Palestinian economy – new perspectives

Go to Gaza. Visit a village in the West Bank. You will find people living in poverty, especially compared to most OECD population centres.

Then ask yourself where the money has gone and you will start to find some unusual answers.

Let’s start with Israel and Egypt’s blockade of Gaza. Whatever the sense of this policy, the fact is that Gaza is not short of food or commodities. First, most commentators accept that there over 500 smuggling tunnels available, of which around 100 are in operation at any one time.

To illustrate the effect of these supply routes, according to an article in Hebrew by Gideon Eshet in Yediot Ahronot, the price of cement is lower now than before the blockade. A liter of petrol costs approx 2nis (6.4nis or US$1.70 in Israel), with one shekel going to Hamas “admin costs”.

That the Palestinian Authority (PA) and Hamas leadership are awash with cash is not in doubt. This blog has reported on occasions of the corruption endemic amongst much of the respective leaderships. In a legal settlement last year in America, the PA agreed to pay up to US$200 million in damages. Where did the money come from?

In Gaza, Hamas resorts to cash smuggling as opposed to the printing of money. On the West Bank, controlled by the PA, the World Bank (through Western taxpayers) has been paying for water and electricity bills.

And what about the lack of electricity in Gaza? It seems that the power was paid for by the EU, which was supposed to pay the money to Hamas. In addition, Gaza residents are paying to Hamas. But Hamas does not always pay the supplier (which is mainly….Israel). Thus, every so often Israel reduces the supply. And now even the EU is demanding greater accountability from Hamas, which in turn shouts “oi gevalt” insults against European and Israeli hate crimes. Sic!

All this goes to explain the economic contradiction that Palestinians have relatively high expenditure levels but low GDP.

It is time to move past politically correst slogans. Time for greater transparency. Time for Palestinian leaders to start looking after the financial pockets of their own people.

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