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Israel Reportedly Wants to Maintain Fiscal Control on West Bank, Gaza

December 8, 1978
See Original Daily Bulletin From This Date

Israel intends to maintain tight fiscal control over the elected authorities on the West Bank and Gaza Strip after self-rule is implemented for the Arab populations of those territories, it was reported today. According to Yediot Achronot, a “secret” document presently under study at the top levels of the government would forbid the autonomous authorities to print new currency, impose comprehensive taxes or levy customs duties.

The document was prepared by Prof. Eitan Burgless, head of the Treasury’s budget department, in consultation with senior government officials. It has been submitted to Eliyahu Ben-Elissar, Director General of the Prime Minister’s Office, who heads the interministerial committee on autonomy, Yediot Achronot reported.

Government sources refused to discuss the document on grounds that its publication at this time would greatly increase the present tensions in the negotiations with Egypt. It was learned, however, that it contains five points related to the economic aspects of the autonomy program.

The autonomous authority would not be permitted to print its own currency because that could be equated with independence, nor will the local authorities be allowed to establish their own central bank. The Israel Pound and the Jordanian Dinar will continue to be the only legal currencies in the territories, as they have been since 1967. Foreign banks, including those in Arab countries, would be allowed to open branches in the territories.

The local authorities would not have the power to impose customs duties or other comprehensive taxes that differ from those imposed by Israel but they will receive a share of the duties collected by Israel on goods brought into the territories. They will be allowed to enforce direct taxes on Arab residents to finance the operations of the local administrations. Israelis living in the autonomous regions would pay taxes only to Israel.

The autonomous authorities would not be permitted to impose restrictions or duties on Israeli goods entering the territories. Workers and day laborers from the territories will continue to enjoy freedom of travel between the autonomous areas and Israel. The local authorities will not be permitted to close that border. The report said that the Israel government would be willing to contribute to the fiscal budget of the autonomous authority as it does under the present administrative arrangement. The Israeli contribution is expected to reach IL 1.5 million during the coming year.


Meanwhile, senior government officials have denied reports that Israel intends to exercise military control indefinitely on the West Bank and Gaza Strip regardless of autonomy. According to the reports, such a recommendation was made by the ministerial committee on autonomy. But Ben-Elissar and Yosef Ciechanover, director general of the Foreign Ministry, reportedly told their aides yesterday that the report was “incorrect.”

The original reports were broadcast over the weekend by Israel Radio which attributed the information to a “senior official.” The exact source could not be traced. Aides to Ben-Elissar said the ministerial committee has yet to complete its recommendations on the implementation of the autonomy scheme.

They did not deny, however, that the committee was preparing proposals to restrict the legislative powers of the local self-governing authorities, to preserve Israel’s right to expand existing settlements in the territories and to maintain security by Israeli military forces deployed in new positions.

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