The Blog

The World Bank Report About the Palestinian Economy Slams Israel, Israel Slams the Report

In November 2008 according to Haaretz, The Likud Chairman Benjamin Netanyahu told the closing plenary of the United Jewish Communities General Assembly that "Economics Not Politics is the Key to Peace".

In July 2009 Haaretz reported that Palestinians rejected Netanyahu's economic peace plan.

Fast forward to May 2013 and we still hear more and more about the "elusive economic peace".

According to Israeli newspapers some of the country's top businessmen met with Prime Minister Benjamin Netanyahu in May 2013 to express concern that the stalled peace process with the Palestinians would ultimately harm and even endanger the Israeli economy.

The businessmen told Netanyahu they are worried by the signals they are getting from the international business community.

"We come from the field, and we're feeling the pressure," one said. "If we don't make progress toward a two-state solution, there will be negative developments for the Israeli economy. We're already noticing initial signs of this. The future of the Israeli economy will be in danger."

One businessman who attended the meeting told Haaretz that the lack of progress toward a two-state solution could send Israel down a slippery slope toward a binational state that would be either not Jewish or not democratic.

"The world will not accept this," he said. "Foreign investments will not come to such a state. No one will buy goods from such a state." Heading the group was high-tech entrepreneur Yossi Vardi, who had served as an economic adviser to Netanyahu during the talks with the Palestinians that resulted in the Wye Agreement of 1998.

Joining Vardi were Shlomi Fogel, a close friend of Netanyahu's and the owner of Ampa; Ruth Cheshin, a member of Teva's board of directors and the founder of the Jerusalem Foundation among others. The same group of Israeli businessmen participated in a conference at the World Economic Forum on the Middle East and North Africa at the Dead Sea, Jordan later that month and they were joined by their Palestinian counter-parts. The group calls itself the BTI (Breaking the Impasse) said: "The current situation endangers the economy and the social fabric of both nations, and may render the two-state solution unattainable." The Initiative was launched jointly by Munib R. Masri, Chairman, PADICO Holding, and Yossi Vardi, Chairman, International Technologies Ventures, in May 2012, and had been facilitated by the World Economic Forum. Masri and Vardi demanded that the leaders of the two countries to be bold and to move forward with an agreement to end the conflict seizing on the historic Arab Peace Initiative and work toward a historic end to the conflict. That was in May 2013.

Now in October 2013, a World Bank report comes out to highlight the obstacles facing the Palestinian economy. The report criticised Israel for stifling the Palestinian economy by the imposition of restrictions, road-blocks and other arbitrary measures. The Israelis say these measures are necessary for security reasons.

The World Bank says:

"Agriculture would be boosted if restrictions on access and water supply were eased. Israel's control of a huge swath of the West Bank is costing the Palestinian economy $3.4bn (£2.1bn) a year, or 35% of its GDP"

Restrictions on Palestinian access and movement within Area C, the 61% of the West Bank that is under full Israeli military control, is stunting the Palestinian economy, says the report. Area C and the Future of the Palestinian Economy, published on Tuesday, is the first comprehensive study of the potential impact of land restrictions in the region, according to the World Bank.

If the Israeli Prime Minister Benjamin Netanyahu is serious about "Economic Peace" as the solution, how about paying attention to the World Bank's recommendations. Implementing any of the recommendations would give a positive signal that Israel is serious about peace. The report said movement of people and goods "is severely limited by a multi-layered system of physical, institutional and administrative impediments. Physical barriers are compounded by unpredictable regulatory measures and practices". How about the easing such restrictions?

How about permitting access to the Dead Sea which according the report would provide opportunities for mineral extraction and tourism. The Palestinian economy could earn $918m (£571m), 9% of 2011 GDP, if minerals such as potash and bromine were harvested from the Dead Sea. The Palestinian tourism sector could be boosted by $126m (£78m) annually or 1% of GDP, by creating Dead Sea hotel resorts, similar to those in Israel and Jordan.

The Palestinian economy would expand by more than a third if Israeli restrictions on movement, land access and water use are lifted in the majority of the occupied West Bank that remains under full Israeli control, the report has said.

The report warned of a "bleak" future if Israel did not relinquish its economic strictures in what is known as area C, which comprises 61 per cent of the West Bank, but it also said Palestinians would have to address Israeli security concerns there. At the end of 2012, sixty Palestinian communities were still compelled to use detours that are 2 to 5 times longer than the direct route to the closest city, the report said.

I am aware of Israel's security concerns, but these can be addressed by a comprehensive political agreement between Israel and the Palestinian Authority and with the help of the Quartet. In the final analysis only a full and final political settlement will deal with all outstanding issues.

A new EU Report Critical of the Palestinian Authority:

The Palestinian Authority is required to tackle mismanagement of aid funds and corruption. Last week a damning report by the European Court of Auditors, the Luxembourg-based watchdog revealed that the EU transferred more than £1.95 bn (approx. 3 billion US Dollars) to the occupied territories between 2008 and 2012. The auditors who visited sites in Jerusalem, Gaza and the West Bank said they were not happy with what they saw. They complained about the lack of measures to deal with the mismanagement of funds and corruption.

The London Financial Times reported on 23rd September that "Israel offers boost to Palestinian economy". A great optimistic headline compared with the bleak World Bank report? Are we missing something?