Baz Ratner / Reuters The West Bank Jewish settlement of Ofra, north of Ramallah, July 18, 2013.

First, an Economic Peace

Revisiting Israel and Palestine's Paris Protocol

On September 30, just as he had warned a week earlier, Palestinian President Mahmoud Abbas dropped a “bombshell” at a speech before the UN General Assembly. In somewhat vague terms, Abbas said, “We declare that as long as Israel refuses to commit to the agreements signed with us...they leave us no choice but to insist that we will not remain the only ones committed to the implementation of these agreements.” By “agreements,” Abbas meant the Oslo Accords, signed in 1993 and 1995, which are considered the cornerstone of peace between Israelis and Palestinians. The accords established the Palestinian Authority and laid out a five-year timetable for the resolution of disputes between Israel and Palestine. Since then, peace has stalled in light of Hamas-sponsored terrorist attacks against Israel, the exchange of rocket fire between the two, intifadas, and the expansion of Israeli settlements in the West Bank.

Abbas likely wasn’t talking about the Paris Protocol, which was signed in 1994 and incorporated into Oslo II in 1995. Palestinians and Israelis have recently made calls to revisit this agreement, which defines nearly all economic relations between Israel and Palestine. The protocol, like the rest of the Oslo Accords, was meant to last for a five-year interim period, and sought to empower Palestine to take control of many aspects of its economy. It is centered on a customs union, which enables Israel to collect taxes on goods flowing to the Palestinian territories. Israel is supposed to distribute the revenue to the Palestinian Authority on a monthly basis. The agreement means that Palestinians rely on the Israeli Shekel and pay almost identical customs and value-added taxes (VAT) as Israelis with the exception of specific goods such as certain food items, metals, and household appliances, for which the Palestinian Authority can issue its own tariffs. The agreement also ensured the flow of Palestinian labor into Israel, established the Palestinian Monetary Authority, and created the Joint Economic Committee to arbitrate and resolve economic disputes.

Over two decades since the conclusion

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