Israel to use withheld Palestinian tax income to pay debt to state-run electric company

Israeli Finance Minister Bezalel Smotrich (File/AP)
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Updated 12 January 2025
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Israel to use withheld Palestinian tax income to pay debt to state-run electric company

  • Israel withheld Palestinian Authority's sums earmarked for administration expenses in the Gaza Strip since Oct. 7, 2023

JERUSALEM: Israel plans to use tax revenue it collects on behalf of the Palestinian Authority to pay the PA’s nearly 2 billion shekel ($544 million) debt to state-run Israel Electric Co. (IEC), the far-right Finance Minister Bezalel Smotrich said on Sunday.
Israel collects tax on goods that pass through Israel into the occupied West Bank on behalf of the PA and transfers the revenue to Ramallah under a longstanding arrangement between the two sides.
Since the Hamas-led attack on Israel on Oct. 7, 2023, Smotrich has withheld sums earmarked for administration expenses in the Gaza Strip.
Those frozen funds are held in Norway and, he said at Sunday’s cabinet meeting, would instead be used to pay debt owed to the IEC of 1.9 billion shekels.
“The procedure was implemented after several anti-Israeli actions and included Norway’s unilateral recognition of a Palestinian state,” Smotrich told cabinet ministers.
“The PA’s debt to IEC resulted in high loans and interest rates, as well as damage to IEC’s credit, which were ultimately rolled over to the citizens of Israel.”
The ultranationalist Smotrich has been opposed to sending funds to the PA, which uses the money to pay public sector wages.
Israel also deducts funds equal to the total amount of so-called martyr payments, which the PA pays to families of militants and civilians killed or imprisoned by Israeli authorities.


Famed Jerusalem stone still sells despite economic woes

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Famed Jerusalem stone still sells despite economic woes

  • Quarries account for 4.5% of Palestinian GDP and employ nearly 20,000 workers
  • Palestinian Authority, which exercises partial civilian control over some of the West Bank, is on the brink of bankruptcy

SAIR, West Bank: Despite the catastrophic state of the Palestinian economy, Faraj Al-Atrash, operator of a quarry in the occupied West Bank, proudly points to an armada of machines busy eating away at sheer walls of dusty white rock that stretch into the distance.

“This here is considered the main source of revenue for the entire region,” Atrash said at the site near the town of Beit Fajjar, close to the city of Hebron.
The quarry is a source of Jerusalem stone, the famed pale rock used throughout the Holy Land and beyond for millennia and which gives much of the region its distinctive architectural look. But Atrash, in his fifties, said “our livelihood is constantly under threat.”
“Lately, I feel like the occupation (Israel) has begun to fight us on the economic front,” he said.
Atrash fears the confiscation of the quarry’s industrial equipment, the expansion of Israeli settlements and the Palestinian financial crisis.
The Palestinian territories are “currently going through the most severe economic crisis ever recorded,” according to a UN report.
“There are problems with exports and market access because we used to export most of the stone to Israel, and after the Gaza war begun, we ran into difficulties,” explained Ibrahim Jaradat, whose family has owned a quarry for more than 40 years near Sair, also near Hebron.
Public services are functioning worse than ever, Atrash said, adding that fixed costs such as water and electricity had soared.
Quarries account for 4.5 percent of Palestinian GDP and employ nearly 20,000 workers, according to the Hebron Chamber of Commerce.
Around 65 percent of exports are destined for the Israeli market, where some municipalities mandate the use of Jerusalem stone. “The people who buy the stones from us to resell them to construction sites are mostly Israelis,” said Abu Walid Riyad Gaith, a 65-year-old quarry operator. He lamented a lack of solidarity from Arab countries, which he said do not buy enough of the rock.
Most of the roughly 300 quarries in the West Bank are located in Area C, land which falls under full Israeli authority and covers the vast majority of its settlements.
“Many (Israeli) settlers pass through here, and if Israel annexes Palestine, it will start with these areas,” said one operator.
The physical demands of working in a quarry are intense, but for many Palestinians there are few other options as the West Bank’s economy wilts.
“We are working ourselves to death,” Atrash said, pointing to his ten laborers moving back and forth in monumental pits where clouds of dust coat them in a white film.
In the neighboring quarry, blinking and coughing as he struggled with the intense work was a former geography teacher.
With the Palestinian Authority’s budget crisis meaning he was no longer receiving his salary, he had looked for work in the only local place still hiring.
All the laborers said they suffered from back, eye and throat problems. “We call it white gold,” said Laith Derriyeh, employed by a stonemason, “because it normally brings in substantial amounts of money. But today everything is complicated; it’s very difficult to think about the future.”
He added: “People have no money, and those who do are afraid to build,” he added.