PA National Economy Minister Khaled Osaily: American, Palestinian Officials Are Engaged in Economic Dialogue

PA National Economy Minister Khaled Osaily: American, Palestinian Officials Are Engaged in Economic Dialogue


An economist and investor with extensive experience in business and investment management, PA National Economy Minister Khaled Osaily holds a bachelor’s degree in economics and business administration. He helped establish the Palestine Telecommunications Company (Paltel) in 1996 and the Arab Palestinian Investment Company in 1994.

He was mayor of Hebron from 2006 to 2012.

The Media Line: What is the state of the Palestinian economy?

Khaled Osaily: First of all, our economy is governed by many negative elements, the biggest negative element being the occupation. The occupation is interfering with every detail of our lives, and the biggest obstacle to us is the existence of the occupation. In order to build an economy, you want at least freedom of movement for people and goods, and these are not available to us. At the same time, we have more than 60% of our lands in Area C [of the West Bank], and therefore I want to refer to a report of the World Bank in which it declares that Palestine’s losses from not exploiting Area C – which is like what I told you, 65% of our land, our losses are $3.4 billion annually. And this report was two years ago, a report of an international bank, not a Palestinian one, and therefore has high credibility. This is one of the big problems we have in the economy. In addition to the occupation’s control of movement to and from Palestine, the lack of ports, our links with the Paris Agreement, the Oslo Agreement, the Paris Protocol, the occupation implements what it wants to implement, and the rest is not implemented, and therefore we are working under very difficult circumstances, and these will certainly be reflected on the economy of Palestine.

But we have a determination, whether from the government or from the Palestinian sector, that we are steadfast in our land here, in our country, and we are not leaving it. Our duty is to do our best to preserve every citizen, create job opportunities for every citizen, and give a decent life to every citizen to the extent that we can work on it. We are greatly supported by the Palestinian private sector. There is absolute and close cooperation with the private sector, between the private sector and the public sector, and thus this reflects positively on our results. We have a very bold private sector, whose experience has refined the problems that the occupation creates, and therefore all of them are also convinced that this is our country, we will work in it, we will stay in it and therefore under the almost impossible difficult circumstances we are building a healthy economy. Our situation despite the corona, despite the financial problems, despite the clearing [the tax withholding by Israel], we are working with our budget. It is about $600 million in deficit. We are trying to save from it and, God willing, we will end the year with less than the announced deficit. But our circumstances are difficult, we have a liquidity problem, our employees take (home) 80% of their salaries, and this also reflects on the economy. We also have foreign investments because of our transparent economy. We have great success stories. The Palestinian financial market is one of the best and produces one of the best results compared to all Arab markets. Our average income for profit distribution in this year was approximately 7%; this is a very positive indicator of the success of our companies and the success of investing in Palestine.

TML: Palestinian markets faced a wave of high prices in the recent period, how did your ministry deal with this issue?

Osaily: Everything is calculated for and is under control. We work within a budget. Within the budget that exists with the subsidy, we are given subsidies for petroleum, we have given subsidies for electricity, this year is 210 million shekels (about $64,000) subsidy from the government for electricity prices so that it won’t go up. We gave food subsidies as well. We want to preserve the weaker classes, within the budget that we have. We had about $500 million or less than $600 million as an annual deficit. We try to rationalize government expenditures; you can say that the government expenditures that exist today have been rationalized a great deal. We have reduced them a lot. At the same time, we have financial obligations, salaries to civil servants, the prisoners, the martyrs, Gaza, Jerusalem, the Palestinians in the diaspora, the Palestine Liberation Organization, all of this we cover from our income in the West Bank, and therefore we work within a certain budget approved by the government, and we are 100% committed to the budget that exists.

TML: The Israeli minister of regional cooperation, Esawi Frej, says that he now has the green light to revive the joint economic committee emanating from the Paris JEC (Joint Economic Committee) agreement, and that he is trying to hold a meeting with you and talk about many things that contribute to improving the Palestinian economy. What do you have to say to that?

Osaily: This is a very important topic. My background as a mayor, businessman and minister makes me a liberal and open-minded person, and I believe in dialogue, and dialogue when it becomes a serious one. The Paris Agreement is the one that governs the economic relationship between Israel and Palestine, and it was set to end in 1999, five years [after the signing of the Oslo Accords]. The last serious meeting [of the JEC] was in the year 2000. In 2009, a meeting took place on one or two topics for an hour or two, and after that there was no meeting. Unfortunately, if the Paris Agreement was implemented as it is, the first thing it would have been expired. It has ended, and after we have obtained a monitoring status at the United Nations, we have the right to have the agreements that we want and that we conclude with the countries of the world, but as they say in English, the JEC is the only game in town. We don’t have another mechanism that we can negotiate other than the JEC. The JEC is a Palestinian demand, the meetings of the Joint Committee is a demand for us because, as I told you, we do not have another mechanism other than that to develop the economy, to do development, to do international relations as well, but unfortunately, as you mentioned, the last meeting was in June 2009; we are demanding that these meetings should be held periodically, according to the Paris Agreement. Every six months, the JEC must be convened and convened at least to discuss all the existing problems, including the commodity lists. I want to talk about the commodity lists, there is A1 and A2 lists. A1 is a group of goods that you can bring with an import certificate with a Palestinian standard certificate or a Palestinian health certificate, exempt from customs from Arab countries – from Egypt and Jordan, and List B that needs an Israeli standard and Israeli certificates. Both lists are outdated.

