AP interview: Palestinian PM accuses US of 'financial war'

RAMALLAH, West Bank — The new Palestinian prime minister on Tuesday accused the United States of declaring "financial war" on his people and said an American peace plan purported to be in the works will be "born dead."

In his first interview with the international media since taking office over the weekend, Mohammad Shtayyeh laid out plans to get through the financial crisis he has inherited and predicted that the international community, including U.S. allies in the Arab world, would join the Palestinians in rejecting President Donald Trump's expected peace plan.

"There are no partners in Palestine for Trump. There are no Arab partners for Trump and there are no European partners for Trump," Shtayyeh said during a wide-ranging hour-long interview.

Shtayyeh, a British-educated economist, takes office at a difficult time for the Palestinians, with his government, the Palestinian Authority, mired in a dire financial crisis. The PA administers autonomous zones in the West Bank.

The Trump administration has slashed hundreds of millions of dollars of aid, including all of its support for the U.N. agency for Palestinian refugees.

Israel has also withheld tens of millions of dollars of tax transfers to punish the Palestinians for their "martyrs' fund," a program that provides stipends to the families of Palestinians imprisoned or killed as a result of fighting with Israel.

The Israelis say the fund rewards violence, while the Palestinians say the payments are a national duty to families affected by decades of violence. Furious about the withholding, the Palestinians have in turn refused to accept partial tax transfers from Israel.

Without its key sources of revenue, the Palestinian Authority has begun paying only half salaries to tens of thousands of civil servants, reduced services and increased borrowing. In a new report being released Wednesday, the World Bank said the Palestinian deficit will grow from $400 million last year to over $1 billion this year.

"Israel is part of the financial war that has been declared upon us by the United States. The whole system is to try to push us to surrender" and agree to an unacceptable peace proposal, Shtayyeh said. "This a financial blackmail, which we reject."

Shtayyeh laid out a number of proposals for weathering the storm. He said he has imposed spending cuts by reducing perks for his Cabinet ministers.

He said he would seek to develop the Palestinian agricultural, economic and education sectors and seek ways to reduce the Palestinian economy's dependence on Israel. For example, he proposed importing fuel from neighboring Jordan, instead of from Israel, and even floating a Palestinian currency. He also said the Palestinians would seek financial backing from Arab and European donors.

Despite the tensions with Israel and the U.S., Shtayyeh said the Palestinians remain committed to the establishment of an independent Palestinian state on areas captured by Israel in the 1967 war. That includes establishing a capital in east Jerusalem, which Israel has annexed and claims as part of its eternal capital.

The two-state solution has enjoyed overwhelming international support for the past two decades. But Israeli Prime Minister Benjamin Netanyahu and his hard-line political allies reject Palestinian independence.

Netanyahu secured another term in office in elections last week and is expected to form a new coalition with religious and nationalist parties that oppose the two-state solution. On the campaign trail, Netanyahu even raised the possibility of annexing Israeli settlements in the West Bank, a step that could extinguish any remaining hopes for an independent Palestine.

Netanyahu has received a boost from Trump, who has given Netanyahu a number of diplomatic gifts since taking office. Trump has recognized Jerusalem as Israel's capital and moved the U.S. Embassy to the holy city, slashed aid to the Palestinians and shuttered the Palestinian diplomatic office in Washington.

In a departure from Republican and Democratic predecessors, Trump also has notably refused to endorse the two-state solution. His peace team, led by son-in-law Jared Kushner, has repeatedly pushed back the release of a peace plan it says it is preparing, and it remains unclear if or when it will be released.

Kushner's team has said little about their proposal. But their limited public statements have indicated it will call for large amounts of economic investment in the Palestinians, but given no sign that it will include their demand for independence.

Shtayyeh said that after all of the U.S. moves in favor of Israel, particularly the recognition of Jerusalem, there is nothing left to negotiate.

He said any proposal that ignores key Palestinian demands will be rejected by the international community. The European Union this week reiterated its call for peace talks aimed at establishing a Palestinian state.

"Where are we going to have the Palestinian state?" he asked. "We are not looking for an entity. We are looking for a sovereign state."

"Palestinians are not interested in economic peace. We are interested in ending occupation," he said. "Life cannot be enjoyed under occupation."