The Palestinian Authority suffered a 50 percent loss in foreign aid compared to 2019 and 70 percent shortfall in revenues in 2020.
Palestinian officials believe that recent normalisation deals between the Gulf monarchies and Israel have led to a sharp decline in financial support from Arab states to Palestine.
According to The New Arab and data from the Palestinian finance ministry, Ramallah has received no funds from Arab countries since March.
This is in addition to a 50 percent decrease in foreign aid and a 70 percent drop in annual revenues for Ramallah.
The governing Palestinian Authority (PA) received around $255 million in foreign aid for the first seven months of this year – a decrease of roughly $500 million in the corresponding period of 2019.
Arab aid during the same period dropped by 85 percent, from $267 million in 2019 to $38 million in 2020.
This financial deterioration occurred only amid the Covid-19 pandemic, but during a time when the Gulf-Israeli normalisation agreements – strongly opposed by the PA – were being drawn up and negotiated.
Palestinian Foreign Minister Riyad Al Maliki assessed the reasons behind the sudden funding in a recent press conference.
“Most of the Arab countries did not abide by the decisions of the Arab summits to provide a financial safety net of $100 million for Palestine in the face of US and Israeli sanctions,” he said.
“We do not know if this was the result of the financial repercussions of the coronavirus pandemic, or at the request of the United States, as President Trump said.”
According to Al Araby Al Jadeed, The New Arab’s Arabic language service, US President Donald Trump told Israeli Prime Minister Benjamin Netanyahu that he had “asked the rich Arab countries not to pay the Palestinians.”
The financial crisis and the drop in Arab and foreign aid has forced the PA to seek new revenue sources to cope with severe economic challenges. With deep reductions in international aid and an almost complete cut in US funding since 2018, the West Bank economy has been in a free fall.
As a result of the pandemic, the Palestinian Central Bureau of Statistics estimates that from March to May 2020 the PA lost $2.5 billion with a GDP contraction of 14 percent and suffered a budget deficit of $1.4 billion.
Financial support from the Gulf Arab states, particularly from Saudi Arabia and Qatar, has been a lifeline to the occupied Palestinian territories.
Riyadh is the PA’s largest funder, providing $20 million per month since 2013. Before the pandemic hit, Saudi budgetary support to the PA was keeping public sector employees paid.
After the US withdrawal of funding that impacted a third of the UN Relief and Works Agency’s (UNRWA) operational budget, Saudi Arabia became the third-largest donor to the UN body – which provides essential services to Palestinian refugees in the region – providing $160 million in 2018.
Qatar’s support is primarily directed at Hamas-controlled Gaza, which is responsible for housing construction, infrastructure and daily subsistence. In March, Doha announced it would deliver $150 million over six months.
The UAE does not provide direct financial assistance to the PA, as relations have soured over a number of years.
A recent UAE transport of medical supplies for the PA to combat the pandemic – not coordinated with the PA and which landed in Tel Aviv – was rejected by the Palestinian leader Mahmoud Abbas because it was viewed as an underhand attempt at normalising ties with Israel.
According to the PA’s Ministry of Finance, the government received approximately $4.5 billion in aid between 2012 and 2016 – 39 percent from Arab and 61 percent from non-Arab donors.
The four biggest donors to the PA were the EU ($981 million), Saudi Arabia ($908 million), funds channeled through the World Bank ($872 million), and the US ($477 million).