Palestinians in market - Emil Salman
Palestinians at the market in Ramallah. Photo by Emil Salman
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Israel is expected to unveil a report Wednesday claiming that the Palestinian economy is not stable enough to meet the standards of a well-functioning state. A copy of the report has been obtained by Haaretz.

The 44-page paper, written by the Foreign Ministry and several other ministries, will be presented at a donor meeting on Palestinian aid in Brussels. On hand will be Norwegian Foreign Minister Jonas Gahr Store, who heads a committee on assistance to the Palestinian Authority. Also present will be European Union foreign policy chief Catherine Ashton and Quartet envoy Tony Blair.

The report points to a long line of actions by Israel to aid the Palestinian economy in the West Bank and Gaza Strip, but notes that economic growth in the West Bank has foundered. Many of the numbers in the document also appear in a report the World Bank published last week.

The Israeli report asserts that the Palestinian economy is unable to support an independent state. In the World Bank's report and papers by international agencies before the Palestinians' UN statehood bid last September, the authors claimed that the PA's institutions were developed enough to support an independent state.

"While the present fiscal crisis was caused by a shortfall in donor aid, there were also deviations in the execution of 2011's budget," the Israeli report says. "The public finance management system's role in the current crisis may undermine its track record as a system that meets the requirements of a well-functioning state."

The report also suggests that the PA's financial managers contributed to the crisis. "This demonstrates the need for further reform in order for the PA to meet the standards of a well-functioning state," it says.

Israel is expected to stress that despite the growth of recent years, the PA still needs foreign aid to survive.

"The fiscal crisis is especially acute because much of the West Bank economy still depends on the public sector and on construction projects, both still heavily financed by foreign aid. It also serves as an alarming warning sign for the stability of the Palestinian economy," the report says.

"The current fiscal situation raises doubts about whether the PA will be able to reduce its dependency on foreign aid in the coming years."

Another part of the report addresses the security cooperation between Israel and the PA. It says that last year, 764 meetings took place between Israeli military and police officials and their Palestinian counterparts in the West Bank - a 5 percent rise from 2010.

The report notes that IDF commanders in Samaria regularly meet their Palestinian counterparts in Jenin, Nablus, Tul Karm and Qalqilyah.