Israel to renegotiate Paris Protocol with Palestinians

The Palestinians claim the protocol on economic relations signed in 1994 hurts them. Israel has agreed to discussing changes.

By Batya Jerenberg, World Israel News

Israel has agreed to renegotiate with the Palestinian Authority (PA) certain terms of the economic protocol signed almost 25 years ago between the two sides amid Palestinian complaints of unfairness, Globes reported.

A Palestinian source told the paper that French President Emmanuel Macron will host the talks, which were originally signed in Paris in 1994. The PA had formally requested to reopen the agreement, called the Paris Protocol, in December, after claiming for years that it heavily favored Israel and prevented the growth of the Palestinian economy. This came even though the PLO Council declared in October that it would end its economic partnership with Israel.

The Protocol on Economic Relations was incorporated into the Oslo II Accord of September 1995, which established the PA. It essentially integrated the Palestinian economy with Israel’s by regulating the cooperation in six areas: customs, taxes, labor, agriculture, industry and tourism.

The protocol was supposed to be in force for only five years in order to ease the Palestinians’ entrance into the world economy, which is one of the major reasons the PA had signed. Another was that Israel made it a condition for continuing to allow tens of thousands of Palestinian workers into the country.

The most important part of the protocol formally allows Israeli control over all external borders and exclusive supervision over imports and exports as well as making it the sole decider and collector of customs fees, import and VAT taxes on goods coming into the PA. Israel also collects the tax revenue on Palestinian goods and services sold in the country as well as the income tax deducted from Palestinians employed in Israel. The government then transfers this money on a monthly basis to the PA.

Israel has used this mechanism to punish the PA by withholding these revenues at various times over its promotion of terrorism and its demands for international recognition as an independent state, among other reasons.

The report notes that one of the PA’s senior economic advisers said their primary demand will be that Israel not deduct money from the monthly transfers of tax revenue.

Palestinians insist on paying ‘martyrs’

The impetus for the demand, said Globes, is the Israeli law passed last July to withhold from Ramallah the same amount of money that the PA pays terrorists and their families. It requires the state to put those tax revenues into a fund to help terror victims instead.

According to Israel’s Defense Ministry, in 2017 the PA paid prisoners and the families of “martyrs’” over a billion shekels – about seven percent of its entire budget.

Although the law has yet to be implemented, it does not seem likely that the government would try to rescind it, considering that it passed overwhelmingly by 87-15.

No date has been set yet for the talks to commence, according to the Globes report.

Other changes favored by the PA include reducing or abolishing the 3% commission Israel charges for tax and customs collection work and removing restrictions on Palestinian imports to Israel and exports abroad.