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Source: Norway
18 July 2011

Economic crisis threatens Palestinians

The Palestinian people face the threat of a serious economic crisis as pledged funding for the Palestinian Authority is not being paid. An economic crisis would hit the people of Gaza particularly hard. Norwegian Minister of Foreign Affairs Jonas Gahr Støre said, “All donors should make an extra effort to support the Palistinians this summer and autumn.”

“I also urge all donors and in particular the Palestinians’ neighbours and Arab countries to show generosity and solidarity in this time before Ramadan,” said Mr Støre.

Norway chairs the Ad Hoc Liaison Committee (AHLC), where the parties and donors meet to coordinate assistance to the Palestinians. So far this year, the donors are behind on payments amounting to more than USD 150 million, and it seems that only half the need for budget support will be met this year.

“This happens at a time when the recent years’ strong economic growth in the Palestinian Territory is beginning to decline. Revenues from taxes have been lower than expected. The Fayyad Government has therefore decided to halve salaries for all public employees. If salaries are cut, we are concerned that the security situation in the West Bank may deteriorate during the autumn”, said Mr Støre.

There is an urgent need for increased support during the autumn. Half the support to the Palestinian Authority goes to Gaza to pay public employees’ salaries and provide social services. Norway’s contribution of USD 43 million was transferred in May.

The largest donors to the Palestinian Authority are the EU and the US. Saudi Arabia and the Gulf states are important donors and have previously made major contributions.

Mr Støre finally emphasised that Israel has a particular responsibility for removing obstacles to growth in the Palestinian economy.
“I urge Israel to work systematically to improve the conditions for Palestinian value creation and to lift the current blockade of Gaza.

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