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Office of the United Nations Special Coordinator for the Middle East Peace Process: Report to the Ad-Hoc Liaison Committee, 23 February 2021

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Grounds for guarded optimism

By every measure, 2020 was a year of setbacks for the Palestinians, their institutions, and their economy. By the end of January 2021, approximately 180,000 Palestinians had tested positive for COVID-19 and just over 2,000 had died. Since the start of the pandemic, about 70 percent of cases and 75 percent of deaths have occurred in the West Bank, including East Jerusalem, and 30 percent of cases and 25 percent of deaths have occurred in the Gaza Strip. Throughout 2020, the Government of Palestine periodically imposed significant public health restrictions in response to fluctuating caseloads, and these restrictions sharply curtailed social and economic activity. The Palestinians’ closest trading partner, Israel, suffered an even higher caseload in both absolute and per capita terms, and large parts of the Israeli economy were shut down for significant stretches of 2020. Consequently, Palestinian workers commuting into Israel faced both lower demand for their labor and unpredictable public health restrictions on their movement. During the first lockdown in spring 2020, around 150,000 Palestinians lost their jobs, of which 41,000 were employed in Israel and the settlements, and we can expect to see similarly large impacts from the present lockdown. Nearly half of all Palestinians now need humanitarian aid. Palestinian systems of social protection, education, and health have come under great stress in the face of rising needs and complicated operating environments.

Regrettably, in the middle of the worst global pandemic in a century, coordination between the Israeli authorities and Palestinian authorities broke down almost completely. In Israel, proposals to annex parts of the West Bank were prominent in the lengthy election season and in the negotiations forming a coalition government in May 2020. In response to this threat of annexation, Palestinian President Abbas announced that the Palestinian leadership considered itself “absolved of all the agreements and understandings” with the United States and Israeli governments, suspended security and civilian coordination with Israel, and called on Israel to assume its obligations as the occupying power. The suspension of coordination, which lasted until 18 November 2020, significantly impeded the public health and humanitarian responses to the pandemic. Among other things, the UN temporarily assumed responsibilities for processing deliveries of humanitarian aid and related equipment and for facilitating the exit of medical patients from the Gaza Strip—coordinated actions that would have ordinarily taken place bilaterally between Israeli and Palestinian authorities. Far more serious for the economy, the halt in coordination meant that the PA refused to receive the revenues that Israel collects on its behalf. This action contributed to an 80 percent reduction in the PA’s overall revenues, forced the adoption of additional austerity measures by the PA on top of a budget already cut to the bone, and greatly amplified the social and economic impact of the COVID-19 pandemic on Palestinians.

Between the COVID-19 pandemic and the collapse of coordination, the Palestinian economy contracted around 10 to 12 percent in 2020—one of the largest annual contractions since the PA was established in 1994. Initial studies suggest that Palestinian poverty rates and food insecurity rates are up sharply, that gender-based violence has increased, and that educational attainment was slowed. There is little doubt that the unfortunate events of 2020 will negatively shape Palestinian development trajectories for many years to come.

And yet, we begin 2021 with some guarded optimism.

Since peaking on 2 December 2020 at approximately 2,500, the new daily reported infections in the Occupied Palestinian Territory have dropped sharply, down to a daily average of 577 for the first ten days of February 2021. The Palestinian health system has performed well in its efforts to control the pandemic. Globally, several COVID-19 vaccines have been tested successfully and indeed Israel is now the worldwide leader in administering the vaccine to its citizens and residents. As of early February, vaccines have also begun arriving in the Occupied Palestinian Territory, which is one of the earliest middle-income countries to receive shipments of COVID-19 vaccines. Through the efforts of the World Health Organization and UNICEF, the UN is supporting the Palestinian government’s preparedness to receive and administer vaccines, including through the global COVAX-AMC facility. Israel has supported the logistics for delivery of vaccines and transferred a small batch of doses on 1 February 2021. Large allocations of vaccines to cover priority groups are expected in the OPT in the next two months, but significant funding gaps remain.

Israel has worked closely with the UN and its partners throughout the course of the pandemic to ensure that equipment and supplies, and more recently vaccines, have been delivered throughout the occupied West Bank and the Gaza Strip.

On the economic front, the restart of coordination between Israelis and Palestinians led to the transfer of over US$ 1 billion in Palestinian revenues that Israel collects on behalf of the Palestinian Authority. This amount has allowed the PA to compensate government employees for partially-paid salaries from May through November, repay loans to the Palestinian banking sector, and put the PA’s COVID-19 response on steadier fiscal footing. The necessary coordination between the Israeli and Palestinian governments has also recommenced on humanitarian and medical imports and patient transfers from the Gaza Strip, though better and more timely coordination is needed. Specifically, with coordination restarted, it is critical that the Ministries of Finance develop good relationships and ensure the speedy and routine transfer of the clearance revenues.

