President Trump’s push to renew the Israeli-Palestinian peace process has brought with it a drive to address one of Israel’s primary concerns: the Palestinian Authority’s financial rewarding of terrorism. The Taylor Force Act is the main American vehicle for punishing the PA for its odious practice of paying stipends both to Palestinians convicted and jailed for terrorism by Israel and to the families of terrorists killed in the process of committing their crimes. The bill, which has gained new momentum and is moving through the Senate, will cut off all U.S. economic assistance to the West Bank and Gaza unless the PA stops these payments. I wrote in March about the general concern that in cutting off the non-security assistance, the Taylor Force Act will endanger the PA (and open the door to cutting security assistance in the future) and create an even bigger headache for Israel should the PA be at risk of collapse. But the bill sends an important and unequivocal message that the U.S. indeed should communicate to the PA, and it will almost certainly pass in some form. It is therefore worth taking a deeper look at how American assistance to the Palestinians works, precisely what effects the Taylor Force Act will have, and ways in which the bill can be improved.

The U.S. has spent a lot of time and effort figuring out how to punish the Palestinian Authority for its wink and nod to Palestinians who kill and maim Israelis. The bill that passed a preliminary reading in the Knesset last week, which will reduce the amount that Israel transfers to the PA in collected taxes by the same amount that goes to terrorism stipends, is an example of Israel following America’s lead rather than the other way around; the annual State Department appropriations legislation since 2015 has reduced the amount of U.S. economic assistance equivalent to what the PA pays to reward terrorism. In addition, in 2014 the U.S. stopped transferring any assistance to the PA directly, and instead pays the PA’s Israeli creditors (Israeli electric utilities and hospitals in East Jerusalem). The U.S. also spends the allocated money through USAID on vital infrastructure projects in the West Bank and Gaza and gives it to NGOs for programs on good governance, anti-corruption, and Israeli-Palestinian reconciliation. In other words, the PA itself does not get its hands on a dime of the U.S. economic assistance, which in fiscal year 2017 was $327.6 million.

Evidently, all of this has not been enough, since the PA continues to dole out rewards to the worst elements of Palestinian society. Hence the strong support for the Taylor Force Act, which ups the ante by removing the direct proportionality variable that the U.S. has been using and thus puts hundreds of millions of dollars at risk if the PA gives even ten dollars to a terrorist sitting in an Israeli jail. If this approach works and destroys the abhorrent system that the PA now has in place, it will be very difficult to argue that using a sledgehammer here was the wrong move. There are reasons why it is unlikely to work in one fell swoop, however, and it also carries with it some imposing downsides that make the decision to pass the Taylor Force Act as currently constituted a risky one.

The overall PA budget is somewhere between $3.75 billion and $4 billion, which makes the American contribution significant, but not dispositive. If the U.S. cuts off economic aid entirely – but still leaves in place the $35 million in security assistance that the Taylor Force Act doesn’t impact – it will hurt the PA, but the U.S. is still too much of a minority shareholder to be able to force an immediate change on its own, particularly given that none of its assistance goes directly to the PA anyway. Faced with the choice between a revolt and collapse in domestic support should it stop the enormously popular prisoner and family payments and losing American assistance for projects that are not under its purview anyway, the PA is clearly going to choose the latter.

If the U.S. passes the Taylor Force Act and the PA does not change its behavior, we also do not just get to save a few hundred million dollars with no attendant adverse consequences. One of the reasons that Israel does not just cut off the PA entirely and is only just now conditioning payments – aside from being terrified of causing the PS to implode and have the vacuum filled by Hamas – is because doing so would take away much of Israel’s leverage. The same reason applies to the U.S., but even more acutely, given that the PA does not rely on us for much aside from the money we provide. If Congress turns the spigot all the way off, there will be no remaining reason for the Palestinians to accede to American demands or requests on anything. Allowing some money to go to the Palestinians, even while reducing that amount significantly, preserves whatever leverage we have more than would eliminating the assistance entirely.

There is also a larger security rationale at play, which is another reason Israel itself has not taken the step being contemplated by the U.S. It is very hard to untangle the economic circumstances in the West Bank from the security environment, as the two are intertwined. This is the basic rationale behind IDF efforts to improve economic opportunities, freedom of movement, and quality of life in the West Bank, and it is also the motivating rationale behind the rightwing embrace of the concept of economic peace over diplomatic peace. Palestinians who have nothing to lose are exponentially more likely to take up arms against Israelis than those who do have what to lose. Cutting off every dollar of economic aid will hurt many Palestinians who do not commit violence but who are dependent on USAID-funded infrastructure projects for clean water, functional sanitation, schools, and roads. For those who desperately want to see Palestinian governance and societal reform, cutting off every dollar of economic aid means the end of programs that facilitate more streamlined courts, combat violence against women, and protect abused children. All of these things help Palestinian society without funding the PA itself, but they also protect Israel’s basic security in preventing the West Bank from turning into a boiling cauldron of seething hate and woeful despair that spits out Palestinians with no higher purpose than attacking Israelis.

There is no question that part of the U.S. assistance is benefiting the PA by paying its creditors. Every dollar that the U.S. pays on behalf of the PA directly to Israeli electric companies or to Israeli hospitals serving Palestinian neighborhoods means a dollar freed up for the PA to use as it wishes. The Taylor Force Act can and should be used to target this money, and thus pressure the PA by financially squeezing it while allowing the infrastructure and good governance projects to continue. Reworking the bill in this manner allows the U.S. to punish the PA, maintain some leverage over the Palestinian leadership, and not contribute to a deterioration in Israel’s security. In addition, by holding out the promise of increased assistance should the PA end its compensation for terror, it creates the space for the PA to set up a legitimate welfare system that will ensure that families do not go destitute without creating larger financial incentives to kill innocent Israelis. This is a long shot no matter what, but the ability to influence the issue disappears completely if the U.S. pulls out entirely.

The Taylor Force Act rightly generates strong emotions. The PA’s behavior is completely unjustifiable, and its excuses and ploys to get around having to end the “martyrs fund” are morally bankrupt and despicably inept. The U.S. must deliver a strong message to the PA, but there are ways to make this bill better and protect American and Israeli interests in a way that the current version does not.

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