The Protocol on Economic Relations, also called the Paris Protocol, was an agreement between Israel and the Palestine Liberation Organization, signed on 29 April 1994, and incorporated with minor amendments into the Oslo II Accord of September 1995.
The Protocol, itself signed on 29 April 1994, was part of the Gaza–Jericho Agreement, which was signed in Paris five days later on 4 May 1994. The Gaza–Jericho Agreement simultaneously established the Palestinian Authority (PA), which is responsible for the Palestinian obligations concerning the Paris Protocol. The Protocol is mentioned in Article XIII of the Gaza–Jericho Agreement and attached to it as Annex IV with the full name "Protocol on Economic Relations between the Government of the State of Israel and the P.L.O., representing the Palestinian people". [1] It was incorporated with minor amendations into the Oslo II Accord of September 1995. [2]
In the Oslo II Accord, the Paris Protocol is incorporated in Article XXIV. The amendments to the Protocol (Supplement to the Protocol on Economic Relations) were annexed as Annex V of the Oslo II Accord and contain only some changes on the clearance of revenues and some technical changes on the taxes issue. [3] While the Protocol initially applied to the Gaza Strip and the Jericho Area, its jurisdiction was extended to all of the Palestinian territories in the Oslo II Accord. [2]
Originally, the Paris Protocol was to remain in force for an interim period of five years. As of 2016, however, the Protocol was still applicable. The limited time the agreement was supposed to be operative helped encourage Palestinian negotiators to sign it, to be the first step to make progress. [4] More importantly, Israel made acceptance of the Protocol a condition for Israel's continuing to allow the tens of thousands of Palestinians to work in Israel. [5]
Essentially, the Protocol integrated the Palestinian economy into the Israeli one through a customs union, with Israel to control all borders, both its own and those of the Palestinian Authority. Palestine remains without independent gates to the world economy. The Protocol regulates the relationship and interaction between Israel and the Palestinian Authority in six major areas: customs, taxes, labor, agriculture, industry and tourism.
Since Hamas’ takeover of the Gaza Strip, and the Israeli blockade of the Gaza Strip, the Protocol cannot be fully applied to the Strip. However, Gaza importers still pay Israel customs, VAT and purchase taxes on goods that they import via Israel. [4] [2]
The Protocol determines that Israeli currency, the New Israeli Shekel (NIS), is used in the Palestinian territories as a circulating currency which legally serves there as means of payment for all purposes and to be accepted by the Palestinian Authority and by all its institutions, local authorities and banks. The Palestinians are not allowed to independently introduce a separate Palestinian currency. [6] Imports from and exports to third countries, including quantitative restrictions are subject to Israeli supervision [7] and the Protocol gave Israel sole control over the external borders and collection of import taxes and VAT. According to the agreement, Palestinian trade with other countries would continue to be handled through Israeli sea and air ports, or through border crossings between the Palestinian Authority and Jordan and Egypt, which at the time were both controlled by Israel. [5] As of 2016, the Rafah Border Crossing is controlled by Egypt, but Egypt has largely supported blockading the Gaza Strip since Hamas's rise to power in the Battle of Gaza (2007).
A major part of the 1994 Paris Protocol is the tax system, the backbone of the customs union. Israel collects and transfers to the Palestinian Authority the import taxes on goods that were intended for the Palestinian territories. Israel may unilaterally establish and change the taxes imposed on imported goods. [5] If Israel raises its VAT, Palestine has to follow it.