On the political front, recent developments suggest a small window of opportunity to reinvigorate a moribund peace process, strengthen the institutions of the Palestinian Authority, and improve the day-to-day lives of Palestinians. Promising trends include the scheduling of Palestinian elections, an accelerating dialogue on Palestinian national unity, a moderately improving donor climate, and a new U.S. administration willing to work with both parties.

Lastly, many of the international institutions that provide critical humanitarian and development support to the Palestinian Authority and the Palestinian people are commencing their strategic planning cycles during 2021—among them, the European Union, the World Bank, and the United Nations Country Team under the leadership of the United Nations Resident Coordinator. Support to the people in Gaza remains a priority for partners and donors such as the United Nations, including UNRWA, along with the European Union and Qatar. The Palestinian Authority and the International Monetary Fund must also reestablish good working relationships. Therefore, 2021 provides these institutions and key donors with a chance to deepen and better structure relationships, discuss collective outcomes and joint programs, and ensure that support to the PA and to the Palestinians is coherent and complementary.

In 2021, the international community should seize these opportunities, however modest, to alleviate suffering, restore hope and trust, overcome the current political impasse, and continue to focus on returning the parties to meaningful negotiations with the goal of a just, lasting, and comprehensive resolution to the Israeli-Palestinian conflict.

Given the short time that has elapsed since UNSCO released our last socioeconomic report in November 2020, and since the socioeconomic analysis in that paper is still current, this report to the Ad-Hoc Liaison Committee moves swiftly to our policy prescriptions. Of course, we cannot divorce Palestinian development and institution building from the broader context: a grim reality of military occupation, violence, illegal settlements, demolitions, displacement, and the ever-present threat of escalation in the Gaza Strip. The Palestinian people remain locked in a protracted humanitarian crisis. Readers seeking greater detail on the various political, human rights, protection, and humanitarian concerns during the reporting period are directed to other recurring publications and briefings by the United Nations. The most up-to-date information on political, human rights, and protection issues can be found in the monthly briefings to the UN Security Council (found here). The most recent humanitarian updates, including situation reports on the COVID-19 emergency, are made available by the Office for the Coordination of Humanitarian Affairs (OCHA) (found here). Despite the call of UN Secretary-General António Guterres for a global ceasefire in response to the COVID-19 pandemic, echoed in a joint statement by the five UN envoys in the Middle East, the parties have not engaged in substantive negotiations to resolve their protracted conflict nor has the pandemic halted the violations of international humanitarian and human rights law.

Two other developments deserve note. First, President Abbas issued a long-anticipated presidential decree on 15 January 2021 stating that legislative, presidential, and Palestinian National Council (PNC) elections would be held later in the year. According to the decree, legislative elections will take place on 22 May, followed by presidential elections on 31 July, and PNC elections on 31 August. The Secretary-General has welcomed the scheduling of elections and called on Palestinian authorities to facilitate, strengthen, and support the political participation of women and youth, including as voters and candidates, throughout the electoral cycle. The UN will continue its engagement with the Palestinian Central Elections Committee to support the elections process. In a separate development in Israel, on 23 December 2020, the Israeli Knesset dissolved after failing to pass a budget and general elections were scheduled for 23 March.

Second, bilateral relations between Israel and countries in the wider Arab region have continued to develop. Following formal statements signed on 13 August 2020, Bahrain, Israel, and the United Arab Emirates have concluded trade agreements. On 18 October, Israel and Bahrain established formal diplomatic relations, signing eight bilateral agreements, including a joint communiqué affirming that the two parties would “continue their efforts to achieve a just, comprehensive and enduring resolution to the Israeli-Palestinian conflict.” On 23 October, the leaders of the United States, Israel and Sudan announced that the Governments of Israel and Sudan had agreed to end the state of belligerence between their countries and normalize relations. On 10 December, Israel and Morocco announced an agreement to normalize their relations, again facilitated by the United States. The Secretary-General hopes that recent developments will encourage Palestinian and Israeli leaders to re-start meaningful negotiations, with the support of the international community, and will create opportunities for regional cooperation. The commitment to the two-State solution, in line with UN resolutions, international law and bilateral agreements, continues to be affirmed by broad regional and international consensus.