Tuesday, October 08, 2013

  • Tuesday, October 08, 2013
  • Elder of Ziyon
The World Bank just came out with another voluminous report on the PA economy. This time, instead of painting an inaccurately rosy picture to encourage Abbas to declare statehood, as it did in 2010, it is concentrating on pressuring Israel to hand over most of Area C, coincidentally (?) a major European initiative.

Reading between the lines, however, reveals an interesting fact.

Here are the bullet items in its executive summary:

  • Restrictions on economic activity in Area C of the West Bank have been particularly detrimental to the Palestinian economy.
  • Mobilizing the Area C potential would help afaltering Palestinian economy.
  • This slowdown has exposed the distorted nature of the economy and its artificial reliance on donor-financed consumption.
  • Area C is key to future Palestinian economic development.
  • This report examines the economic benefits of lifting the restrictions on movement and access as well as other administrative obstacles to Palestinian investment and economic activity in Area C.

One problem off the bat is that the World Bank ignores the obvious: for a small area like the PA, just like Israel or Singapore or Taiwan, it is necessary to move from a land-based economy towards one where physical area is not that important. So the World Bank notes disapprovingly that " 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." It then adds "Nor has manufacturing been replaced by high value-added service exports like Information Technology (IT) or tourism, as might have been expected." That is key - the Palestinian Arabs are better educated than their Arab neighbors and high tech would be a natural area for growth, as well as one that Israeli tech companies would love to be able to help. Checkpoints mean little as long as data can cross them. The most obvious area for growth has not been encouraged by the PA, and the World Bank - instead of pushing for that - instead politicizes the issue to blame Israel.

Indeed, Israel's manufacturing percentage of GDP (if I am reading this correctly) had dropped from over 20% to around 14% in the past 20 years. Agriculture is only 2.5% of the GDP. Like it or not, when your country is small, you don't whine about how little land you have - you make up for it in other areas.

The report makes a strong case, however, that as percentage of  its current GDP, access to Area C would be a big boon to the lackluster PA economy.

Here's the funny thing: The report specifically excludes all existing Jewish communities and their farms in its analysis!

In other words, it isn't the "settlements" that is hurting the PA economy - it is the PA's refusal to compromise. If they would have accepted the Clinton parameters in 2000, then all the benefits noted here would have been theirs for over a decade now. As long as they continue to insist on that extra 2% or 3% of land for their pride, they are immensely hurting their people.

Perhaps there are things Israel could do to help in the meanwhile without compromising security. I personally don't understand why the Israeli government is stingy with helping the PA build its 3G/4G mobile and ADSL telecom infrastructure, which I believe would help both sides.

But this report shows quite convincingly that the PA has shot itself in the foot time and time again by refusing to compromise for peace.

(h/t Ilya)




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