The bond issuance reportedly raised $70 million for the Palestinian Development and Investment Company, with the funds earmarked for a new tourism center and a power plant in the West Bank.
The move is yet another step along the way toward the Palestinians’ unilateral declaration of independence (UDI) in the West Bank and Gaza Strip, which they have planned to coincide with the United Nations General Assembly in September of this year. The Palestinians have also introduced plans to roll out their own currency, the Palestinian Pound, and establish a Palestinian Central Bank to house that currency.
The architect of these institutions and initiatives, Palestinian prime minister Salaam Fayyad, recently affirmed that “the Palestinian Authority [PA] is determined to build the foundations of an independent state.”
But the announcement that the new unity deal will bring Hamas into the Palestinian government raises a quandary for the Treasury Department and Congress: Will these bonds essentially become vehicles for financing terrorist activities?
This appears to be new and uncharted territory. First, this may be the first time that Palestinian sovereign debt is being sold on the open market. After all, the Palestinians do not yet have a sovereign state. But more importantly, it appears to be the first time that an equity could potentially provide such an obvious stream of funding to Hamas.
Legislators have scarcely more than a week in which to engage the Treasury Department, the U.S. Securities and Exchange Commission, and likely the White House, to determine the way forward.
Jonathan Schanzer is vice president of research at the Foundation for Defense of Democracies, and a former intelligence analyst for the U.S. Department of the Treasury.