Norway chairs the donor support group to the Palestinian Territory. We are taking the floor today to underline the serious dangers threatening the foundations for a viable Palestinian State.
First, the Palestinian Authority is facing a grave financial crisis. This is due to decline in economic growth and reduction of donor contributions. This could push the PA into a full financial crisis within the next months. The PA has accumulated significant debt and faces difficulties in paying salaries.
Since the establishment of the PA, and in particular since the Paris Conference in 2007, the Palestinians have achieved tremendous institutional progress towards building a viable Palestinian state. Today these achievements are in jeopardy..
Second, peace negotiations are at an impasse. Expansion of Israeli settlements in the West Bank persists in grave violation of international law. This illegal activity undermines efforts to resume peace negotiations and threatens the two-state solution. The scope and scale of settlements and the encirclement of East Jerusalem are the most severe impediments to peace.
These unlawful and unilateral acts aiming at changing the situation on the ground and preempting the outcome of negotiations must stop. There is a grave risk that further expansion of the settlements may trigger waves of uncontrolled unrest in the neighborhoods and lead to a breakdown of current security mechanisms.
When the donor support group for the Palestinian Territory meets on 23 September in New York it will be against this backdrop. The main topic of the AHLC meeting will be to address the key challenges of the Palestinian economy and how to avoid an aggravated financial crisis in the short term. Immediate budgetary needs must be met as soon as possible.
But beyond that stimulating sustainable economic growth is key. The Palestinian private sector must be allowed to develop and engage in trade internally in the Palestinian territory as well as with its neighbors. Many restrictions on movement of goods in and out of the West Bank and Gaza are crippling economic activity and must be lifted. Opportunities for private sector development also in Area C must be stimulated.
Norway commends those donors which have contributed to covering the PAs recurrent deficit. The European Union’s frontloading of its aid was pivotal and has helped keep the PAs budget somehow afloat. Also, recent contributions from Saudi-Arabia enabled the PA to pay, albeit with a delay, full salaries prior to the holy month of Ramadan. However, the outlook for the remainder of the budget year looks grim, unless further contributions are made. This is not the time to hold back funds and to jeopardize financial stability in the occupied Palestinian territory. Too much is at stake.