Palestinian Authority’s Financial Crisis ‘Sobering Manifestation’ of Risk Posed by Political Stalemate to Two-State Solution Viability, Security Council Told

17 September 2012
SC/10766

Palestinian Authority’s Financial Crisis ‘Sobering Manifestation’ of Risk Posed by Political Stalemate to Two-State Solution Viability, Security Council Told

17 September 2012
Security Council
SC/10766
Department of Public Information • News and Media Division • New York

Security Council

6835th Meeting (AM)

Palestinian Authority’s Financial Crisis ‘Sobering Manifestation’ of Risk Posed

by Political Stalemate to Two-State Solution Viability, Security Council Told

Robert Serry, Special Coordinator for Middle East Peace Process Briefs

The top United Nations official dealing with the Middle East peace process told the Security Council today that the financial and economic crises currently crippling the Palestinian Authority were a “sobering manifestation” of the risk that the ongoing political stalemate between Israelis and Palestinians, as well as the ongoing occupation, posed to the very viability of the two-State solution.

“Today, amidst a fiscal crisis and related social unrest in the West Bank, the stakes are growing.  The main obstacles remained political; the unresolved issues between the parties, the continued occupation and the ongoing Palestinian divide,” said Robert Serry, United Nations Special Coordinator for the Middle East, in his regular monthly briefing to the Council.  “We can no longer simply count on the pursuit of short-term mutual confidence building measures aimed at starting talks.  Such measures are not alternatives for a negotiated peace,” he declared.

“In a volatile and rapidly changing region, the vision of a two-State solution and the achievements of the Palestinian Authority are elements of stability and progress that should not be lost, but rather maintained and realized in full and without further delay”, Mr Serry said, and while he went on to highlight the situation in the wider Middle East, he made a specific call “for nothing short of unequivocal support by the international community” for the Palestinian Authority and collective intensified efforts to address its fiscal difficulties, so that institutional gains made to date could be preserved.

“Israel also has a special responsibility and interest in ensuring the Palestinian Authority’s viability.  It is now even more important for the parties to engage in positive steps, show restraint and refrain from provocative acts that risk inflaming an already delicate environment,” he continued.  As for the international community, he said that with yet another deadline on reaching a comprehensive negotiated settlement set by the diplomatic Quartet on the Middle East peace process due to expire at the end of the year, along with a protracted political stalemate and the increasingly fragile situation on the ground, “the time has come for the international community to seriously reassess its role in resolving the conflict.”

In that regard, Mr. Serry said the Secretary-General sincerely hoped the Quartet partners, in consultation with the parties, would look beyond prescriptive timelines to chart a credible political way forward in the coming months.  “Both parties will suffer the consequences of failure to act responsibly and of sliding further away from the two-State solution and regional peace, as envisaged in the relevant Security Council resolutions and the Arab Peace Initiative,” he declared.

He went on to note that it had been nearly one year since the Secretary-General had forwarded the Palestinian application for membership in the United Nations to the Council.  At that time, the Quartet had set a framework for resumed dialogue, reaffirming that the only sustainable solution to the conflict was a negotiated one.  Despite some positive, quiet engagement, the parties had not yet held meaningful dialogue on core issues.  More recently, following his meeting with the Foreign Ministers of the League of Arab States on 5 September, Palestinian President Mahmoud Abbas had expressed his intention to commence preparations to pursue an upgrade in status at the United Nations through the General Assembly.

Opening his comments with a snapshot of the current fiscal situation and its fallout, he said that beginning on 4 September, thousands of Palestinian demonstrators in the West Bank had taken to the streets to protest the increase in the VAT, recent rises in the price of fuel and the most basic commodities, and deferred payment of the August Government salaries.  Unions and taxi and truck drivers repeatedly blocked city centres and had joined protesters.  One protestor, who had set himself on fire in Ramallah, remained is serious condition.  Attempts of another two protestors, including one with his child, were thwarted.

Although Palestinian security forces had handled the protests with professionalism and restraint, the demonstrators had turned violent on 10 September and dozens had been injured in clashes.  He also said the situation in the Gaza Strip had become tense when a teenager died on 2 September after he torched himself to death to protest his family’s poor living conditions.

