US bailout for Palestinian economy – only if Abbas drops UN plan
DEBKAfile Exclusive Report July 4, 2011, 7:27 AM (GMT+02:00)
The Palestinian Authority is broke. Prime Minister Salam Fayyad, who has been credited with performing an economic miracle, appealed to "donors and our Arab brothers" Sunday, June 3, for urgent assistance after being forced to halve civil servants' July wages. Donors have stumped up only $330 of the total of $970 pledged for 2011. "If the crisis continues," said Fayyad, more austerity measures will be necessary - meaning more wage cuts and dismissals in August.
The Palestinian economy is suffering in the backlash from European recessions – donors have dropped out or cut back on aid - and the political unrest in hitherto supportive Arab countries, Egypt, Syria, Libya and Tunisia which has virtually immobilized their economies. The only three countries able to rescue the Palestinian Authority from bankruptcy, Saudi Arabia, the United States and Turkey, are invested elsewhere, unwilling to come forward – or both.
The Saudis are channeling vast amounts of cash to Pakistan and Jordan in support of the league of conservative Sunni Muslim regimes they are fashioning as a bulwark against Iranian expansion and its nuclear threat and as a counter-trend to the Obama administration's sponsorship of the "Arab Spring."
Sunday, July, 3, Saudi King Abdullah bin Abdul Aziz guaranteed to the Hashemite monarch visiting him in Jeddah: "We will stand with all our potential by Jordan to enable it to face all challenges out of the belief that what affects one country reflects on the other."
The Saudis have therefore hauled Jordan back from the brink of bankruptcy and given the neighboring kingdom a financial cushion – estimated by debkafile's sources at $1 billion for July – with one major string attached: a commitment to line up behind Saudi policies instead of obeying Washington.
To obtain even the smallest crumbs of Saudi largesse, the Ramallah-based Palestinian government would be expected to follow Jordan's lead and break away from America's Middle East orientation. This PA chairman Mahmoud Abbas is deeply reluctant to do.
Turkey, which under the rule of Prime Minister Tayyip Erdogan has prospered – its economy registering 11 percent growth in the last quarter – walks in step with US President Barack Obama in the Middle East and will not advance a cent to the Palestinians without White House approval.
On this front, Abbas is also facing a squeeze.
Our sources report that a secret White House emissary visited Jerusalem and Ramallah last week to inform both governments that Obama will not take no for an answer to his invitation to send delegates to Washington to prepare the opening ceremony for revived Israel-Palestinian negotiations. Abbas was told that direct talks with Israel was his only option; he must therefore abandon his plan to have the UN vote to approve an independent Palestinian state within 1967 boundaries at the September General Assembly.
Nothing was said about ongoing US financial assistance.
But Abbas knows perfectly well that if he sticks to his UN initiative, the US Congress will freeze the aid that sustains Palestinian projects on the West Bank, keeps the PA administration solvent and provides jobs. The financial situation in Ramallah will go from bad to worse. He therefore understands that salvation for the Palestinian cause at this stage is financial rather than political and must be sought in Riyadh, Washington or Ankara – not the United Nations