The Palestinian pound: Mo' money, mo' problems?

The Palestinian pound: Mo' money, mo' problems?
3 min read
27 Mar, 2017
While Palestinians flirt with the idea of the Palestinian pound, economists warn that the creation of a currency is not to be taken lightly, writes Arafat.

The Middle East used to be under the Ottoman Empire whose currency they used until the First World War in 1917 when the empire disintegrated. As a result, the Middle Eastern states, including Palestine, started using other currencies.

Palestine, assigned as a mandate to Great Britain, used the Egyptian pound until 1927, when Britain introduced the Palestinian pound. This pound held the same value as the sterling pound.

After the Israeli occupation, and the declaration of the state of Israel in 1948, the Palestinian pound was replaced with the Israeli lira. In 1980, the lira was replaced with the shekel, and in 1985, the Israeli new shekel was introduced.

Consequently, many younger Palestinians are unaware of the Palestinian pound.

Palestinian schools, in a bid to remind the younger Palestinian generations of their history, hope to introduce the Palestinian pound among their students.

In a meeting with Azzam el Shawa, the Palestine Monetary Authority governor, Sabry Seidam, the education minister said that the coming step hopes to strengthen Palestinian history among students.

"This step holds a lot of national meaning among students, and it is preparing [them] for the independence of Palestine."

He added, "The Palestinian Ministry of Education focuses on education, offering its support to the Palestinian teacher."

A number of politicians in the Palestinian National Authority have also hinted on plans which seek to introduce the Palestinian pound officially among Palestinians in the West Bank and Gaza in the coming years. This move requires the cooperation of the Palestinian Monetary Authority, Ministry of Finance and the Ministry of Economy.

Commenting, the general manager of economic policies in the Ministry of Economy, Azmy Abdulrahman, said that there are no real plans for using a new currency in Palestine and statements by politicians are only words, adding, "a new currency with no economic basis is a crisis"

Palestinian coin

However, the Ministry of Economy said that it has the ready-to-use policies for the new currency, and is waiting for a political decision to begin. They added however, that disruptions in the Palestinian Authority need to be fixed before a new currency is introduced.

Furthermore, article 22 in the Protocol on Economic Relations (Paris Protocol 1994) states that Palestinians have the right to have their own currency beside other available currencies.

Palestinian coin

Meanwhile, halting the use of the new Israeli shekel means stopping many of the economic processes that depend on the Israeli currency. Palestinian decision makers must take all of this into consideration. Moreover, having a new currency needs a Palestinian central bank that can take care of all incoming currency and current economic processes being taken care by the Israeli central bank.

Decision makers will also need to ensure that the currency is able to compete with others.

Dr. Yasser Shaheen, a Palestinian economist, believes that having a new currency can happen gradually without abandoning the Israeli shekel.

Some Palestinian economists and analysts, including Shaheen, think that the Israeli authorities might attempt to block the Palestinians from using their pound by closing the crossings between the Palestinian cities.

"A new currency is not easy without mutual understanding between the Palestinians and the Israelis," Shaheen explained.

Mohammed holds a bachelor degree in Teaching English as a Foreign Language and is preparing for a Masters in Peace and Conflict Studies. Author of, Still Living There, a book documenting Gaza's last war and its aftermath.

Opinions expressed in this article remain those of the author, and do not necessarily represent those of The New Arab, its editorial board or staff.