister Benjamin Netanyahu and his government to transfer those funds.
Meanwhile, the writer monitoring Israeli affairs, Mohammad Abu Allan, considers the announced agreement “an international legitimization” of Israeli deductions.
Speaking to Al Jazeera Net, he called the correct decision is to reject receiving the clearance because “nothing has changed, as the Authority’s condition was to receive it in full, and that is not present.”
Furthermore, Abu Allan highlighted that if the Palestinian approval occurs, it would pass policies and decisions by Smotrich who previously declared that no funds should go to Gaza as long as Hamas is present there.
More crucially, according to Abu Allan, in the Palestinian acceptance—if it occurs—it would be greenlighting Smotrich’s policy and potentially leading to more Israeli deductions.
