On April 29, Israel began economic sanctions on the Palestinian Authority (PA) on the heels of the reconciliation agreement between Fatah and Hamas. This is accomplished by deducting the PA’s debts from the tax money that Israel collects on the PA’s behalf in accordance with economic agreements signed following the Oslo Accord. These funds serve the PA for payment of its employees' salaries. At this point, after the collapse of the negotiations and without any diplomatic resolution, the Israeli punishment has weighty implications.
Israel has already activated this type of weapon many times in the past, as far back as 1997. But not only did it not achieve its desired goals, it even caused greater damage — the results of which are borne by Israel to this very day.
And so, on the day Hamas won the PA elections in January 2006, former Prime Minister Ehud Olmert decided to punish the PA for the results of the vote. In a shoot-from-the-hip move, the State of Israel under Olmert’s leadership and guidance decided to freeze the transfer of tax funds that Israel collects for the PA; this transfer is mandated by economics addendums of the Oslo Accord — the Paris Protocol of 1994 and, later on, the Trade Agreement of 2012. A major source of these funds is the taxes imposed on merchandise imported to the territories via Israel, and these funds often comprise as much as a third of the PA’s budget. Hence, the funds are the source of the salaries of the PA’s employees, including the security apparatus personnel.
The assumption that guided the Israeli decision-makers in 2006 and today as well, so it seems, is that economic pressure will instill "reason" or regret in the minds of the Palestinians. As a result, they would aspire to draw the right conclusions and "return to the straight and narrow road." However, this approach was not proved to be effective. Over the many months in which the PA employees did not receive their salaries, their morale dropped as did their motivation. In addition, the Palestinian depots emptied and the security apparatuses barely functioned because there was no money for the operational equipment needed for routine activity (vehicles, ammunition, uniforms). As far as weapons and ammunition supply from Israel in general, that was out of the question altogether.
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