He said that Prime Minister Salam Fayyad’s Government had announced an emergency economic package on 11 September, including a reduction of the VAT to 15 per cent and a return to pre-September prices for diesel fuel and gas.  “Such measures will provide temporary relief to the average Palestinian who bears the brunt of the crisis.  Absent a predictable and immediate injection of funds, the Palestinian Authority will be unable to meet its recurrent financial requirement, which amounts to less that $1 billion,” he said, adding that the mounting fiscal crisis will paralyze the Authority’s institutions.

In a few days, the Ad Hoc Liaison Committee meeting in New York would offer a sober account of the Authority’s very grave fiscal situation.  Indeed, despite Prime Minister Fayyad’s commendable efforts, he was confronted with the impact of a drop in foreign aid, the failure of donors to fulfil their pledges, and slowing economic activity.  As the report to the Committee would highlight, such a slowdown was dampening the hope of reducing the high unemployment, poverty and vulnerability that still affected thousands of Palestinians.  Against that backdrop, and as an immediate step to ensure the short-term fiscal viability of the Palestinian Authority, “we urgently call on donors, in particular from the region, to increase their contributions and provide the much needed funds to timely finance the current gap”.

The Israeli Government was also called on to do more to ease the Authority’s burden and provide much-needed economic impetus in the medium term.  On 11 September, Israeli Prime Minister Benjamin Netanyahu had announced the transfer of some 225 million shekels in tax monies it collected from the Palestinians.  “This is welcome and we encourage Israel to take further steps in this direction,” he said, adding that greater facilitation by the Israeli Government, in particular by easing restrictions to allow for the private sector to develop, would contribute to stimulating economic activity and addressing the Palestinian Authority’s fiscal sustainability in the medium term.

He went on to say that developments on the ground did not support efforts to overcome the political stalemate.  Settlement activity continued during the reporting period; and on 9 September the Israeli Government had endorsed a decision to upgrade the status of a college in the settlement of Ariel to that of a university.  While pending final approval, that decision would lead to a further encroachment into the West Bank and viability of a future Palestinian State.  He said that access by Palestinians to and development of Area C was vital to the natural growth of the Palestinian population.

Further, developing natural resources was also essential for the private sector to drive the economic growth for a rapidly growing population.  He said that alongside the United States Agency for International Development (USAID) and other international partners, the United Nations had engaged the Israeli Government on a series of planning and social infrastructure projects in Area C, and an additional 18 education and health projects for USAID had just been approved.

Meanwhile, he said the United Nations remained concerned by the scale of ongoing demolitions, which during the reporting period had included 11 residential structures.  He noted the ongoing consultations between the concerned vulnerable communities and the Israeli Government, but while there were initial indicators that plans for six to eight Palestinian communities might soon be approved, more progress in addressing the needs in Area C was urgently required to adequately address the long-standing development needs of those communities.

Turning next to security matters, he said that Palestinian security forces had continued working to maintain order in the West Bank.  On 5 September, a senior Palestinian Authority security commander had been shot and killed in Jenin, where extensive security operations had taken place since the death of its Governor in May.  “For the [Authority’s] security forces to continue operating effectively, it is necessary that they receive a delivery of equipment currently awaiting approval for import,” he said. 

On related issues, he said that on 13 September, the nineteenth anniversary of the Oslo Agreement, all pre-Oslo Palestinian prisoners in Israeli jails had observed a one-day hunger strike.  The Secretary-General remained concerned about the life-threatening condition of three of those hunger strikers, and called for a swift resolution to their cases.  “On a positive note, visits to family members from Gaza to Palestinian detainees continue on a weekly basis since they were resumed on 16 July, with International Committee of the Red Cross (ICRC) facilitation,” he said.  Continuing, he noted that the Palestinian Central Election Commission continued preparations for local elections, scheduled to take place on 20 October.  The elections were an important benchmark, and the United Nations encouraged the Palestinian Authority to conduct the poll as scheduled with all necessary support extended to the Commission.

Specifically on the situation in the Gaza Strip, Mr. Serry said the United Nations had issued a report “Gaza 2020” — on 27 August, highlighting the ever greater stress that population growth in the areas would place on efforts to provide clean water, electricity, health and education, “which are inadequate now and will not keep pace with the needs of a population expected to grow to 2.1 million people in 2020.”  The current untenable situation should, therefore, raise alarm among all concerned, he said, and underscored that along with progress on the peace process, the international community must work to ensure calm was realized, the Palestinian divide ended, and the closure regime was lifted.

