The Obama administration has come to the aid of the debt-laden Palestinian Authority.
On Monday, the US government requested that a New York court reduce the bond the PA is required to post while it appeals against a ruling that found it liable for a series of attacks between 2002 and 2004 in Jerusalem and present-day Israel.
One of the reasons cited for supporting the PA is that the US regards it as playing an important role in protecting Israeli settlers in the occupied West Bank.
Earlier this year, a Manhattan jury awarded plaintiffs hundreds of millions of damages from the Palestinian governing authorities — the PA and the Palestine Liberation Organization. While the defendants are appealing the ruling, plaintiffs are insisting that a monthly payment plan be enforced in the meantime.
The PA has described itself to the court as “essentially insolvent” and said that posting such a high bond would put itself and its creditors in “undue jeopardy.”
The Palestinian Authority currently owes $5.4 billion in debt and is unable to pay its creditors on time.
According to the World Bank and the International Monetary Fund, every month the PA falls $42 million short of meeting its expenses.
Threat to PA’s future
Nevertheless, plaintiffs have argued that the PA could find the money to post bonds on a monthly basis. International financial consultant Bradley Wendt testified in July that the PA could divert foreign aid payments to make bond payments of as much as $20 million per month.
Foreign aid to the PA is given in order to meet the Palestinians’ basic needs.
Wendt furthermore suggested that the PA implement a kind of austerity program that would include paring down the public sector, enforcing collections of tax and energy bills in Gaza, slashing public sector salaries and firing all of its employees in Gaza.
The World Bank and the IMF have already warned against forcing the PA to pay large sums of money for the case. In May, the IMF specifically pointed out that the case had the ability to “shock” the system and threaten the PA’s very existence.
The US is now joining those international financial organizations.
On Monday, Antony Blinken, the deputy secretary of state, filed a statement of interest with the court. It expressed fear that the bond payments would compromise the PA’s solvency.
Blinken stated: “The US has provided billions of dollars in assistance to strengthen Palestinian institutions, promote security in the West Bank, expand Palestinian economic growth and help create conditions for peace.”
“The collapse of the PA would undermine several decades of US foreign policy and add a new destabilizing factor to the region, compromising national security,” he added.
Crucial for stability?
Blinken clarified that he was not deciding on the merits of the case or the jury’s verdict of liability. Indeed, he devoted several paragraphs to affirming the right of “victims of terror” to sue in US courts under the Anti-Terrorism Act.
“I believe it is our national security interest to support fair compensation for American victims of terrorism from those responsible for their losses,” he wrote.
But Blinken indicated that the PA is crucial to maintaining stability in the Middle East.
“The PA insolvency and collapse would harm current and future US-led efforts to achieve a two-state solution to the Israeli-Palestinian conflict… The vacuum in governance and security could be filled by violent Palestinian groups that seek Israel’s destruction and reject the goal of a two-state solution.”
Blinken underscored that he regarded the PA’s “security coordination” with Israel as vital. Such coordination helps protect Israel’s settlements in the West Bank.
Such settlements violate the Fourth Geneva Convention and are tantamount to war crimes.
“The PA and Israel currently have mechanisms and channels for security coordination, helping to maintain security for Palestinians and Israelis living in the West Bank, and identifying and thwarting potential terrorist attacks in Israel,” he stated. ”The collapse of the PA would break this channel of coordination.”
Blinken also warned that the destabilization of the PA could help Islamic State in Jordan. Only at the end did his letter give a nod to the humanitarian impact on Palestinians that the financial burden would cause.
Since 2013, the PA’s foreign aid has been in decline, dropping 20 percent each year. Eighty percent of people in Gaza depend on international aid, while nearly half the population is unemployed.
Any kind of iron-fisted austerity program imposed for the sake of an American civil lawsuit, decided by a jury of 12 Manhattanites, would be felt by every Palestinian in the West Bank and Gaza.