Pls sir, can I have another US$5 billion?

Palestinian Prime Minister, Salim Fayyad, is canvassing Western support for a US$5 billion investment package spread over three years.

Compared to the needs of Portugal ($113b) or Ireland ($50b), that ain’t so much. And nobody can argue that the Palestinian economy is one of the richest in the world. So, in the context of an era when despite open persecutions in Syria, Yemen, Iran or wherever, the Palestinian issue is still considered the cause of unrest in the Middle East, Fayyad’s plan has a real chance of going through.

In my private capacity, I deal with small investors, who always have questions before they throw their money at a new project. So here are my three questions, under the bold assumption that a Western taxpayer might be interested.

1) Is so much money needed?

The World Bank report, “Building the Palestinian State” from 13th April 2011, is highly informative. The press release implies that future growth via overseas help will depend on the relaxation of Israeli restrictions.

Well, nobody can deny that. Before the violence of the second Intifada and the ensuing clampdown, World Bank researchers showed that the economy grew under Israeli governanceby over 5% annually since 1968 . Yet just two weeks ago, a British tourist was killed by a Palestinian bomb in Jerusalem, not allowing a removal of all security measures. 

Yet in parallel, there are signs that the Palestinian economy is actually doing very well. In the executive summary on page 5, the report notes:

Education and health in the West Bank and Gaza (WB&G) are highly developed, comparing favorably to the performance of countries in the region as well as globally. For example, enrollment in secondary education is roughly 20 percentage points higher than the rate in the average middle income country, and levels of malnutrition are 7 times lower.

A week previously, Reuters had described how:

The hilly city of Ramallah, which lies just to the north of Jerusalem, has undergone a massive boom in recent years on the back of Western donor support, with new smart eateries and bars mushrooming alongside a plethora of pristine office blocks.

Significant is the contradiction in the World Bank report, which concentrates on the importance of donor aid. However, as the IMF noted and then cited by Forbes, the need for donor aid is dropping all the time, down to under US$1 billion for 2011.

2) Where is the accountability and transparency?

If the aid or investment is to be given, who will track that it is to be put to correct use? Despite the best efforts of the World Bank and the use of interim mechanisms, money is still transferred via Ramallah to pay for the salaries of thousands of Hamas supporters and operatives in Gaza.

Of equal concern is the opinion of Palestinian President, Mahmoud Abbas. Back in January, he was quoted in Al Hayat al Jadida that “the US is assisting us in the amount of $460 million annually. This does not mean that they dictate to us whatever they want, because we do what we view as beneficial to our cause.”

In a period of international economic instability, with governments cutting billions from their budgets, US$5 billion is no small sum to let go of and wander off on its ownsome.

3) What about other countries?

Fayyad’s appeal is to the West. He specifically started the ball rolling at a conference in Brussels. Yet, in the past month alone, the price of crude oil has jumped by around 20% or US$20 per barrel. Now that is one heck of a lot of extra revenue, which sure ain’t going to the protesters on the streets in Bahrain or Damascus.

So tell me again; just why are Western governments going to accept the brunt of this call from Fayyad? Is anyone going to challenge the figures?

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