4 comments on the Palestinian economy

As Palestinians head towards elections in January 2010, few external commentators will be looking at their financial leadership. So let me chip in with some opening thoughts.

1) Israeli military restrictions are often held up as the sole or main cause of poor Palestinian living standards. In parallel, reports from the World Bank for the past 5 years have consistently chastised the Palestinian Authority (PA) for its excessive levels of public spending.

 This is a euphemism for employing too many people, particularly in the security services. 60% of the PA budget is devoted to paying salaries, including Hamas officials in Gaza. When will the government have the courage to reduce this patronage?

2) Another issue often ignored is the non-delivery on promises of donations, made by members of the Arab League, or its non-accountability in the books. This was brought to light again by Ekmeleddin Ihsanoglu, the secretary-general of the Organisation of Islamic Conference (OIC). With 57 members, it is the second largest inter-governmental body after the UN.

In an interview with Al-Jazeera, Ihsanoglu berates Israel and observes how the Goldstone Commission was a pre-planned tactic. But he effectively admits that much of the money raised on behalf of Gaza cannot be accounted for.  He mentions $100m. He clarifies that the Palestinians received $37m, of which $21m came from Norway. Where is the missing US$56m?

3) Britain’s Daily Mail newspaper eloquently explained why increased supervision of Palestinian accounting is needed by the international community.

The Government is sending British police and intelligence officers to the West Bank to try to stop a wave of brutal torture by Palestinian security forces, funded by UK taxpayers.

Their mission is to set up and train a new ‘internal affairs’ department with sweeping powers to investigate abuse and bring torturers to justice.

The department is being paid for by Britain, with an initial planning budget of £100,000 – a sum set to soar as it becomes established.

Yesterday a senior official from the semi-autonomous Palestinian Authority (PA), which runs the West Bank and its security agencies, admitted for the first time that torture, beatings and extra-judicial killings have been rife for the past two years, with hundreds of torture allegations and at least four murders in custody, the most recent in August.

And as noted by the World Bank, about 25% of the PA expenditure is supported by external donations, particularly from Western countries. They are effectively paying for the salaries of these people.

4) Despite the abuse of budgetary control, the World Bank notes that since 2008, as violence has reduced, so economic activity has risen. Just visit new shopping centres in key Palestinian cities like Ramallah and Jenin for proof.

However, a note of warning. This is the Middle East, where logic is often a poor way to analyse the geopolitical dynamics. Just before the outbreak of the Intifada in the year 2000, Palestinians were enjoying their best economic boom ever. Back then, the realities of the peace process ensured how that prosperity would not continue.

Nine years later on, will the Palestinian leadership, through their rioting on the Temple Mount and actions from Gaza, allow the same thing to happen?

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3 Comments on “4 comments on the Palestinian economy”

  1. David Says:

    Interesting – the Arab nations promise $100m, and then claim credit for $21m given by Norway as if it was part of the $100m.

    This is part of an historic pattern. The Arab nations make big promises to the Palestinians, but deliver next to nothing – largely because they know that their money will be siphoned off toward violence and corruption. But they leverage those undelivered promises into huge donations from the West. The Arabs want the Palestinians to remain stateless refugees as long as possible in order to promote their own interests – and are happy to see the infidels treasury flushed down the toilet into the cesspool of Palestinian corruption.

  2. Michael Horesh Says:

    Wall Stree Journal has written on “Palestine’s missing critics”: http://online.wsj.com/article/SB10001424052748703932904574511043050416578.html

  3. Michael Horesh Says:

    Secret Israeli (commercial) Weapon Can Stabilize Middle East: Amity Shlaes
    http://www.bloomberg.com/apps/news?pid=20601039&sid=ahJ9KwauXrlM#


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