Palestine - World Bank Exposes PLO's Disastrous Miscalculations

[Published 13 October 2013]


The failure by the PLO to accept two offers made by Israel in 2000/1 and 2008 ceding Israel’s claims in more than 90% of the West Bank have been political and economic catastrophes for West Bank Arabs - as substantiated by a World Bank Report published this week titled “West Bank and Gaza , Area C and the Future of the Palestinian Economy”.

Whilst Israel and the PLO are once again engaged in negotiations behind closed doors for the next eight months - any prospect for their successful conclusion seems destined to founder for the same reasons that led to the collapse of the negotiations in 2000/2001 and 2008 namely:

1. The PLO refusal to recognise Israel as the national home of the Jewish people
2. The PLO insistence that any Palestinian State not be demilitarised
3. The PLO rejection of the right of Jews to live in the West Bank under any circumstances
4. The PLO objection to abandoning the claimed right for millions of Palestinian Arabs to emigrate and settle in Israel.

The World Bank Report has highlighted the following disastrous economic outcomes suffered by the West Bank Arab population - because the PLO failed to grab those two political lifelines thrown to it by Israel:

1. Private investment has averaged a mere 15 percent of GDP over the past seven years, compared with rates of over 25 percent in vigorous middle income countries.
2. The manufacturing sector, usually a key driver of export-led growth, has stagnated since 1994, its share in GDP falling from 19 percent to 10 percent by 2011.
3. Manufacturing been not been replaced by high value-added service exports like Information Technology (IT) or tourism, as might have been expected.
4. Much of the meager investment has been channeled into internal trade and real estate development, neither of which generates significant employment.
5. Consequently, unemployment rates have remained very high in the Palestinian territories and are currently about 22 percent - with almost a quarter of the workforce employed by the Palestinian Authority - an unhealthy proportion that reflects the lack of dynamism in the private sector.

The World Bank has concluded:

“Whilst the unsettled political environment and internal Palestinian political divisions have contributed to investor aversion to the Palestinian territories, Israeli restrictions on trade, movement and access have been seen as the dominant deterrent.”

Accepting the Report’s conclusion - the fastest way to end these Israeli restrictions would be a signed peace treaty between the PLO and Israel.

In Area C - 61% of the West Bank where Israel exercises complete administrative and security control under the Oslo Accords - the World Bank report states:

”Area C is particularly important because it is either off limits for Palestinian economic activity, or only accessible with considerable difficulty and often at prohibitive cost. Since Area C is where the majority of the West Bank’s natural resources lie, the impact of these restrictions on the Palestinian economy has been considerable. Thus, the key to Palestinian prosperity continues to lie in the removal of these restrictions with due regard for Israel’s security.”

Realistically these restrictions in Area C are not going to disappear until the signing of a peace treaty that guarantees Israel’s security.

Yet the PLO stubbornly maintains its intransigent and rejectionist demands - whilst simultaneously encouraging economic, divestment and sanctions boycotts and public relations campaigns undertaken with funds supplied by foreign Governments and wealthy private foundations - designed to denigrate and delegitimise Israel and erode Israel’s legal rights negotiated under the Oslo Accords with the PLO.

That is the PLO’s prerogative - but it has come at a heavy political and economic cost.

The World Bank report confirms this gloomy assessment:

“Access to Area C will not cure all Palestinian economic problems - but the alternative is bleak. Without the ability to conduct purposeful economic activity in Area C, the economic space of the West Bank will remain crowded and stunted, inhabited by people whose daily interactions with the State of Israel are characterized by inconvenience, expense and frustration.”

Regrettably those affected by the PLO’s political stance - the West Bank Arab population - are denied any say in determining whether changes need to take place that would improve their economic and political fortunes.

PLO Chairman Mahmoud Abbas refuses to hold elections in the West Bank - preferring to continue with failed policies that threaten the future aspirations of the people he claims to represent - so clearly exposed in this damning World Bank Report.

Abbas continues to travel the world’s capitols unsuccessfully seeking financial support whilst an ailing economy collapses before his very eyes - as the World Bank Report makes ominously clear:

” Recent growth rates are proving unsustainable, however. Growth in recent years has been driven largely by extraordinary levels of donor budget support, which amounted to USD 1.8 billion, or 29 percent of GDP, in 2008. This fuelled a significant expansion in consumption, particularly the consumption of valuable public services such as policing, education and health (the share of public administration, education, and healthcare in GDP increased from 19 to 26 percent between 1994 and 2011). By 2012, however, budget support had decreased by more than half, and growth rates had declined from 9 percent in 2008-11 to 5.9 percent by 2012 and 1.9 percent in the first half of 2013 (-0.1 percent in the West Bank).”

International donors financial support is running out - as is PLO peace treaty signing time - as is the continuing disenfranchisement of the West Bank Arabs.

An explosive cocktail indeed.