The decision of the Palestinian Authority (PA) to halt the security and the civil coordination with Israel is already impacting the Palestinian economy and giving rise to criticism in the Palestinian press. The decision, taken in response to Israel's intention to annex part of the West Bank on the basis of the Trump administration's peace initiative, created a severe deficit in the PA budget. This is because a large portion of this budget consists of Palestinian tax revenues that are collected by Israel on the PA's behalf and later transferred to the PA. As part of its decision to end the civil coordination, the PA has been refusing to accept these funds from Israel.
The coronavirus pandemic exacerbated the economic crisis even further, especially after the PA was forced to re-impose a general lockdown to suppress the second wave of the virus. This, coupled with the loss of the tax revenues held by Israel, resulted in a severe decline in the PA's income, to the extent that it has been unable to pay its employees on a regular basis. For example, in early July 2020 PA Finance Minister Shukri Bishara announced that public sector employees were about to receive half their pay for the month of May.
In light of this situation, several Palestinian journalists criticized the PA's decision to halt the civil coordination with Israel amid the coronavirus crisis, calling this a grave mistake. They wrote that the decision had been taken hastily out of an urge to punish Israel for its annexation plans, and without any strategic consideration of the economic situation or any attempt to identify alternative sources of revenue. They also noted that the suspension of the civil coordination with Israel harmed the Palestinians more than Israel, and argued that the PA should have sufficed with halting the security coordination at this stage and maintained the civil coordination in order to keep the Palestinian economy from collapsing.
It should be noted that the UN Special Coordinator for the Middle East Peace Process, Nickolay Mladenov, also implicitly criticized the PA for its refusal to accept the tax revenues transferred by Israel. In his July 21 monthly briefing to the UN Security Council, he noted that this had worsened the fiscal crisis of the PA, which "faces the risk of a total collapse at a time when Palestinians throughout the occupied territory need the services and support of their government more than ever."
The following are translated excerpts from articles in the Palestinian press criticizing the PA's decision to halt the civil coordination with Israel.
"The [Palestinian] Authority threatens to stop the security coordination with 'Israel' in response to the annexation of the [West] Bank" (Source: Arabi21.com, June 10, 2020).
Former PA Minister: Decision To Halt Civil Coordination Was Premature, Burdens The Palestinian People
Former PA minister for Jerusalem affairs Ziad Abu Zayyad wrote in the East Jerusalem daily Al-Quds that the decision to halt the civil coordination with Israel did not harm the latter's interests but only the Palestinian economy, which depends on this coordination. He added that the decision should have been part of a considered and gradual plan, and should have been carried out only after ensuring that the PA had alternative sources of income.
He wrote: "The [PA] public sector is without a doubt a major source of cash flowing into the local economy, because its members have low incomes and the concept of saving is meaningless for them; in fact, most of them earn salaries that barely cover their monthly needs… When the civil servants receive their pay, markets prosper and return to life, so they are the ones who unknowingly hold the key to [driving] the engine of the local economy. It is they who either drive it or halt it, depending on when they receive their pay.
"In the shadow of the coronavirus pandemic and the lockdowns, the local economy shut down and large sectors of society came to share [the fate of] the civil servants, who lost their salaries when the PA stopped paying them under the pretext that Israel had stopped transferring the tax revenues… following the Palestinian leadership's decision to halt the security and civil coordination with Israel… In this context I completely agree with the Finance Minister, brother Shukri Bishara, who said that we must free ourselves from the blackmail [tactics] of Israel, which is using the tax revenues… to pressure the PA by trying to steal or deduct some of the money, sometimes on the pretext of [covering] outstanding water and electricity depts of the [Palestinian] municipalities, sometimes on the pretext that the PA pays salaries to prisoners, and sometimes for no reason at all.
