RAMALLAH – Baker Armoush was struggling to maintain his composure. What started as a conversation on the street during a recent demonstration against rising prices in the West Bank became an emotional litany of personal hardship.

A father of five, Armoush ticked off the facts and figures of his struggle to survive. Out of a monthly salary of NIS 1,600 he earns working as a courier, cleaner and coffee server at a government ministry, he salvages only NIS 800 after paying back debts to the bank, he said. What’s left is not enough to cover costs of rent, food and utilities, so he works afternoons and night peddling ice cream on the street and accepts handouts from friends.

“If people had a chance, they would emigrate," he said bitterly before walking away.

The economic protests that erupted this month in the West Bank, rattling the Palestinian Authority, reflected what people there say is a growing sense of stalemate in the absence of progress toward ending the Israeli occupation or resolving the internal rift between Fatah and Hamas, which has divided Palestinians in the West Bank and Gaza Strip. The Palestinian Authority’s fiscal crisis, caused by a shortfall in foreign aid, has piled on economic strains, with tens of thousands of government employees uncertain about receiving their monthly wages.

An increase in fuel prices this month triggered the protests that only subsided after Prime Minister Salam Fayyad announced a roll-back of the price-hikes and the recently increased value added tax.

The unrest reflected the skewed economy of the Palestinian Authority, which is heavily dependent on foreign aid and has become the source of support for some 150,000 civil service employees, whose wages consume more than half of the government’s expenditures.

While the Palestinian leadership may have survived the recent economic protests, the festering discontent has the potential to undermine the stability of the Palestinian Authority.

A way out of the crisis has been charted by the World Bank in a new report prepared for a meeting next week of donor nations in New York. Aside from increased donor support and further fiscal reforms by the Palestinian Authority, the report points to the 61 percent of the West Bank directly controlled by Israel, known as Area C, as having significant potential for development and reducing the Palestinian economy’s dependence on unsteady foreign aid.

The area contains the majority of the West Bank’s natural resources and land reserves, to which Palestinian access is heavily limited. Israel has used Area C as a reservoir for expansion of settlements and their agricultural lands, for construction of roads, and for military bases and training areas. The result is a fragmentation of Palestinian-controlled zones of the West Bank into small, disconnected enclaves that lack economic cohesion, the report says.    

Lifting physical and administrative restrictions on Palestinians in Area C could encourage private investment in such areas as housing, agriculture and industry, which in turn could create jobs and expand the PA’s tax base, according to the World Bank. That, the report says, would help “promote private sector led economic growth in the Palestinian territories.”  

For now, however, Israeli constraints, particularly on construction and access to land, hinder Palestinian economic initiatives. Less than one percent of Area C is designated by the Israeli authorities for Palestinian use, while the rest is heavily restricted or off limits to Palestinians, according to the report.  

Two examples cited in the study illustrate the difficulties:

The building of Rawabi, the first planned Palestinian city in the West Bank, has been hampered by the lack of Israeli permission to build a permanent access road through Area C.  Permission for a temporary road to bring in construction materials was delayed, setting back construction by at least a year and substantially increasing building costs.

In another case, a small leather manufacturing plant in the Hebron area obtained contracts for export to a European buyer and needed to expand. Its existing factory was in a residential area, which was deemed unsuitable for expansion because of the chemicals used in the manufacturing process. The owner had land in Area C that would have been suitable for development, but could not obtain permission to build from the Israeli authorities. The firm moved is operation to an industrial park in Greece.