The Palestinian Authority Political Economy: The Architecture of Fiscal Control

This chapter explores the political economy of the Palestinian Authority (PA) through a fiscal sociology approach. It examines the nexus between contemporary and historical fiscal affairs and economic structures of the West Bank and Gaza Strip before and after the establishment of the PA. To understand this relationship, this chapter studies the evolution of public revenues since 1967, investigates recent neoliberal attempts at tax reforms, and identifies the economic consequences of the PAs fiscal structure. Essential to this discussion is the PAs fiscal relations with the wider Palestinian economy and its ability to utilize its budget to co-opt or coerce different economic actors. To dissect this case, the detailed workings of the clearance revenue mechanism, PA public debt, and the arrears system are examined. The chapter demonstrates that the Oslo development model/framework provided the PA with public revenues but equipped it with little leverage over controlling or devising fiscal policy. It argues that public revenues in the Occupied Palestinian Territories (OPT) have historically served as agents in an overarching political economy architecture of control. In addition, the PAs budget reinstated and, at times, innovated new measures of economic and fiscal colonial control in OPT.