Saudi Arabia rescues West Bank from economic collapse

Saudi Arabia has delivered 68 million to the Palestinian Authority (PA) to help prevent a financial collapse, following Israels refusal to transfer tax revenues collected on behalf of the governing body. In the West Bank, teachers and other public sector workers have endured months of incomplete salaries, with some receiving no compensation at all.

According to the Oslo Accords from the 1990s, the Palestinian economy operates using Israeli shekels, and Israel is responsible for collecting taxes from Palestinians and transferring them to the PA. Since May, however, Israeli Finance Minister Bezalel Smotrich has declined to authorize these transfers, apparently in response to Western nations recognition of Palestine as an independent state. Previously, Israel withheld funds to offset payments to families of individuals involved in terrorism, a practice the PA says has now stopped, although Israel disputes this.

The Saudi contribution, intended to maintain critical PA services for several weeks, was officially handed over at Saudi Arabias embassy in Amman, Jordan, on Monday. Riyadh broadly supports Donald Trumps peace plan for Gaza but insists on a clear path toward Palestinian statehood as a condition for formal diplomatic recognition of Israel and enhanced trade relations.

Under Benjamin Netanyahu, Israel opposes Palestinian independence, though US-Saudi cooperation has continued to grow. President Trump and Saudi Crown Prince Mohammed bin Salman have held talks regarding Gaza, and a major defense agreement was signed last month, including the provision of F-35 fighter jets, sparking concern among Israeli military leaders.

Several countries, including Britain, France, Australia, and Canada, formally recognized Palestinian statehood in September, marking a shift in diplomatic strategy. Meanwhile, conditions in the West Bank remain challenging, with frequent settler violence and an increasing number of Israeli military checkpoints restricting economic activity. Israel cites security as the reason for these measures. Smotrich, a member of the West Bank settler community, has previously expressed disinterest in the PAs continuation.

In addition to withholding tax revenue, Smotrich has threatened to destabilize the Palestinian banking system by not renewing an indemnity waiver required for Israeli banks to trade with Palestinian banks. Last weekend, he approved a two-week extension, allowing operations to continue temporarily, though uncertainty remains beyond mid-December.

Saudi Arabia, along with Norway, France, and Spain, has initiated fundraising efforts to prevent the PAs collapse. The PA maintains administrative and security control in certain urban areas, while Israel oversees policing and security in others, and full control in most rural regions.

Recent violence in the West Bank includes two Palestinian assailants killed in attacks that injured Israeli soldiers, amid increasing aggression by extremist settler groups. The PA has accused the Israeli Defense Forces (IDF) of raiding and shutting down offices of the Palestinian agricultural workers committee, seizing equipment and detaining staff. The IDF stated that the actions targeted materials linked to incitement and terrorism.

Author: Sophia Brooks