Israel transfers the collected tax revenue for goods and services sold in Israel and intended for consumption in the Palestinian territories. [5] Israel also collects income taxes from Palestinians employed in Israel and the Israeli settlements. Pursuant to the Protocol, Israel withholds 25% of these income taxes by default (not from Palestinians employed in settlements). Additionally, 3% of the total revenue is levied as collection and processing fees. [8]
Tax clearance is the largest source of Palestinian public income. In 2014, it accounted for 75% of the total revenue. Israel collects taxes on Palestinian imports, and national insurance and income taxes from labor on behalf of the PA and transfers the results on a monthly basis. This makes the PA vulnerable to unilateral suspension of clearance revenue transfers by Israel. In 2014-2015, the revenue was about $160 million per month. [8]
As early as 1997, Israel began to unilaterally settle bills unpaid by Palestinians, not the PA itself, including fines and interests. Political reasons for suspension varied from Palestinian violence to the election of Hamas into PA, reconciliation between Fatah and Hamas and the demand for international recognition. [8]
The Palestinian Authority, officially known as the Palestinian National Authority or the State of Palestine, is the Fatah-controlled government body that exercises partial civil control over the Palestinian enclaves in the Israeli-occupied West Bank as a consequence of the 1993–1995 Oslo Accords. The Palestinian Authority controlled the Gaza Strip prior to the Palestinian elections of 2006 and the subsequent Gaza conflict between the Fatah and Hamas parties, when it lost control to Hamas; the PA continues to claim the Gaza Strip, although Hamas exercises de facto control. Since January 2013, following United Nations General Assembly resolution 67/19, the Palestinian Authority has used the name "State of Palestine" on official documents, without prejudice to the Palestinian Liberation Organization (PLO) role as "representative of the Palestinian people".
The history of the State of Palestine describes the creation and evolution of the State of Palestine in the West Bank and Gaza Strip. During the British mandate period, numerous plans of partition of Palestine were proposed but without the agreement of all parties. In 1947, the United Nations Partition Plan for Palestine was voted for. The leaders of the Jewish Agency for Palestine accepted parts of the plan, while Arab leaders refused it. This triggered the 1947–1949 Palestine war and led, in 1948, to the establishment of the state of Israel on a part of Mandate Palestine as the Mandate came to an end.
The Oslo I Accord or Oslo I, officially called the Declaration of Principles on Interim Self-Government Arrangements or short Declaration of Principles (DOP), was an attempt in 1993 to set up a framework that would lead to the resolution of the ongoing Israeli–Palestinian conflict. It was the first face-to-face agreement between the government of Israel and the Palestine Liberation Organization (PLO).
The occupied Palestinian territories, also referred to as the Occupied Palestinian Territory and the Palestinian territories, consist of the West Bank and the Gaza Strip—two regions of the former British Mandate for Palestine that have been occupied by Israel since the Six-Day War of 1967. These territories make up the State of Palestine, which was self-declared by the Palestine Liberation Organization in 1988 and is recognized by 146 out of 193 UN member states.
The Interim Agreement on the West Bank and the Gaza Strip, commonly known as Oslo II or Oslo 2, was a key and complex agreement in the Israeli–Palestinian peace process. Because it was signed in Taba, Egypt, it is sometimes called the Taba Agreement. The Oslo Accords envisioned the establishment of a Palestinian interim self-government in the Palestinian territories. Oslo II created the Areas A, B and C in the West Bank. The Palestinian Authority was given some limited powers and responsibilities in the Areas A and B and a prospect of negotiations on a final settlement based on Security Council Resolutions 242 and 338. The Accord was officially signed on 28 September 1995.
Palestine, officially the State of Palestine, is a country in the southern Levant region of West Asia recognized by 146 out of 193 UN member states. It encompasses the Israeli-occupied West Bank, including East Jerusalem, and the Gaza Strip, collectively known as the occupied Palestinian territories, within the broader geographic and historical Palestine region. Palestine shares most of its borders with Israel, and it borders Jordan to the east and Egypt to the southwest. It has a total land area of 6,020 square kilometres (2,320 sq mi) while its population exceeds five million people. Its proclaimed capital is Jerusalem, while Ramallah serves as its administrative center. Gaza City was its largest city prior to evacuations in 2023.
