from Pressure Points and Middle East Program

Ramallah and Riyadh

January 9, 2013

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Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

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Two recent headlines produce a certain amount of cognitive dissonance.

The first is "Fayyad: PA is on the verge of bankruptcy" while the second reads "Saudi budget surplus hits $103 billion."

In the first story, Prime Minister Fayyad notes that several factors contribute to the financial crisis. Israel is not passing Palestinian Authority tax revenues through to the PA, which he calls a "fatal blow." But he also notes that Arab countries--which in December promised a $100 million a month safety net should Israel do just that--are not helping. Why not? “I have no explanation. Frankly, I don’t know what is going on,” Fayyad said.

In the second story we learn that Saudi Arabia had a $102.9 billion dollar budget surplus in 2012. Moreover, since expenditures for 2012 were $227 billion and planned expenditures for 2013 are $218.7 billion, unless oil prices collapse a huge surplus can be expected for 2013 as well.

Of course the first claim on Saudi oil revenue is clearly domestic spending--and it is also true that the Kingdom donated $100 million to the PA in the summer of 2012 and $200 million in 2011. If that seems generous, consider this summary from the Library of Congress of U.S. aid:

From FY2008 to the present, annual U.S. bilateral assistance to the West Bank and Gaza Strip has averaged nearly $600 million, including annual averages of approximately $200 million in direct budgetary assistance and approximately $100 million in non-lethal security assistance for the PA in the West Bank. The remainder—approximately $300 million on average per year—is dedicated to project assistance for the West Bank and Gaza through U.S. government grants to nongovernmental organizations (NGOs).

The European Union is also extremely generous, and in September announced that it was doubling its 2012 aid package from roughly $150 million to $300 million. And this comes, as does the U.S. aid, in a year of enormous fiscal pressure on both sides of the Atlantic.

In this context, the Saudi gift of $100 million isn’t generous and isn’t enough. Not in a year when the budget surplus will run one hundred billion dollars.

In his speech on behalf of the Kingdom to the UN General Assembly in September, the Saudi king’s son Abdulaziz bin Abdullah said that "Saudi Arabia, for one, is sparing no effort to meet all its obligations towards the peace process and towards our Palestinian brothers by the provision of various types of support and assistance." Other oil producers should pitch in as well, of course, but the Saudis traditionally lead this effort and should do far more.

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