Chair’s Summary of the Ad Hoc Liaison Committee (AHLC) (30 April 2019)

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03. May 2019

Meeting of the Ad Hoc Liaison Committee (AHLC) Brussels, 30 April 2019

Chair: Foreign Minister of Norway Ms. Ine Eriksen Søreide

The members of the AHLC met today in Brussels. The donors expressed continued support to a negotiated two-state solution where both parties can live side by side peacefully as the only way to resolve the Israeli-Palestinian conflict.

The meeting expressed deep concern about the current fiscal crisis of the Palestinian Authority, following Israel’s decision to withhold around USD 144 million annually of the revenues it collects on behalf the PA due to the Palestinian prisoner payments, and the Palestinian decision not to accept any clearance revenues, unless the entire transfers are reinstated. These clearance revenues amount to 60 percent of the PAs revenues, and the PA is currently implementing serious austerity measures that are not sustainable. The donors cannot fill this financing gap.

The economic conditions in the Palestinian territories have deteriorated from a standstill to a crisis. In 2018, falling growth slowed below 1 percent with a deep recession in Gaza and growth in the West Bank below its recent trends. Furthermore, the economy is now facing a severe fiscal shock because of the standoff of the transfer of clearance revenues.

The stability of the PA could be at stake if the current fiscal crisis is not resolved. Enhanced dialogue between the Palestinian and Israeli governments is required to address the current crisis. The chair and the members of the AHLC are offering to assist the parties to adequately and urgently address the outstanding fiscal issues.

The meeting expressed deep concern that the situation in Gaza is unresolved. We have been on the brink of war several times during the last year. Contributions to avoid this by Egypt, UN, and others have been crucial. In addition, Qatar has been playing a major role in allowing for electrical supplies to be restored.

In order to address the situation and preserve the stability of the PA the following should be done:

1) The meeting urged the parties to enter into a serious dialogue, with assistance from the donors, to address a broad range of outstanding fiscal issues. We are prepared to facilitate contact between the parties. We urge the parties to present as soon as possible and before the next meeting of the AHLC a range of measures to increase the revenues of the PA in a serious way. Some such measures are already under work, and they should be continued and finalized. The Paris Protocol should be safeguarded by being updated and improved in its implementation. The committees established for revisions and improvements should be revived. In the meantime, the Protocol should be respected.

2) A collective effort is needed to bring the Palestinian economy on to a more sustainable path. This implies, as recommended in the reports to this meeting, a substantial revision and change of the current access and movement regime both for the West Bank and Gaza. A reduction of the dual use list, increased permits to traders, removal of obstacles to Palestinian exports and quotas for imports, as well as allowing for increased Palestinian access to Area C, are among the necessary steps.

3) Donors need to cooperate and fund the UN humanitarian and economic package for Gaza, in coordination with the PA. The international community has responded. Improving the humanitarian situation in Gaza is essential, but also to start renovating the basic infrastructure. There is a need for more predictable energy supply to Gaza (short- medium- and long term) and the meeting supports efforts to reform Gedco to become independent. The meeting welcomed progress by the parties in implementing the Gaza Desalination Plant made in the side meeting this morning. Easing and lifting the closure regime, and enabling the PA’s return to Gaza, should remain important goals underlying all our work there.

4) The AHLC reminded the parties of the urgency of implementing necessary measures for continuing corresponding bank relations.