Why a Palestinian plan to revive Gaza and democracy faces doubt and distrust

The team of policymakers working around the clock here to overhaul Palestinian governance has a checklist of proposed reforms that are a Western diplomat’s dream.

Build a representative, democratic Palestinian Authority (PA). Foster an inclusive society. Prepare for the governing and rebuilding of Gaza. Unite fractured political groups and social institutions.

The policy to-do list includes education, renewable energy, and business opportunity.

By “revitalizing the Palestinian Authority,” as PA President Mahmoud Abbas has tasked his government with doing, the team believes it can create a unified democratic entity that can peacefully govern both Gaza and the West Bank – and lay the foundations of an independent state.

But there’s a problem.

These would-be reformers lack both money and popular support, and face domestic political opponents hoping they will fail. And the Israeli government is overtly hostile to the PA and Palestinian independence.

Nevertheless, they say they are fighting for what one reformer describes as “the last best chance” for peace – even as the region teeters on the edge of a wider war and the PA faces financial collapse.

And the international community is counting on them. The Biden administration has pushed a “revitalized PA” as key to a post-Hamas, postwar Gaza.

“Our people want to see reforms,” says Wael Zaqqout, minister of planning and international cooperation in the reformist government. “They want to see a government that is effective, responsive, and provides services in a dignified way.”

Gaza first

Since businessman Mohammad Mustafa was tapped as prime minister in April to form a Cabinet of technocrats with backgrounds in the World Bank and the United Nations, his team has raced to carry out a two-year plan to overhaul the PA and govern Gaza. 

Its top priority is “relief and recovery” for the Gaza Strip – facilitating lifesaving aid and preparing teams to restore electricity, water, and sanitation “to make the life of people less painful,” Mr. Zaqqout says.

In the meantime, the technocratic government is looking for people to fill government posts in Gaza and is integrating West Bank and Gaza legal codes and institutions so that the PA can administer the strip as soon as the war ends.

The other major pillar for its Gaza plan: long-term rebuilding coordinated by an independent Gaza reconstruction agency and bankrolled by a trust fund to be established at the World Bank.

The team’s vision: a postwar Gaza full of new housing complexes, powered by solar and wind energy and served by a large-scale desalination plant and a functioning port.

“We are absolutely committed to rebuilding Gaza, and we will make it greener, and cleaner, and better. Rebuild better,” says Mr. Zaqqout, a former World Bank official whose family hails from Gaza. “We need to bring hope to people that their homes will be rebuilt, their lives will be rebuilt.”

Once the war ends, the PA team plans to take its reconstruction vision to Gaza to widely consult residents, and amend it with their input.

Transforming the PA

The technocrats’ other main objective is a series of democratic reforms converting the corruption-wracked PA into a transparent, responsive government.

At the core of these reforms are an independent government auditor and an anti-corruption commission.

In a judicial overhaul, the president would no longer make senior judicial appointments – an indirect acknowledgment that the autocratic Mr. Abbas has stacked the high courts with lackeys.  

The government says it will complete these overhauls by 2025.

Other proposed reforms include the following:

• Improve PA finances by collecting import duties at the borders with Jordan and Israel while removing red tape for entrepreneurs.
• Amend a draconian cybercrimes law that has been used to curb dissent.
• Introduce a mandatory “civics course” to teach Palestinian children democracy, diversity, separation of powers, and respect for others.

One reform especially prized by Washington is the government’s commitment to end monthly stipends paid to families of Palestinian prisoners and those killed by the Israeli military.

PA ministers say they will suspend the authority’s Martyrs Fund and Prisoners Fund, which support families of those killed or imprisoned by Israel – criticized by Israelis and others as “pay to slay” programs, but on which thousands of Palestinian families rely.

Instead, they say they are developing a new social safety net under which the authority would provide assistance to families based solely on socioeconomic needs.

Overhauling the welfare system would put the PA in line with U.S. law, which suspends U.S. aid to the authority if it continues these stipends.

Yet senior Palestinian politicians decry the plan. One calls it “reducing heroes of the resistance to unemployed welfare dependents.” 

On the political front, Prime Minister Mustafa’s government says it is taking steps to strengthen the electoral commission to prepare for “free and transparent” parliamentary and presidential elections by March 28, 2026 – two years after the technocrat government’s appointment.

By 2026, the government hopes to have the reforms completed and a new elected Palestinian government administering both the West Bank and Gaza, with the foundations of a state in place.

Headwinds and history

One immediate challenge facing the reform government is a lack of credibility among Palestinians.

