Funding cuts hurt US as much as Palestinians

The threat by the United States to withhold Palestinian aid is further proof of it's unbending support for Israel and that it is no longer a credible negotiator in the Middle East.

We've already seen how Israel chose to respond to Palestinians' statehood manoeuvring at the UN - by continuing to build settlements. No surprise there.

But what is shocking, not to mention self-defeating, are threats from the United States to use financial aid as a weapon. With its unflinching support for Israel and backtracking on earlier promises, Washington appears dead-set on making Mahmoud Abbas pay by cutting off the spigot of aid. Yet the US must understand it was Washington's unilateral support for its Israeli allies that backed the Palestinians into this corner in the first place.

Reason, of course, is not an attribute often ascribed to US politicians on this issue. As The National reported yesterday, the US Congress has already delayed the transfer of nearly US$200 million (Dh734million) in aid to the Palestinians. Israel's Republican and Democratic allies are also pondering even deeper cuts to unilateral assistance; as much as $500 million a year is on the block.

These actions amount to nothing short of blackmail by President Barack Obama's government, which has shown it is unprepared, some would say powerless, to stand up to Israeli Prime Minister Benjamin Netanyahu's bullying tactics.

More damaging for the Palestinian Authority is that Israel is likely to stop transferring the customs and tax revenue that it collects on behalf of the PA. That US$1.3 billion (Dh4.8billion) in annual fees is critical to the PA, accounting for about two thirds of its revenue, and is used to pay public sector wages and social benefits. If Washington has any influence left with Mr Netanyahu, it must insist that tax revenues continue to be distributed to the PA.

If the money is blocked it could spell potential financial ruin for the PA, and have very serious repercussions for the US and Israel as well. At a time when world opinion has never been more critical of the two allies, the images of further suffering in the West Bank and Gaza would further isolate Israel in the minds of international community, not to mention destroy US credibility in the region.

It is also worth asking who might fill the financial gap in the absence of western support. It is hard to see how the West wins, for instance, if Iran becomes a saviour of the Palestinian people. With its role in the region already diminished thanks to the Arab Spring and two disastrous wars, the US can ill afford to lose any more.