World Bank: Lost tax revenue and missing aid money add to Palestine’s woes

The flag of Palestine flies at Rawabi. (flickr/scottgunn)

Unfulfilled aid pledges and lost tax revenues are making life difficult for Palestinians, according to a recent World Bank report. A bad revenue-sharing deal with Israel costs the authority an estimated $285 million a year, the report shows, and only $1.41 billion of the $3.51 billion pledged has materialized to help Gaza rebuild after its July 2014 war with Israel. On top of that, Israel is holding onto $669 million in revenues owed to Palestinians who work in Israel.

Cutting or eliminating the tax could help Palestine cut its $1 billion deficit, and begin to address its high unemployment and poor living standings. The missing aid money could do much of the same, especially for those who still recovering from damage caused by the fighting. A survey of more than 16,000 families displaced by the violence found the majority are taking out credit to buy food and borrowing money to get by.

“At this pace, pledges are estimated to be fully disbursed only five years after the end of the war. One can understand the exhausted population when 20 months after the war, only 9 percent of totally damaged houses and 45 percent of partially damaged houses have been repaired. Over 14,800 families continue to be displaced. For these people in Gaza, there is no escape,” said Steen Lau Jorgensen, World Bank country director for West Bank and Gaza, in a statement.

The World Bank presented the data from its updated economic monitoring report on Monday. It builds on a September report that also showed challenges related to revenues and aid. The revenue issue stems from the 21-year-old Paris Protocol that places stipulations on trade flows between Israel and Palestine. The World Bank argues that some aspects of the deal are outdated and others are not properly implemented.

It calls the agreement by Israel to transfer $128 million to Palestine a “highly commendable first step,” but says that more must be done. One option would be to bring back the Israeli-Palestinian Joint Economic Committee, a body established as a part of the Paris deal. It could help resolve any disputes between the two and help implement the trade deal as it is intended.

With already-slow economic growth, these gaps are making matters more difficult for Palestinians. The U.N.’s relief agency working in Palestine plans to provide food aid to more than 900,000 people between April and June. As a point of comparison, it was assisting about 80,000 refugees in Gaza in the year 2000.

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About Author

Tom Murphy

Tom Murphy is a New Hampshire-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.