Rather than heed Palestinian and international calls for a broad unity government, Mr. Abbas, whose term in office was to have ended years ago, handpicked Mr. Mustafa, an ally, without consultation.

As a result, the reform government lacks broad support from Palestinian factions. It is not unanimously popular even in Mr. Abbas’ own Fatah party.

“We will not work against you,” one senior Fatah official recalls telling Mr. Mustafa in a meeting in April, “but we will not work with you. And you need us.”

Hamas rejects the reformist government and has called for a new technocratic government to be formed with the involvement of all factions, in line with a unity agreement reached by Palestinian groups in Beijing last month.

“I believe this government will suffer the fate of all other governments before it, as it was not discussed or negotiated with other factions,” says Basem Naim, a former Hamas health minister. “It will fail.”

The Democratic Reform faction of Fatah is calling on Mr. Abbas to step aside. “We believe the only way out of this domestic mess ... that Abbas has put us in is through elections,” says Dimitri Diliani, the faction’s spokesperson. What happens the day after the war ends “should be up to the people.”

Polls indicate that the Palestinian public, mindful of previous failed reform efforts, has little faith in this new one.

In a June poll by the Ramallah-based Palestinian Center for Policy and Survey Research, 72% of Palestinians surveyed in the West Bank and Gaza said they believe the Mustafa government will fail to carry out reforms, 77% believe it will not tackle corruption, and 71% believe it will fail in providing relief or rebuilding Gaza.

In the same poll, 69% viewed the PA as a “burden.”

Financial chokehold

But all Palestinians – supporters and detractors of the PA alike – agree that the biggest challenge facing the technocrats’ reform drive is Israel’s refusal to hand over the authority’s funds.

Or, as Planning Minister Zaqqout describes it, “the elephant in the room.”

Under a 30-year-old temporary agreement, Israel collects Palestinian customs duties and taxes on behalf of the PA and transfers them to the Palestinian government. The arrangement was to have been scrapped upon completion of a treaty recognizing a Palestinian state, but it is now a political football.

Many of the funds have been held hostage by the far-right Israeli Finance Minister Bezalel Smotrich, who has repeatedly choked off the $170 million per month in taxes that comprise 60% to 70% of the authority’s total revenues.

In April and May, Mr. Smotrich blocked all cash transfers after several European states recognized Palestinian statehood, marking the first time since the Oslo Accords that Israel declined to transfer a single dollar to the PA.

Israel has refused to transfer the money used to pay salaries of PA staff in Gaza, some $70 million per month, since Hamas’ Oct. 7 attack. When it finally transferred $130 million to the PA in June, it deducted $34 million for payment to Israeli victims.

Meanwhile, the domestic revenue the PA collects locally has shrunk by 50% since Oct. 7 due to economic collapse in the West Bank and Israel’s denial of permits to some 200,000 Palestinian laborers to work in Israel.

With Gaza under siege and the PA surviving on only 35% to 40% of its normal budget, “there is no way we can talk of reconstruction in Gaza,” says Naser Abdelkarim, an economic analyst and consultant on previous Gaza reconstruction efforts.

Initial reforms, such as publicly posting the authority’s budgets and clamping down on fiscal waste, show “there is still hope, but it is not the significant breakthrough” needed, Mr. Abdelkarim adds.

In May, the World Bank warned that the PA’s financial condition had “dramatically worsened” in 2024, raising the prospect of an “imminent fiscal collapse.”

“The Israelis are not transferring our tax money to the government to pay salaries for teachers, health care providers, policemen, and others,” says Mr. Zaqqout.

Help from Europe

One ray of hope is coming from the European Union, which sees the Mustafa government as a rare source of progress.

This month the EU provided the PA with €400 million in grants and loans in what European diplomats variously describe as a vote of confidence in the government’s reforms and a way to “keep the authority alive.” The cash influx allowed the PA to pay nearly 70% of employee salaries for the month of July.

“The European Union fully supports the Palestinian National Authority government’s reform plan, and we will do everything we can to make sure it gets the funding it needs,” says a senior EU diplomat in the Middle East who declined to be named. “This is in the interest of regional stability, and Israel, not just the Palestinians.”

Yet it remains unclear whether money from international donors will allow the government to meet its two-year goals – or even survive the year.

“Help us. We need your help,” says Mr. Zaqqout, addressing the international community, warning that “a window for hope” threatens to close. “We are tired of killing and destruction and think there might be a window to salvage the situation,” he says.

“We have the plans” he insists. But “if people don’t trust the government to pay salaries, take care of them and protect them, it will be very difficult to do these reforms.”