Palestinians Warn Budget Crisis Threatens Two-State Solution

Posted September 24th, 2012 at 2:10 am (UTC-5)
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The Palestinian finance minister says a two-state solution to the Israeli-Palestinian conflict is in jeopardy if the Palestinian Authority does not get urgent funding to address its budget crisis.

Nabeel Kassis said Sunday after a meeting with donor nations in New York that the Palestinian Authority needs the money to continue functioning and prepare for statehood.

He said donors have yet to fulfill $300 million in pledges. Some of that money has been promised by the United States.

The World Bank and the International Monetary Fund issued reports ahead of the meeting warning of serious financial challenges facing the Palestinian Authority, including a $400 million budget shortfall.

The Norweigian chair of the donor support group known as the Ad Hoc Liaison Committee said the economic crisis is “dire and getting worse.”

The World Bank report called for urgent action from donors, but says sustainable economic growth in the Palestinian territories is not possible without the removal of Israeli policies that hinder development.

An Israeli foreign ministry spokesman said Sunday that Israel is “very concerned” about the Palestinian economic situation, and that government has taken several actions including releasing advance tax revenue to the Palestinian Authority.

Israelis and Palestinians have not held direct peace talks since 2010, when Israel refused to extend its freeze on settlement activity in the occupied West Bank.