The recent resumption of discussions about economic ties between the US government and the Palestinian Authority (PA) after a five-year hiatus must be understood in the context of the change of administrations as well as Israeli interests. The Biden Administration is looking to hold the proverbial stick in the middle between Israel and the PA—if not politically, then economically. Washington aims to maintain at least a modicum of balance that continues to be absent in its relations with the two parties.
Trump’s Obvious Bias
Under President Donald Trump, the US government—always a firm supporter of and benefactor to Israel—took a decidedly anti-Palestinian stance that went far beyond the usual support for the Israeli establishment and appeared to cater to the most right-wing positions of settlers. The US ambassador in Israel at the time, David Friedman, openly supported Jewish incursions into the areas surrounding the Al-Aqsa mosque. The Trump Administration appeared to both tolerate and favor Israeli settlement expansion. Further, Trump moved the US embassy from Tel Aviv to Jerusalem; he closed the offices of the Palestine Liberation Organization in Washington as well as the US consulate in Jerusalem, whose mandate was to keep contact with Palestinians and communicate directly with the US State Department without passing through the US embassy. The previous administration also cut off economic assistance to Palestinian institutions, including hospitals in East Jerusalem, as well as all funding to the United Nations Relief and Works Agency for Palestine Refugees (UNRWA). The last two elements are noteworthy since these organizations have usually enjoyed tacit support from Israel as they helped to relieve it of some economic burdens and acted as a safety valve for the most needy refugees.
The previous administration cut off economic assistance to Palestinian institutions, including hospitals in East Jerusalem, as well as all funding to the United Nations Relief and Works Agency for Palestine Refugees (UNRWA).
Brandishing this open hostility toward Palestinians seemed designed to appease right-wing Israeli settlers as well as US evangelical Christians who supported a Christian Zionist agenda that was often divorced from daily realities. These included Secretary of State Mike Pompeo and Vice President Mike Pence. The Trump Administration also imposed additional conditions on future US economic aid to the PA. It was only natural, therefore, for Palestinians to suspend economic relations or contacts with the US administration that had unilaterally cut financial support.
The Biden Disappointment
When Trump lost the 2020 presidential election, many experts anticipated that the policies of the previous administration with respect to Palestinians would be reversed and, at a minimum, there would be a return to the situation that prevailed under President Barack Obama. No one thought that the decision to move the embassy from Tel Aviv to Jerusalem would be reversed, but most expected that other policies would be rescinded. In particular, the assumptions were that President Joe Biden would fulfill his campaign promise to open the US consulate in Jerusalem; restore funding to UNRWA, Palestinian hospitals, and the Palestinian Authority; and return to the policy of verbal support for the two-state solution and condemnation of new settlements.
The reality was disappointing, however. While some funding was restored to UNRWA ($235 million as compared to the annual contribution of $360 million in 2018), reopening the US consulate in Jerusalem was initially postponed in order not to interfere with Israel’s elections, then it was made contingent on Israeli approval. Now it seems this move is totally shelved in light of Israeli objections. While many in the US administration welcomed the defeat of former Prime Minister Benjamin Netanyahu, Biden did not seem to be eager to challenge the policies of his successor, Naftali Bennett, as long as they did not present a major public embarrassment, such as a move to annex all of Area C of the occupied West Bank. Even the US objections to a new settlement in Atarot Airport in occupied East Jerusalem seemed to have led to a temporary postponement rather than outright cancellation.
While many in the US administration welcomed the defeat of former Prime Minister Benjamin Netanyahu, Biden did not seem to be eager to challenge the policies of his successor, Naftali Bennett, as long as they did not present a major public embarrassment.
On the political front, Bennett said he would not meet with PA President Mahmoud Abbas, or restart peace negotiations, or allow a Palestinian state under his watch. Talk of returning to the stalled peace process is therefore not part of the current political atmosphere, and the Biden Administration seems unlikely to start any new initiative to challenge this state of affairs.
Escape to Economic Cooperation
With progress on the political front appearing out of the question, it was imperative that some actions should be taken in the economic realm, at least to project a semblance of progress and to justify or appease the interests of those who were pushing for action on the Palestinian side. The appearance of making some headway serves to maintain the US monopoly on the peace process and forestall any other initiatives, as well as to provide a fig leaf for those in the Arab world who need to justify their normalization activities with Israel by pretending the United States is still interested in peace and in a two-state solution.
The US-Palestinian Economic Dialogue, therefore, was announced with much fanfare. It included representatives of several US departments, including the United States Agency for International Development, and was headed by the Acting Assistant Secretary of State for Near Eastern Affairs Yael Lempert. It covered such matters as helping to build the Palestinian economy and empowering the private sector in Palestine, “including infrastructure development, access to U.S. markets, U.S. regulations, free trade, financial issues, renewable energy and environmental initiatives.” It deftly navigated away from substantive political issues, beyond a cursory reference to the two-state solution, and the rejection of unilateral moves by Israelis or Palestinians that would prejudice the outcome of peace negotiations.
Facing Israel’s Economic and Political Clout
Yet this dialogue is not likely to yield concrete results that genuinely affect the Palestinians’ economic situation for two reasons. First, Israel is clearly the controlling arbiter of Palestinian economics and no measures can be taken on the economic front without its prior consent. The Biden Administration has already made it clear it was not willing to use its leverage to insist even on its own interests in the face of determined Israeli positions, especially when it comes to the Palestinian issue.
Second, even if the administration were willing, with tacit Israeli support, to provide monies to strengthen the Palestinian Authority and improve the lives of Palestinians, the administration is still saddled with legislation—promulgated by Congress especially during the previous and other administrations—that prohibits it from providing assistance to the PA unless the latter takes certain political steps. These include revoking its complaint before the International Criminal Court regarding Israeli war crimes and suspending payments to families of Palestinian prisoners and martyrs.
The last issue is particularly difficult for the PA to accommodate. It is already suffering from a real loss of credibility with its people. Thousands of Palestinians, including members of the ruling Fatah Party, have been imprisoned or killed for their activities in the struggle. They form the backbone of any lingering support Mahmoud Abbas continues to have, and he cannot afford to abandon their families. Israel, on the other hand, claims that such individuals are not only criminals and terrorists, but that their resistance to the occupation is based solely on their expectation of being “paid for their terrorism.” According to Israel, ending payments to these individuals’ families is a necessary measure to provide security for Israel; therefore, it has pressured the PA to that end as well as appealed to European and US donors to cut off support for the PA until it cancels these payments.
The paradox is that Israel does not wish for the PA (or Hamas, for that matter) to collapse and will always find ways to assist them in finding monies from donors outside the area, even as it maintains its own pressure on all the parties. It has recently agreed to allow Qatar to send financial support to pay the salaries of Hamas employees. In this regard, economic ties between the United States and the Palestinians are not intended to serve Palestinian or US interests, but Israeli interests first and foremost.
That being the case, the recent resumption of economic talks between the Biden Administration and the Palestinian Authority is hardly a harbinger of any progress toward peace. Unless they are combined with concrete political steps that address real problems and provide a path out of the current cul-de-sac in which the peace process and diplomatic efforts have been trapped, they will not bear fruit in any meaningful way.