August 10, 2020

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World Bank implicitly condones the PA paying salaries to terrorists

The World Bank has released a report addressing the budget woes of the Palestinian Authority. From AP:

The World Bank says less than half the money pledged by donors to rebuild the Gaza Strip after the 2014 war between Hamas and Israel has been disbursed.

The shortfall is among several reasons the Palestinian economy is stagnating, with unemployment at 42 percent in Gaza and at 18 percent in the West Bank.

The World Bank says Israeli restrictions are also limiting Palestinian economic competitiveness and driving away private investments.

The bank recommends Israel allow more building in the West Bank and loosen its blockade of Gaza. It also calls on the Palestinian Authority to cut spending, especially by reducing pension payments.

The report seems fairly comprehensive, even as it blames Israel primarily for limiting PA growth in Area C.

What is most interesting is what it doesn’t mention.

It notes that the PA pays extremely high salaries to its own people compared to public sector employees of other nations:

At 15 percent of GDP, the relative size of the PA’s wage bill is amongst the highest in the world and it is certainly a major contributor to the PA’s chronic fiscal difficulties. The high wage bill is mainly driven by the high average public sector wage, which as a multiple of GDP per capita amounts to 3.5 – exceeding the average ratio in MENA and in all other regions except Africa. Pay practices, the system of annual step increases (1.25 percent per year) and automatic promotions have contributed substantially to the high average wage.

The World Bank gives a number of specific recommendations:

The PA should (i) control wage increases and index the CoLA to inflation; (ii) consider implementing a temporary wage freeze for employees who are at the lower end of the public sector pay scale until their pay equalizes with private sector peers; and (iii) Implement zero-staff-growth policies in units of government that are found to be overstaffed while limiting staff growth in other units of government to a maximum of population growth (3 percent).

The World Bank doesn’t mention what some $137 million of the PA budget goes to pay terrorists in Israeli jails, their families, and former terrorists who get automatic jobs without having to work.

If 15% of the GDP goes towards wages, that means that the total wage budget is about $600 million. Assuming that the bulk of the amounts paid to terrorists and former terrorists are in the PA’s wage budget – and they must be, because the stipends to prisoners and former prisoners are considered salaries – that means that as much as 23% of the PA’s wage budget is simply to reward terrorists!

In a document that is dense with recommendations on how the PA can bridge the budget gap and what Israel and the donors could do, this omission is not an oversight. It is deliberate. The international community is quite aware of this fact and even Norway’s foreign minister complained to Abbas about this. (He responded that Norway shouldn’t worry – none of their money goes towards terrorists.)

The World Bank praised the PA at reducing the relative size of the PA’s wage bill from 15.5% to 15.1% over three years. Yet simply eliminating payments to terrorists would instantly reduce that metric to about 10%!

By ignoring this huge part of the PA budget, the World Bank is implicitly condoning the PA’s policy of paying terrorists. And that is the real outrage.

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