"Clearly, we are all against succumbing to blackmail of any sort and for any reason. However, before deciding on a move that could cause Israel to halt the transfer of these revenues, alternative sources of funding should have been identified, to ensure the continued payment of salaries to the public sector, which is the economically weakest sector [in Palestinian society], but at the same time is the main source of cash flowing into the veins of the local economy. The decision to halt the civil coordination… was taken prematurely, I believe, and without formulating a back-up plan [providing] an alternative to the tax revenues, should Israel decide to stop transferring them. The decision to halt the civil coordination with Israel was taken in response to Israel's announcement of its intention to annex parts of the West Bank in early July. But… it was taken three months ahead of the date chosen by Israel [for implementing the annexation], without considering [the possibility] that Israel may have to postpone or cancel the annexation for reasons beyond its control. Furthermore, the decision was not taken as part of a phased plan for pressuring Israel: first a suspension of the contacts carried out by the Military Liaison Committee, then a suspension of the security coordination and only then a suspension of the civil coordination…
"The civil coordination is vital to maintaining Palestinian civil life, since Israel is integral to many aspects of [this life]… Today, now that the coordination has been stopped, any [Palestinian] civilian needing some permit [from Israel] must apply directly to the Israeli liaison offices and handle it directly vis-à-vis the Israelis, and must turn to the [Facebook] page of the Coordinator [of Government Activities in the Territories] for instructions... Ultimately, the suspension of civil and military coordination did not harm the essential interests of Israel and the Israelis, but [only] burdened the Palestinian people. It would have been better to start by suspending the military and security coordination, which is an Israeli interest, and leave [the suspension of] the civil coordination to a later stage, when we are forced to burn all our bridges with the Israelis and turn to the phase of civil disobedience…
"The question now is what happens next? Will the PA manage to find alternative sources [of funding] so it can pay the salaries of the civil servants, as they deserve, and pump new blood into the veins of the dying local economy? Or will it continue cleaving to the delusion that the Palestinian is an angelic being whose powers of endurance are limitless? What if Israel's stance on the annexation continues to be vague for months? Will Israel continue holding on to the [Palestinian] tax revenues? Will the civil sector remain without pay and will the local economy die? Will we stay perched in the tree we have climbed, or seek a ladder to help us down? I have no answer to any of these questions, but in my opinion, the patience of the public sector and other low-income civilians, and their ability to endure [these conditions], are ebbing. The leadership must find alternative sources [of funding] in order to pay the civil servants everything they are owed and… meet the basic needs of the low-income sector…"
Palestinian Analyst: Ending Of Civil Coordination Was Ill-Considered, Done Without Strategic Planning
Al-Quds columnist Hani Al-Masri, who is also the director of the Masarat research center, also expressed the opinion that the PA should have halted only the security coordination and maintained the civil coordination for now, because the latter is vital for the functioning of its economy, especially during the coronavirus crisis. He wrote: "For several weeks now the Palestinian territories have been in the eye of the storm of the coronavirus pandemic, continuing the first wave, or entering a second wave, much more severe than the first… The government chalked up a win when it managed to halt the first phase of the pandemic by taking swift measures. But it also made several mistakes, the most significant of which was [later] behaving as though the virus was gone or was on the verge of disappearing, and shifting abruptly from an almost complete lockdown to opening everything up again. It relied on the awareness of the [common] citizen, without enforcing precautionary measures, especially in businesses, which were permitted to remain open even during the lockdown…
"This eroded the government's credibility, especially when it failed to provide a convincing explanation for its decision to maintain the lockdown on the eve of the holiday [Eid al Fitr] – which caused many business owners to lose [the income] they anticipate during this popular annual celebration – followed by a decision to lift [the lockdown] on the third day of the holiday. If the lockdown during the holiday was meant to prevent people from congregating, [its lifting enabled] them to hold even larger gatherings on the third day of the holiday. Then the government permitted to organize national rallies attended by thousands [to protest Israel's annexation plans], without ensuring strict compliance with the necessary [health] precautions…
"What made the situation even worse is that the government exhausted all its resources during the first wave [of the pandemic, namely the money collected by] the Waqfat 'Izz fund, and refused to receive the tax money [collected by Israel] – even though it is Palestinian money – on the pretext that this required coordination with the occupation authorities, [which it had decided to halt]. This greatly exacerbated the economic crisis, to the extent that the [Palestinian] Finance Minister announced that the government had lost 80% of its income, which led to paying out half-salaries [to PA employees] for two and a half months, and to a rise in unemployment…
"It is unclear why the civil coordination has been stopped, for it can't be completely abandoned until the occupation is removed – unless the occupation authorities [themselves] end it, at which point the entire [Palestinian] nation will have to deal with this decision. [Only] the security coordination, which harms the PLO, the PA and all Palestinians, should have been halted. Ending it could have been very effective, had it been done as part of an overall vision and a comprehensive strategic plan aimed at eliminating the occupation and dismantling the settlements, rather than as a [knee-jerk] reaction or an expression of anger, while counting on the assumption that the occupation cannot manage without the PA. The PA is thus pushing the crisis to its limit in order to postpone or halt the annexation and resume the coordination [with Israel] – as though the conflict [lies in] the phase of legal annexation and not in the occupation itself…"
 On May 19, 2020, PA President Mahmoud 'Abbas announced that, in light of Israel's intention to annex territories in the West Bank, the PLO considers itself free of commitment to all agreements and understandings reached with Israel and the U.S. This decision put an end to the activity of the coordination mechanisms between Israel and the PA established on the basis of the Oslo Accords, which handled both security and civil coordination (Wafa.ps, May 19, 2020).
 See for example statements by PA Prime Minister Muhammad Shtayyeh (wafa.ps, July 27, 2020).
 Wafa.ps, July 2, 2020.
 Un.org, July 21, 2020.
 Al-Quds (East Jerusalem), July 19, 2020.
 For more Palestinian criticism on the PA's mishandling of the pandemic, see Special Dispatch No. 8842 – Palestinian Journalist: Hebron Is The 'Wuhan Of Palestine,' With The Highest Percentage Of Coronavirus Cases In The World, July 14, 2020
 The Waqfat 'Izz ('Strong Stand') fund was established by the PA to raise funds from the private sector for low-income families during the pandemic.
 Al-Quds (East Jerusalem), July 14, 2020.