The economy of the State of Palestine refers to the economic activity of the State of Palestine. Palestine receives substantial financial aid from various international donors, including governments and international organizations. In 2020, the inflation rate of -0.7% and unemployment rate was 25.9%. While exports were recorded at US$1 billion, with an import value of US$6 billion. Contributors to the national economy is service sector (47%), wholesale and repair (19%), manufacturing (12%), agriculture (7%), finance and banking (3%), construction (5%), information technology (5%) and transportation sector (2%).
The government of Palestine is the government of the Palestinian Authority or State of Palestine. The Executive Committee of the Palestine Liberation Organization (EC) is the highest executive body of the Palestine Liberation Organization and acts as the government. Since June 2007, there have been two separate administrations in Palestine, one in the West Bank and the other in the Gaza Strip. The government on the West Bank was generally recognised as the Palestinian Authority Government. On the other hand, the government in the Gaza Strip claimed to be the legitimate government of the Palestinian Authority. Until June 2014, when the Palestinian Unity Government was formed, the government in the West Bank was the Fatah-dominated Palestinian government of 2013. In the Gaza Strip, the government was the Hamas government of 2012. Following two Fatah–Hamas Agreements in 2014, on 25 September 2014 Hamas agreed to let the PA Government resume control over the Gaza Strip and its border crossings with Egypt and Israel, but that agreement had broken down by June 2015, after President Abbas said the PA government was unable to operate in the Gaza Strip.
The Gaza–Jericho Agreement, officially called Agreement on the Gaza Strip and the Jericho Area, was a follow-up treaty to the Oslo I Accord in which details of Palestinian autonomy were concluded. The agreement is commonly known as the 1994 Cairo Agreement. It was signed on 4 May 1994 by Yasser Arafat and the then Israeli Prime Minister Yitzhak Rabin.
The Palestinian Authority Government of March 2006, also known as the First Haniyeh Government, was a government of the Palestinian National Authority (PA), led by Ismail Haniyeh, that was sworn in on 29 March 2006 and was followed by the Palestinian unity government of 17 March 2007. On 25 January 2006, Hamas won the election for the Palestinian Legislative Council (PLC) with 44.4% of the vote vs Fatah's 41.4%, and its leader Haniyeh formed the government, which comprised mostly Hamas members as well as four independents, after Fatah and other factions had refused to form a government with Hamas. It was the first Hamas-led PA government in the Palestinian territories.
The Oslo II Accord divided the Israeli-occupied West Bank into three administrative divisions: the Palestinian enclaves as "Areas A and B" and the remainder, including Israeli settlements, as "Area C".
As of 2016, taxation in the State of Palestine is subject to the Oslo Accords, notably the Protocol on Economic Relations also called the Paris Protocol, which was signed in 1994 by the Palestine Liberation Organization (PLO) and Israel. The Paris Protocol established a customs union, which essentially formalized the existing situation, where the Palestinian economy was merged into the Israeli one. Formally, the Palestinian Authority (PA) is entitled to collect taxes from the Palestinians in the Palestinian territories, but some 75% of PA's total tax revenue was as of 2014 collected by Israel on behalf of the PA and transferred to the PA on a monthly basis. Israel has occasionally withheld the taxes it owes the PA.
The Oslo Accords are a pair of interim agreements between Israel and the Palestine Liberation Organization (PLO): the Oslo I Accord, signed in Washington, D.C., in 1993; and the Oslo II Accord, signed in Taba, Egypt, in 1995. They marked the start of the Oslo process, a peace process aimed at achieving a peace treaty based on Resolution 242 and Resolution 338 of the United Nations Security Council. The Oslo process began after secret negotiations in Oslo, Norway, resulting in both the recognition of Israel by the PLO and the recognition by Israel of the PLO as the representative of the Palestinian people and as a partner in bilateral negotiations.
The president of the Palestinian National Authority is the highest-ranking political position in the Palestinian National Authority (PNA). From 2003 to 2013, the president appointed the prime minister of the Palestinian National Authority, who normally required approval of the Palestinian Legislative Council, and who shares executive and administrative power with the president. In 2013 that position was abolished and substituted by the Prime Minister of the State of Palestine position.
