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Broad agreement in international donor group for Palestine (AHLC) on the need to find a way out of the Palestinian economic crisis

‘I am pleased that Israel and the Palestinian Authority are now working actively to solve the ongoing fiscal crisis and conflict over the transfers of tax revenues. The major cuts in public services in Palestine cannot continue. Today’s AHLC meeting in Brussels was a good start and a step on the way towards reaching agreement on this issue,’ said Minister of Foreign Affairs Ine Eriksen Søreide.

Minister of Foreign Affairs Ine Eriksen Søreide chaired the meeting of the Ad Hoc Liaison Committee (AHLC), the international donor group for Palestine, which took place at the EU in Brussels today. The meeting was hosted by EU High Representative Federica Mogherini. Prime Minister Mohammad Shtayyeh led the Palestinian delegation, which included Finance Minister Shukri Bishara. The negotiations on the formation of a new Israeli Government are ongoing, and the Israeli delegation was led by senior Israeli officials. Representatives of the main donor countries were also present.

The transfers of tax revenues from Israel to the Palestinian Authority were a key issue at the meeting. Since March, the Israeli authorities have withheld part of the monthly transfers of tax revenues collected on behalf of the Palestinian Authority, in response to the Palestinian system of payments to prisoners. Under the Oslo Accords, tax revenues are to be transferred to the Palestinian Authority. The Palestinian Authority has responded to Israel’s decision by refusing to accept any of the tax revenues. These funds account for approximately two-thirds of the Palestinian Authority’s overall income. The discussion at the meeting also touched on economic danger signs over and above the acute fiscal crisis.

‘The AHLC is the only international forum where the Palestinian and Israeli authorities take part in dialogue with donors and the international community aimed at strengthening economic cooperation, promoting Palestinian state-building and laying the foundation for a negotiated two-state solution. I am pleased that the parties showed a willingness at the meeting today to resolve the current crisis. The international community cannot cover the financial gap that has now arisen. We will do what we can to support the parties and to help resolve the current crisis,’ Ms Eriksen Søreide said.

The framework conditions for economic activity in Palestine must be improved in order to create growth and more jobs. In particular, it is important that Israel eases the tight restrictions on the movement of people and goods in and out of both Gaza and the West Bank. The donors are also deeply concerned about the absence of a political process between Israel and Palestine, as well as about the damaging split between the West Bank and Gaza. Political progress and agreement are the only way to create the necessary conditions for growth and development. 

‘The international donor community has expressed its clear support for a two-state solution. A peaceful solution to the Middle East conflict can only be achieved through a negotiated agreement between the Israelis and Palestinians,’ Ms Eriksen Søreide said. 

The humanitarian situation in Gaza is dire, and the need to ensure the delivery of goods, electricity and water into Gaza was another key topic at the meeting.

‘Despite the efforts of the donors, the humanitarian situation in Gaza is unacceptable, and it is clear that more needs to be done to improve living conditions there. We have been on the brink of a new war several times during the last year,’ Ms Eriksen Søreide said.

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The AHLC was established in 1993 following the Oslo I Accord, with a view to creating an institutional and economic basis for a negotiated two-state solution. It is the only international forum where both parties to the conflict take part in a regular dialogue with donors and the international community with a view to pursuing Palestinian state-building and a negotiated two-state solution.

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