Commentary, Musings

Can the Palestinian Authority survive the USAID cut?

Posted on by Kelly McCarthy

Palestinian Authority in Gaza and West Bank Faces Collapse as USAID Funding Slashed

The Palestinian Authority (PA), which governs parts of the West Bank and has a limited role in Gaza, is facing a dire financial crisis after losing over 70% of its USAID funding, according to an unverified X post. This funding cut threatens the PA’s ability to pay its security forces and political staff, with some leaders warning it’s more devastating than the conflict with Israel.

Hamas, the militant group controlling Gaza, operates independently of U.S. aid.

USAID Cuts Threaten PA Stability

Since 1994, the U.S. has provided over $5.2 billion through USAID, with recent annual contributions of about $600 million supporting economic, humanitarian, and security programs in Gaza and the West Bank. In 2019, USAID halted all aid due to the Anti-Terrorism Clarification Act (ATCA), which exposed the PA to lawsuits for accepting funds, prompting the PA to reject $60 million in annual security funding to avoid legal risks. In January 2025, the Trump administration froze USAID programs for 90 days, then terminated over 90% of them, gutting a critical lifeline for the PA.

The PA, heavily reliant on U.S., EU, and Arab aid, was already strained by Israel’s 2019 freeze of $138 million in tax transfers over payments to prisoners’ and martyrs’ families—criticized by Israel and the U.S. as incentivizing terrorism but defended by Palestinians as social support.

Austerity measures slashed salaries in 2019, and a 70% funding cut, if accurate, could cripple the PA’s operations, particularly its security forces, which maintain stability in the West Bank through cooperation with Israel.

PA vs. Hamas: Key Differences

The PA and Hamas are distinct entities with different roles, funding, and objectives:

    • Palestinian Authority (PA):
        • Role: Established under the 1993 Oslo Accords, the PA is the internationally recognized governing body for Palestinians, administering parts of the West Bank (Areas A and B) and maintaining a limited presence in Gaza. It oversees civil services, security, and negotiations with Israel.
        • Leadership: Led by President Mahmoud Abbas, based in Ramallah, West Bank.
        • Funding: Relies heavily on international aid, including from the U.S., EU, and Arab states. USAID cuts directly threaten its ability to function, as seen in the current crisis.
        • Objective: Seeks a negotiated two-state solution with Israel, engaging in security coordination to maintain stability in the West Bank.
        • Challenges: Faces criticism for corruption, lack of elections since 2006, and controversial payments to prisoners’ families, which strain its budget and international support.
    • Hamas:
        • Role: A militant and political organization, designated a terrorist group by the U.S., EU, and Israel. It has controlled Gaza since ousting the PA in a 2007 takeover, following its 2006 election win.
        • Leadership: Led by Yahya Sinwar, believed to operate from Gaza, though his exact whereabouts are unclear due to ongoing conflict.
        • Funding: Operates independently of Western aid, relying on support from Iran, Qatar, Turkey, and private donations through informal networks. The USAID cuts do not affect Hamas.
        • Objective: Advocates armed resistance against Israel, rejecting negotiations for a two-state solution and aiming to establish an Islamic state in all of historic Palestine.
        • Challenges: Faces international isolation and Israeli military pressure but maintains strong control over Gaza’s governance and security.

Worse Than War?

PA leaders warn that the funding crisis could be more catastrophic than military conflict with Israel. In the West Bank, the PA’s security coordination with Israel prevents unrest, but unpaid forces could disrupt this, risking instability or forcing Israeli intervention—an outcome Israel seeks to avoid.

In Gaza, the PA’s role is marginal due to Hamas’s dominance, but funding cuts further weaken its influence. The X post’s claim of “total financial collapse” may be overstated, but the PA’s aid dependency makes the situation critical.

Can the PA Survive?

The PA has weathered past crises, such as the 2006 sanctions after Hamas’s election and 2011 USAID cuts, by securing alternative funding from the EU or Arab states. However, replacing U.S. aid is challenging. In January 2025, Abbas reformed the Martyrs Fund to align with U.S. laws like the Taylor Force Act, aiming to restore some aid. Yet, prolonged funding shortages could erode the PA’s legitimacy, already strained by corruption allegations and no elections since 2006. This risks strengthening Hamas, which could exploit a weakened PA to expand its influence beyond Gaza.

The Endgame?

The PA, reliant on U.S., EU, and Arab aid, was already strained by Israel’s 2019 freeze of $138 million in tax transfers over payments to prisoners’ and martyrs’ families—criticized as incentivizing terrorism but defended as social support. Austerity measures slashed salaries in 2019, and a 70% funding cut, if accurate, could paralyze the PA’s operations, especially its security forces, which maintain stability in the West Bank through cooperation with Israel.

Help American Liberty PAC in our mission to elect conservatives and save our nation. Support – American Liberty PAC