The donor-starved Palestinian Authority (PA) may cease to function if government employees continue to go without salaries for much longer, the World Bank warned in a new report released on Monday.
Civil servants will simply down tools and discipline in the ranks of the security services could well collapse if pay cheques, which have not arrived for the last two months, are not forthcoming, the Washington-based body said.
The European Union and United States have both frozen aid payments to the Palestinian Authority, since the radical Islamist movement Hamas took power, over its refusal to renounce the use of violence or accept Israel’s right to exist.
Israel has also stopped handing over customs duties that it used to collect on behalf of the Palestinian Authority, worth around $60-million a month.
Although Muslim countries have pledged tens of millions in a bid to plug the gap, the funds have yet to be transferred with banks wary of falling foul of international laws that prohibit the financing of terrorist organisations. Hamas appears on US and EU terror blacklists.
A previous report by the World Bank last month had warned that the Palestinian economy would experience a dramatic decline, with incomes decreasing by 30%, unemployment doubling and poverty levels rising from 44% to 67% by the end of the year.
But even those dire projections “now appear too rosy”, the new survey said.
“If the PA remains unpaid/minimally paid for several months, it may cease to function,” the report said.
“Civil servants have already begun to withdraw their services in protest and this can be expected to intensify as personnel down tools and look for other ways to subsist.”
Institutional breakdown could undermine years of good work in a matter of weeks and prove extremely hard to rectify.
“Complex structures such as school systems are not machines to be switched on and off at will,” the report said.
“A protracted period in which the PA is disabled might result in the unravelling of a dozen years of donor efforts to build the responsible, accountable institutions needed for a future Palestinian state or for continued governance ad interim.”
The World Bank said there was already evidence that the security forces were prepared to take the law into their own hands in order to force the authorities to hand over cash, with lawlessness and factionalism the likely result.
“Non-payment, part-payment or unequal payment of salaries could precipitate breakdowns in force-discipline in the security services,” said the report. “A deteriorating security environment could make it difficult for government, commerce and relief efforts alike to operate properly.”
The report reiterated warnings from the UN and aid organisations that a humanitarian crisis loomed in the Palestinian territories. It said food and gasoline shortages are already emerging in Gaza as a result of prolonged Israeli-enforced border closings.
With more than 160 000 on the government payroll, one in three Palestinians are dependent on state salaries.
“We agree with the World Bank,” said Palestinian planning minister Samir Abu Eisheh. “If we don’t get money soon we face a real disaster.”
Israel has called claims of a humanitarian disaster exaggerated but the World Bank said Israel risked becoming the target of Palestinian anger as the plight of citizens in the West Bank and Gaza became ever harder.
“The dominant popular response to intense economic pressure in 2001-2 was anger at Israel as the perceived agent of economic distress, not rejection of the violence that Israel was acting to prevent, or of its main proponents at that time,” it said. — AFP