MESS Report / West Bank economic boom? Not yet
While progress is being made, significant developments requires more than opening a new luxury store.
It seems that Israel's declarations about an economic blossoming in the Palestinian territories as proof of the positive steps the Netanyahu government has come a bit too soon. Just last month during his speech at the AIPAC policy conference, Prime Minister Benjamin Netanyahu explained that the West Bank is undergoing an "economic boom." However, a report published by the World Bank - which is to be presented to representatives of donor countries at a conference in Madrid on Monday and Tuesday - clarifies that the road to such an "economic boom" is far off.
A visitor that encounters the West Bank after not having been there for several years by all means notices the significant improvement in the Palestinian economy and public sector. Even the World Bank report points to this important progress. Yet, the creation of significant economic developments for Palestinians requires more than just opening a new restaurant, movie theater or luxury furniture store. The World Bank points to a lack of investment on the part of the private sector, in part due to the restrictions Israel continues to place on the movement of Palestinian people and goods outside of the West Bank.
How does this sit with the reality on the ground and the significant number of checkpoints that have been removed? The bank's report doesn't only criticize: It also mentions the decreased number of checkpoints as well as increased investor confidence. There is considerable momentum in the construction department and in the growth of small businesses, such as restaurants and shops.
But new and privately funded factories, or new tourism or agriculture projects, aren't being initiated in the West Bank, which are in fact the kinds of undertakings that could inject billions of dollars into the Palestinian economy. The Bank explains that one of the only factors significant enough to be profitable is export. But while taking off checkpoints simplifies commerce inside the West Bank, the export to Europe, the Arab states and even Israel or East Jerusalem, remains as complicated as it ever was, as a result of security checks and remaining roadblocks.
Furthermore, there's a marked decline in export to East Jerusalem, once a significant aspect of the Palestinian economy. There's hardly any Palestinian access to resources in the C area, as well as to lands in the Jordan Valley, which comprise an important agricultural center.
The bank says Israel should be doing more to approve the entry of foreign and Arab investors to the West Bank. And, again, Israeli government officials would wonder 'why do you complain to us? We're allowing free entry for tourists into Bethlehem.' But while even a cursory investigation of the issue reveals that the Israel is indeed letting people in, the problem is that Bethlehem is not yet a significant source of income. The tourists land in an Israeli airport, ride an Israeli bus, enter the Church of the Nativity in Bethlehem, maybe buy a local lunch, and return to a hotel room in Jerusalem or Tel Aviv.
The dry data show a visible improvement in the Palestinian economy. For example, the West Bank's unemployment rate for 2009's final fiscal quarter was 18 percent, compared to 20 percent in the previous year. Gaza too has left job seekers, with a 39 percent unemployment rate compared to 45 percent in 2008. The International Monetary Fund expects a t percent growth. But other countries that have emerged out of violent conflicts such as East Timor and Bosnia saw grow rates in the dozens of percents in subsequent years.
The bottom line is improvement, yes, "economic boom," as Netanyahu phrased it, no. The World Bank says it will happen only if Israel would allow Palestinains access to C areas, East Jerusalem and relax restrictions on the export of goods to Israel and abroad.
Previous MESS Report posts:
- Snubbed IDF chief won't fight to stick around
- The race is on for next IDF chief
- Four Gaza factions halt rocket fire, in bow to Hamas
- Is Gaza now Netanyahu's biggest problem?
- Despite U.S. anger over settlements, defense ties are flourishing
- Netanyahu faces a U.S. adamant about East Jerusalem
- Is Obama's problem that Netanyahu is a Republican at heart?