TML: Like what?

Osaily: I give you an example: today on the A1 list, we have black and white TV. Black and white TV in the world today? The lists haven’t been updated since 1994.

There are new products that came out today all over the world, they do not exist on the lists! We want to add these products and the quantities, which were necessary to review every six months. The population of Palestine in 1994 has multiplied. Thus, their needs have multiplied too.

But we are still linked to the old lists, most of the items on it are irrelevant, or have been replaced by new products. One example, we are permitted to import 12,500 tons of frozen meat, from 94 to date they have not increased one kg, this has created a crisis for us.

The per year capita for a citizen in Israel is $48,000 while for Palestinians it is $2,000 to $3,000. We are subjected to the same customs, and this is unfair to every Palestinian citizen. When you charge me for income of $2,000 and $3,000, and  $48,000 for an Israeli citizen, and I pay the same cost if it is not more.

The cost is much higher, and therefore it all reflects on the economy and the level of life of the Palestinian people because we are occupied. When I do not have the freedom to import what I want, whether from Jordan or from Arab countries, I do not have crossings for the imports. This all affects the Palestinian economy and the life of the citizen and the level of the quality of life for the Palestinian citizen. Medicines are more expensive than Israel, and there are no adequate guarantees. We have semi-free health insurance, and we give everyone medicine and health care, costing us at least 30% of the budget for health expenses. During the corona pandemic, we used to pay about a million shekels ($325,000) every month, only for corona treatment, corona vaccination and treatment to all people for free, including hospitals. We live with great injustice, we are under occupation which impacts the political, economic and social level.

PA National Economy Minister Khaled Osaily: American, Palestinian Officials Are Engaged in Economic Dialogue

Palestinian Authority National Economy Minister Khaled Osaily (L) speaks with The Media Line’s bureau chief, Mohammad Al-Kassim, at the Palestinian Economy Ministry in Ramallah, on the West Bank, Aug. 16, 2022. (Noor Khatib)

TML: There is also a series of bilateral meetings and meetings that took place between Palestinian economic delegations from the Ministry of Economy and American delegations. What do you want from the United States and where does this economic relationship stand between the two parties?

Osaily: There’s dialogue, a Palestinian-American (one), and I lead the Palestinian side as Minister of Economy. It happened in the last 11 to 12 months after a long hiatus. We talked with complete openness with the Americans, and we are committed to strengthen the relationship with the Americans, and interested in American support, and with implementing President Biden’s promises to President Abu Mazen [Mahmoud Abbas], and we hope that these pledges will be implemented. At the same time, there are American restrictions from Congress that still exist and limit American aid to the PA’s budget and to the PA. We appreciate President Biden’s support and thank him for the $100 million to hospitals in Jerusalem, support for some USAID projects, which we welcome. They have $75 million, of which $40 million this year (was) allocated for the private sector. We are open to everyone, very interested in the relationship with America, like any country in the world. On the contrary, we are even more interested in restoring the relationship that former President Trump destroyed.

We are interested in American investments, take IT (information technology) for example, where US companies are a big part of this field, and I welcome that investors of all large American companies to open branches here, as we write legislations and laws to facilitate the affairs of foreign companies, whether with registration processes, whether with the work that exists here, and I hope that businesses like Apple and Intel come here.

We have approximately 3000 graduates annually from our universities majoring in IT, whose cost is less than the cost of many people who deal with America. And they are highly qualified, and their accent is almost American, meaning it is different from the rest. We welcome them. We welcome all US and foreign investments in general, because our goal is to develop the economy, create job opportunities, and a good quality of life for our Palestinian people.

TML: You have made several visits at the international level, including to Geneva, but also to Russia. There are also strong economic relations with Turkey. Talk to us about the economic relations that bring you together with Russia and also with Turkey.

Osaily: I went to Geneva to attend the World Trade Organization, in which we are asking for membership, even if it was as an observer. I held, in two days, nine meetings with nine heads of delegations and businessmen. One of these meetings is that we are also asking for membership in the royal WIPO (World Intellectual Property Organization), among them the British Minister of Trade, the Tunisian, Bulgarian, and then I went to Russia and attended a conference in St. Petersburg. At the same time, I tried to obtain offers from Russian companies especially flour, wheat and oil. There is a group of other products, whether for feed, food staples, because our goal is to make sure these commodities are available in the markets so that prices are not affected.

I represent the Palestinian side in the Russian-Palestinian Joint Higher Committee, which is supposed to hold a joint meeting in November. We try to build relations and open markets for our Palestinian products, whether in Russia or the surrounding countries, at the same time you know that Russia and Ukraine produce 40% of the commodities. We intend to make these products available to our people at a reasonable price

As for Turkey, it is our second import market for us, after China. We appreciate President Erdogan increased the custom-free quota of dates from 1,000 tons to 3,000 tons.

TML: Minister Khaled Osaily, thank you for your time.

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