The Palestinian Authority's survival now depends on emergency financial support from Arab states as Israel continues withholding vital tax revenues, an expert has told The New Arab , after President Mahmoud Abbas requested the Arab League activate a regional financial safety net.
Abbas made the request in a letter delivered to the Arab League on Sunday, calling for the activation of the Arab financial safety net, a mechanism established to support the Palestinian Authority's budget when Israel withholds revenues collected on its behalf.
The appeal comes as Israel's continued withholding of Palestinian tax revenues has deepened the Palestinian Authority's financial crisis, undermining its ability to pay salaries and provide essential public services across the occupied West Bank .
"There is no way out for the PA. The PA, in order to survive, needs that money," Joost Hiltermann, Special Adviser on the Middle East and North Africa at the International Crisis Group, told The New Arab.
"If Israel can shift the burden to external donors, then so much the better," he said, adding that Israel was "quite content for others to pay the bills of the PA", effectively underwriting the occupation.
According to Hiltermann, Israel has been withholding customs revenues collected on Palestinian imports since May 2025, significantly shrinking the Palestinian Authority's budget.
He said the cuts have affected around 200,000 public sector employees and their families, amounting to roughly one million people out of the occupied West Bank's population of around 3.2 million.
"It also affects the quality of healthcare and the quality of education," Hiltermann said. "Now students in schools have to take classes online, in part because there's not enough money to keep schools open full-time and to pay the teachers."
In his letter, delivered by Palestine's permanent representative to the Arab League, Ambassador Muhannad Al-Aklouk, to Secretary-General Nabil Fahmy in Cairo, Abbas said Israel's withholding of Palestinian tax revenues had deepened the authority's financial crisis and impaired its ability to govern the occupied West Bank.
The Arab financial safety net was first conceived and later agreed upon in 2012 to provide up to $100 million to the Palestinian Authority if Israel withheld the tax revenues needed for it to govern the occupied West Bank.
The mechanism was first activated in 2012 after Israel suspended the transfer of revenues following Palestine's successful bid for non-member observer state status at the United Nations. The Palestinian Authority has since requested its activation on several occasions, including in 2019.
Israel has withheld portions of Palestinian tax revenues since October 2023 before expanding the measure into a complete freeze in May 2025.
At the time, extremist Israeli Finance Minister Bezalel Smotrich , who plays a central role in administering the occupied West Bank, said he intended to collapse the Palestinian Authority through "economic strangulation".
Hiltermann said activating the Arab League's financial mechanism would help ease some of the immediate financial pressure on the Palestinian Authority.
"If they were to send money to the PA for budget support, that would relieve the pressure a little bit," he said, noting that the European Union also provides similar financial support.
Will Arab states actually step in?
Khalil Jahshan, executive director of the Arab Center Washington DC, said the timing of Abbas's appeal could complicate efforts to secure additional financial support from Arab states.
"What is unusual this time is the unsettled situation throughout the region due to the fallout from the wars on Gaza and Iran. Whether or not Arab countries were historically and unconditionally responsive to such requests, most of their economies at this juncture are not healthy enough to accommodate additional sizeable contributions outside their borders, including to Palestine."
He added that "potential donors are not to be blamed for questioning the nature and objectives of all these solicitations, including the request from President Abbas."
Jahshan said he was sceptical that the Arab League would be able to respond to Abbas's request in light of the current circumstances.
"Therefore, we are not optimistic about the ability of the League of Arab States to respond positively and effectively to President Abbas's request at this chaotic time in the region. Maybe the Palestinian message should have been directed at President Trump asking him to pressure the [Israeli]Netanyahu government to release the illegally held Palestinian tax funds."