Politics & Government

West Bank Palestinians reeling as Israel withholds tax payments

Hatem Amro’s donkey is as scrawny as his salary.

In January, Amro, who teaches Islamic studies in the southern West Bank as one of 180,000 employees of the Palestinian Authority, coped with a 40 percent pay cut by buying a short, spindly donkey for his nine-mile commute to school. It’s just one of the many ways workers whose salaries depend on the Authority are dealing with a cash crisis that the Palestinian government is suffering because Israel has cut off tax payments. The Palestinian Authority employs a quarter of the Palestinian workforce.

“My salary was never enough. Imagine now, with only 60 percent of my paycheck,” Amro said. “How does the Palestinian Authority expect us to survive on that amount?”

Over the last two months, Israel withheld $254 million in taxes it collects on behalf of the Palestinians. The move came in response to the Palestinian step of joining the International Criminal Court. The Palestinians hope to pursue what they say are Israeli war crimes at the court, based at The Hague. An official in Prime Minister Benjamin Netanyahu’s office said the Palestinian application to the ICC was “a violation of their commitments in the framework of the peace process.” The official requested anonymity because Netanyahu has not commented on the move.

The Palestinian Authority has taken out bank loans to pay the reduced salaries. To strike back against Israel, the Palestinians in early February launched a boycott of six major Israeli food conglomerates. But compliance with the boycott is spotty, and its effects are minuscule compared with the crippling impact of the Israeli tax freeze.

Amro said buying the donkey was a symptom of his already dire financial situation growing worse. The father of eight said his regular teacher’s salary of about $830 a month scarcely covered the bills. He saved money by buying an unregistered, cheap wreck of a car, a practice so common among indigent Palestinians that it has a word, mashtube. Amro said Palestinian police caught him and confiscated his mashtube in January.

With his reduced salary, Amro could not afford to buy another ruin, so he bought a donkey for the equivalent of $125.

Other Palestinian Authority employees have coped by buying goods on credit or cutting back on non-essential purchases. Hebron Chamber of Commerce chairman Ghazi Herbawi said the city markets were quieter than usual; he said his office was encouraging local businesses to be lenient with cash-strapped customers.

The European Union pledged nearly $150 million in support to the Palestinians last week, but the cash infusion will be spread over several months, leaving the Palestinians strapped. Pledges by Arab nations to provide a $100 million safety net have not been fulfilled. State Department spokeswoman Jen Psaki said in January that “freezing the tax revenues is an action that raises tension,” but the United States has not responded with concrete aid to the Palestinians.

Ashraf Khatib, an adviser to the Palestine Liberation Organization, the Palestinian Authority’s dominant political group, said the message behind the boycott is Palestinians can hurt Israel, too.

“It’s a message to the Israelis,” Khatib said. “You are hurting us, you are hurting our economy and our livelihood, but we as Palestinians can do the same.”

In 2012, Palestinians imported products valued at about $4.7 billion from Israel, two-thirds of all Palestinian imports, according to the Bank of Israel. Palestinians exported about $864 million to Israel. Economist Naser Abdelkarim of Birzeit University said that because of this trade deficit, boycotting Israel could at most create a $200 million dent in the Israeli bottom line – a drop in the bucket.

But the move could grow local Palestinian industry, he added. The boycotted companies, including dairy giant Tnuva and processed foods manufacturers Osem and Strauss, produce items that have local equivalents.

Palestinian business people are more skeptical that they’ll see long-term benefits. At the Juneidi dairy in Hebron, where 600 Palestinians churn out milk, yogurt and local specialties like sour buttermilk, Amal Wazwaz, assistant to the general manager, said the factory had not increased production ahead of the boycott. She said demand for Juneidi products rose by 20 percent when Palestinians boycotted Israeli products during the summer war between Gaza and Israel – but the increase was short-lived.

“People told Juneidi, ‘We need your products,’ but it was only for a few weeks,” Wazwaz said. “Then everything returned to before. So we think the next boycott will not have an effect.”

In Dura, mini-market owner Murad Amro – a distant cousin of Hatem – fished government-issued boycott advertisements out of a back closet. He said he boycotted all Tnuva dairy products except milk and had stopped stocking Israeli juices. He said he was trying to comply with the boycott but could not do away with the products his customers love – including an Israeli version of finely ground black coffee common in the Arab world.

Hatem Amro, the teacher, pondered how the boycott would ease his financial woes. His wife cooked on charcoal because the couple could not afford cooking gas. He said he borrowed money from family and friends because no businesses would extend him credit for sacks of flour. Amro said a year prior, he tried increasing his income by starting a chicken farm. When a cold winter killed the poultry, promised aid from the Palestinian Authority never materialized. Amro called the Israeli tax freeze “piracy,” but he held his deepest contempt for his own government.

“I am angry with Abu Mazen. He is the president,” Amro said, referring the Mahmoud Abbas by his nickname. “After so many years of the Palestinian Authority, why are our salaries gone?”