The Palestinian Legislative Council (PLC) is the unicameral legislature of the Palestinian Authority, elected by the Palestinian residents of the Palestinian territories of the West Bank and Gaza Strip. It currently comprises 132 members, elected from 16 electoral districts of the Palestinian Authority. The PLC has a quorum requirement of two-thirds, and since 2006 Hamas and Hamas-affiliated members have held 74 of the 132 seats in the PLC. The PLC's activities were suspended in 2007 and remained so as of November 2023, while PLC committees continue working at a low rate and parliamentary panel discussions are still occurring.
The Agreement on Movement and Access (AMA) was an agreement between Israel and the Palestinian Authority (PA) signed on 15 November 2005 aimed at improving Palestinian freedom of movement and economic activity within the Palestinian territories, and open the Rafah Crossing on the Gaza–Egypt border. AMA was described as: ″an agreement on facilitating the movement of people and goods within the Palestinian Territories and on opening an international crossing on the Gaza-Egypt border that will put the Palestinians in control of the entry and exit of people.″ Part of the agreement was the Agreed Principles for Rafah Crossing.
Gaza Seaport is a planned seaport in the Gaza Strip. The establishment of a Gaza seaport was mentioned in the Oslo I Accord, as early as 1993. The 1999 Sharm el-Sheikh Memorandum determined that the construction works could commence on 1 October 1999. The project started on 18 July 2000, but was stopped in an early stage due to obstruction of the supply of construction materials, and destruction by the Israeli army in September and October 2000 when the Second Intifada inflamed. The 2005 Agreement on Movement and Access, following Israel's withdrawal from Gaza, re-announced the start of the works. Israel promised to assure donors that it will not interfere with operation of the port. As of 2014, however, the construction has not been resumed.
Abu Dis is a Palestinian town in the Jerusalem Governorate of the Palestinian National Authority bordering Jerusalem. Since the 1995 Interim Agreement on the West Bank and the Gaza Strip, Abu Dis has been part of "Area B", under joint Israeli and Palestinian control. According to the Palestinian Central Bureau of Statistics (PCBS) census, Abu Dis had a population of 10,782 in 2007.
Israel–Palestine relations refers to the political, security, economical and other relations between the State of Israel and the State of Palestine. Israel and the PLO began to engage in the late 1980s and early 1990s in what became the Israeli–Palestinian peace process, culminated with the Oslo Accords in 1993. Shortly after, the Palestinian National Authority was established and during the next 6 years formed a network of economic and security connections with Israel, being referred to as a fully autonomous region with self-administration. In the year 2000, the relations severely deteriorated with the eruption of the Al-Aqsa Intifada – a rapid escalation of the Israeli–Palestinian conflict. The events calmed down in 2005, with reconciliation and cease fire. The situation became more complicated with the split of the Palestinian Authority in 2007, the violent split of Fatah and Hamas factions, and Hamas' takeover of the Gaza Strip. The Hamas takeover resulted in a complete rift between Israel and the Palestinian faction in the Gaza Strip, cancelling all relations except limited humanitarian supply.
Palestine produces no oil or natural gas and is predominantly dependent on the Israel Electric Corporation (IEC) for electricity. According to UNCTAD, the Palestinian Territory "lies above sizeable reservoirs of oil and natural gas wealth" but "occupation continues to prevent Palestinians from developing their energy fields so as to exploit and benefit from such assets." In 2012, electricity available in West Bank and Gaza was 5,370 GW-hour, while the annual per capita consumption of electricity was 950 kWh. National sources only produce 445 GWh of electricity, supplying less than 10% of demand. The only domestic source of energy is the disputed Gaza Marine gas field, which has not yet been developed. Palestinian energy demand increased rapidly, increasing by 6.4% annually between 1999 and 2005. Future consumption of electricity is expected to reach 8,400 GWh by 2020 on the expectation that consumption will increase by 6% annually.
