3 updates on the Palestinian economy

Three pieces of news have been released recently on the Palestinian economy.

The most encouraging comes from the International Monetary Fund (IMF). Real economic growth (GDP) is expected to rise by 9% in 2009. When you compare that to Israel (around -1.0% or less) and to the UK (at -2.5%), that is remarkable.

This change is promoted by:

  • The removal of many Israel security restrictions, resulting from  a decline in Palestinian violence.
  • Increased trade between Israel and the Palestinian sector – not just in goods, but also in high tech.

Still lacking is a more open, transparent regulatory financial system. This has yet to be implemented by the Palestinian Authority (PA), despite repeated annual demands of the IMF.

The report had been preceded by the announcement of the World Bank, which intends to contribute an additional US$33.5m to Palestinians in Gaza. The money will be directed primarily towards infrastructure projects. An agreement was signed with the PA’s Prime Minister, an internationally respected economist.

There is no issue over whether the money is needed. What hangs over the investment like a bad smell is the question of transparency.

The PA has no representation in Gaza, which is under the authoritarian control of Hamas. Who can guarantee that the money, effectively given by Western taxpayers, will be used properly and not diverted as has happened in the past? This remain a cause for great concern, yet to be broached by scared politicians.

 As if to emphasise the point, a third piece of news was revealed. The President and Foreign Minister of Greece have unwittingly been part of scam to raise money for a hospital in Gaza. The contributions totalled over US$1.5m.

Problem no’ 1: No such hospital existed. Problem no 2: Nobody can trace the money.

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