EU, World Bank funds saved Palestinian Authority from economic collapse, INSS finds

A new INSS study finds that EU and World Bank funding prevented the Palestinian Authority's economic collapse after Israeli tax transfers fell, while Arab states contributed only a small fraction of aid. The PA survived by delaying salaries and shifting deficits onto banks and suppliers, highlighting its dependency on Western support.

A new study by the Institute for National Security Studies (INSS) finds that the Palestinian Authority's complete economic collapse was staved off by funds from the European Union and the World Bank, with only a fraction of support coming from Arab states. Since Israel began withholding tax revenues in 2018 to offset pay-for-slay payments, the PA has faced growing financial constraints, worsened by the 2023 war. Foreign aid jumped from NIS 755.2 million in 2023 to NIS 2.74 billion in 2025, while clearance revenues fell from NIS 7.9 billion in 2023 to NIS 2 billion in 2025. The EU's support surged from NIS 327 million to over NIS 1.5 billion, and the World Bank's from NIS 283 million to NIS 838 million. Arab states provided only NIS 611 million in 2024 and NIS 392 million in 2025. The PA survived by delaying salaries—employees received only 70% of wages in 2024 and 2025—and shifting deficits onto banks and suppliers. INSS notes that Western funds likely reflect Europe's view of the PA as indispensable for a future diplomatic settlement.