Ten of the 16 members of the Palestinian unity government are abroad this week. Four of them — Prime Minister Rami Hamdallah, who also serves as interior minister; Foreign Minister Riad Malki, Finance Minister Shukri Bishara and National Economy Minister Mohammad Mustafa — are in New York for the twice-yearly meeting of donors to the Palestinian Authority, on Monday. The sessions will focus on preparing for a special donors’ conference, in Cairo on October 12, on the reconstruction of the Gaza Strip.
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A task force headed by Mustafa last week estimated the cost of postwar reconstruction in the territory at around $4 billion over three years. Contributing to the assessments were the United Nations Development Program and local teams that included representatives from local mosques, some of whom belong to or are affiliated with Hamas.
The Ad Hoc Liaison Committee was founded in 1993 to coordinate the distribution of international development aid to the West Bank and the Gaza Strip, in preparation for the establishment of an independent Palestinian state in these territories. But for many years the committee has been putting out fires instead of setting development goals, financing the PA’s budget deficit and helping the growing number of Palestinians in need of direct aid.
Four main reports were sent to participants in advance of Monday’s meeting, one each from the PA, the International Monetary Fund, the World Bank and the UN Special Coordinator for the Middle East Peace Process. While they differ in wording and emphasis, all contain two predictable conclusions: Massive international aid will be needed to rebuild the Gaza Strip, and the effort must be carried out by PA institutions only, in coordination with international organizations and private contractors. In their reports, the IMF and the World Bank stress that donor states must continue to contribute to the PA’s budget.
All the reports say Gaza cannot be rebuilt without ending the blockade on the territory, or at least (in the IMF report) easing restrictions on movement. The UN, PA and World Bank reports all say that rehabilitating the Palestinian economy will require Israel to remove its restrictions on development in Area C, the part of the West Bank under full Israeli control. They also deem the continuation of the Palestinian unity government an essential precondition for reconstruction.
These references to Area C and the unity government in the context of reconstructing Gaza and rehabilitating the economy turn these reports from economic and political texts into works of science fiction. First, Israel has made it clear that its policy on Area C remains unchanged. Second, the unity government currently exists on paper only.
Senior Fatah and Hamas officials began discussions in Cairo on Monday on the renewed crisis between the ostensibly reconciled organizations. The still-unpaid salaries of some 27,000 Gazan civil servants appointed by the Hamas government was high on the agenda. The 2011 Cairo agreement on which the unity government is based specified a method and timetable for resolving the problem, but Hamas hasn’t given the unity government time to follow the schedule and accuses it of abandoning the workers.
A senior PA official, speaking on condition of anonymity, said Hamas deliberately turned the salary issue into a crisis, adding that the PA intends to find a way to hire these employees itself and pay their wages. Both the IMF and the World Bank vehemently oppose any increase in the PA’s payroll. It’s not clear how this contradiction can be resolved.
Even if the salary problem is somehow solved, the unity government cannot operate from Cairo. The cabinet ministers who travel to New York, Mecca and Brussels can’t cross the 70 kilometers separating Ramallah from Gaza: Israel bars them from doing so, due to its opposition to the unity government.
Last week, for instance, the Palestinians reported that Israel barred the Palestinian Education Minister, Khawla Shakhshir, from going to Gaza for an event marking the new school year. Israel’s Coordinator of Government Activities in the Territories told Haaretz that technical problems and time pressures led to Shakhshir’s permit being issued too late.
It’s not unusual for Palestinians to report that Israel’s Civil Administration in the West Bank has rejected a request for a travel permit, though in this case the agency says the permit was approved. But conflicting stories, or situations in which a permit is granted only long after the requested date, are part of the overall picture of restrictions on Palestinian movement and of Palestinian dependence on Israel.
Either way, Israel’s rejection or belated approval of the permit had a Palestinian ally that saw the minister’s trip as undesirable: Ziad Thabet, a deputy minister of education appointed by the former Hamas government in Gaza, said Shakhshir did not coordinate her planned visit with him. That was interpreted as a threat that Hamas’ forces, which continue to operate in Gaza, would not allow her to enter and tour Gaza’s schools.
The issue of coordination between ministers in Ramallah and deputy ministers or ministry director generals in Gaza recalls Akira Kurosawa’s “Rashomon.” PA officials in Ramallah say they want to coordinate actions with Gaza, but the Hamas high command in Gaza doesn’t share necessary information with them, including its distribution of money or food sent by the PA in Ramallah. Senior Hamas officials in Gaza claim the ministers in Ramallah ignore them. Physical proximity would aid cooperation, but travel between the West Bank and the Gaza Strip is difficult, even in the event that Cairo permitted officials to enter the coastal territory via the Rafah border crossing with Egypt.
Thus in practice, two separate bureaucracies operate in Gaza, that of the former Hamas government and of the new Palestinian unity government. “The current situation of dual administrative systems, resulting in complicated public service arrangements, is not sustainable,” the World Bank warned in its report.
The IMF report said that after Operation Cast Lead in early 2009, donor states did not fulfill their pledges to finance Gaza’s reconstruction, primarily due to Israeli restrictions on bringing construction materials and goods into the territory. The UN is discussing new arrangements for bringing such materials into Gaza, and Israel has agreed to them. But without freedom of movement for officials between Ramallah and Gaza City, the unity government will be hard put to genuinely work together.
Palestinian economy plummets
Nearly two-thirds — 63.3 percent — of Gazans aged 15 to 29 were unemployed in the period preceding Operation Protective Edge, the IMF and World Bank reported, and 45 percent of the territory’s workforce as a whole was jobless. In the West Bank, these figures were 25 percent and 16 percent, respectively. A weighted average of these numbers produces an overall Palestinian unemployment rate of 26.3 percent, rising to 39.5 percent for young people.
“As international experience and recent history in Gaza shows, such a dire situation may fuel further violence,” the World Bank report warned.
The Palestinian growth rate fell from 6.3 percent in 2012 to 1.9 percent in 2013. And it’s only thanks to Gaza’s cross-border tunnel economy, which hadn’t yet been destroyed by Egypt at that point, that the decline wasn’t even more drastic. Growth in Gaza fell from 7 percent to 6 percent, while in the West Bank, growth plunged from 6 to 0.5 percent.
In 2014, the IMF predicts that the West Bank economy will contract by a further 3.7 percent and the Gaza economy by 15 percent. “Political uncertainty and restrictions on movement and access are the main reasons why the Palestinian economy is unable to take off,” the World Bank report said.
The PA’s report, “Rebuilding Hope,” notes that 48 percent of the PA’s regular budget goes to wages and social benefits such as welfare payments in Gaza. But since the Hamas-Fatah political rift in 2007, only 3 percent of PA tax revenue has come from Gaza, down from 45 percent before 2007.
Last year’s World Bank report concluded that Israel’s policy of preventing Palestinian development in Area C results in an annual loss to the Palestinian economy of about $3.4 billion.