He noted that several weeks of calm in the area had been interrupted yet again by rockets fired from Gaza on the Israeli town of Sderot on 26 and 31 August, causing damage to infrastructure.  A Grad rocket fired at the Israeli town of Netivot on 9 August had caused extensive material damage to a house without injuring the residents.  He said that a total of 50 projectiles had been fired from Gaza into Israel during the reporting period.  Meanwhile, he said, Israeli forces had conducted five incursions and 10 airstrikes into Gaza, resulting in the deaths of six Palestinian militants and injuries to four militants and six civilians.  Israeli airstrikes at tunnels had also resulted in the death of one Palestinian and the injury of another.  “We continue to condemn all indiscriminate rocket attacks from Gaza into Israel, which must stop.  We also urge Israel to show maximum restraint,” he said.

He went on to say that efforts to promote reconciliation among Palestinian factions continued to face obstacles, and that at the 5 September meeting of the League of Arab States, President Abbas had reiterated that general elections were key to true reconciliation.  For its part, Hamas had reiterated that no polling should take place prior to reconciliation, and on 2 September, de facto authorities in the Gaza Strip had reshuffled the ruling cabinet but claimed that reconciliation efforts would not be impacted.  “A unified Palestinian polity is central to the realizing of a two-State solution,” he said, welcoming the recent statements of support, including from the Arab League, of the Egyptian led effort to bring Palestinian factions back to the table.

After reiterating his call for the lifting of the closure regime, which remained a central United Nations objective and vital for the reactivation of a productive private sector in Gaza, he turned to the situation in the wider Middle East, where the situation in Syria remained of utmost concern.  “As we are facing a grim spiral of violence, our objectives remain the same:  to stop the bloodshed and human rights violations, to alleviate human suffering and to seek a political solution through a Syrian-led process of transition and dialogue,” he said, noting that, tragically for civilians, the conflict continued to militarize, with the Government’s indiscriminate shelling of civilian areas and intensified operations from the armed opposition.

Pointing out that August had registered the highest number of casualties thus far in the 18–month conflict, he said that as conditions deteriorated, “We see dangerous implications for Syria’s neighbours.”  As a result, the United Nations and its humanitarian partners were working tirelessly to provide food and deliver basic assistance to those in need in Syria, as well as to the increasing number of refugees.  As regarded the area of separation, he said that the United Nations Disengagement Observer Force (UNDOF) continued to liaise with Israeli and Syrian military authorities to prevent an escalation of tensions.  UNDOF had since 18 July protested operations by Syrian security forces in the area in violation of the Agreement on Disengagement.  Among other measures, the Israel Defense Forces had started three weeks ago to reinforce the technical fence, including through an advanced alert system along the disengagement line.  Overall, while the situation in the Syrian Golan remained relatively stable, in spite of settlement activity, no progress toward peace between the two sides could be expected with the situation in Syria remaining unresolved.

As for Lebanon, he said that country’s northern border remained tense, underscoring the need for continued vigilance about the risk of the further impact of the Syrian crisis.  “Of particular concern is the cross-border shelling from Syria into Lebanon with seven confirmed incidents since 22 August, resulting in the injury of at least eight people,” he said, emphasizing that the Lebanese armed forces had performed robustly during the period and the political leaders had helped calm the situation.  He also noted that on 11 September, Lebanese forces had freed the last hostage kidnapped on 15 August and that four Syrians and a Turkish national had been freed during an operation in Beirut on 8 September.

Mr. Serry said that the next national dialogue was planned for 20 September and that international support for continuing that process was important, as it represented a test of the commitment of the Lebanese parties to their country’s stability and sovereignty against attempts to cause sectarian strife and draw Lebanon into regional events.  The situation in the areas of operation of the United Nations Interim Force in Lebanon (UNIFIL) remained “cautiously calm and stable”, he continued, noting nevertheless that Israeli violations of Lebanese airspace occurred almost daily and that there had also been Lebanese ground violations of the Blue Line.

“These developments are taking place in a broader regional context, which, as we have seen, is rife with tensions; tensions which have recently led to disturbing episodes of violence in the region,” said Mr. Serry, stressing that in that context, the Secretary-General had been clear that now was the time for all to work for calm and restraint, and to strive to advance dialogue, mutual respect and understanding. 

The meeting began at 10:15 a.m. and ended at 10:40 a.m.

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For information media • not an official record
For information media. Not an official record.