Financial Fraud Examples Rock Palestinian Territory, Occupied
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Israel’s Finance Minister Bezalel Smotrich recently announced that Israel would withhold Palestinian tax revenues from the Palestinian Authority in the West Bank “until further notice”. This move comes just a day after Norway, Spain, and Ireland recognized a Palestinian state. The consequences of this action will be devastating for the already financially struggling Palestinian government and its citizens.
Not the First Time
Since the 1990s peace accords, when Israel began collecting tax on behalf of the Palestinian Authority, it has withheld funds six times before. The latest move comes amid heightened tensions between Israelis and Palestinians in the occupied territories.
Consequences of Withholding
- In 1997, Israel initially withheld funds due to violence between settlers and Palestinian people in the West Bank, leading to a financial crisis for the Palestinian Authority.
- During the Al-Aqsa intifada from 2000-2002, Israel accused the Palestinian government of financing terrorist activities and withheld tax revenues for two years.
Severe Impact on the Palestinian Economy
By 2002, the Palestinian Authority’s revenue had dropped by 79%, and public sector employees went without their full wages for the entire period. The West Bank and Gaza suffered immense destruction during this time, with estimated costs of replacing damaged infrastructure reaching $1.7 billion.
Long-term Consequences
Between 2000 and 2017, the Palestinian Authority sustained losses of $6.6 billion due to delayed revenue transfers. Israel’s use of financial control as a tool of collective punishment against Palestine has had far-reaching consequences for its people.
The Human Cost
- The World Bank estimates that 21% of Palestinians were already considered poor before the second intifada, but this figure surged to about 60% by December 2002.
- When tax revenues are withheld, many Palestinians are forced to reduce their food and educational expenditure, as well as their access to health services.
The Cumulative Effect
The cumulative effect of these suspensions has strangled the Palestinian economy and society, contributing to a cycle of poverty and deprivation. The new announcement will only exacerbate these conditions, worsening the plight of Palestinians in the region.