Aid has little impact on mending stifled Palestinian economy
RAMALLAH, West Bank—For dozens of donor countries helping the Palestinians, the worst case scenario appears to be coming true.
They had hoped to revive the Palestinian economy with billions of dollars in aid, envisioning double-digit growth. Instead, the World Bank warned Sunday that the slump continues, largely because Israel hasn't removed roadblocks, and that Palestinians may need even more aid just to get by.
The bleak prognosis will be discussed by key donors in London this week, but quick solutions are unlikely.
The Palestinians say only U.S. pressure on Israel to ease movement restrictions could turn the situation around. However, Washington has refrained from such steps in the past, pointing to Israeli security concerns.
Israel says Palestinian militants still pose a threat best contained by the network of hundreds of roadblocks, gates and dirt mounds covering the West Bank, and warns that a hasty removal of these obstacles could lead to more attacks that will only hurt peace efforts.
Illustrating the point, a Palestinian gunmen killed two Israeli guards at an industrial park straddling the Israel-West Bank boundary last week.
Under a U.S.-led plan, progress in peace talks was to have gone hand in hand with better living standards for the Palestinians. The launch of Israeli-Palestinian peace talks in November was followed a month later by a Paris donor meeting that netted $7.7 billion in aid pledges to the Palestinians over three years.
But optimism has dissipated.
There has been no visible progress in the peace talks. And the World Bank forecast just 3 percent growth in the Palestinian economy this year, meaning either stagnation or a downturn when factoring in population growth.
The Gaza Strip's economy has sharply contracted because of the closure of the area by Israel and Egypt after the violent takeover by Hamas nearly a year ago. Even in the West Bank, economic growth was only modest, the bank said.
The bank warned that if restrictions aren't eased, donors will have to give even more aid.
Two senior Western aid officials said donors are increasingly frustrated and will find it difficult to sustain the current level of assistance to the Palestinians, let alone increase it. They spoke on condition of anonymity because they are only permitted to discuss technical issues, not the politics of aid.
Palestinian economist Mohammed Ishtayeh, whose PECDAR agency is in charge of some infrastructure projects, said the international community has to push Israel harder if it wants to get its money's worth.
"Somebody has to tell Israel that `enough is enough, you are blocking the political process and progress on the ground'," said Ishtayeh, who is also involved in the peace talks. "Somebody has to tell Israel that all the donor money has no impact because of your measures."
Israeli government spokesman Mark Regev said Israel wants to ease Palestinian trade and travel in the West Bank, but can't take too many risks.
"If tomorrow, we were to remove the roadblocks, we might get a nice headline in the newspapers," he said. "But on the day after, we could well have a whole series of attacks by terrorists ... and this could well be the end of the current positive momentum in the peace process."
A failure of the international aid program could have other dire consequences. Palestinian President Mahmoud Abbas' approval ratings have fallen as the peace talks crawl forward. Without economic gains, his standing could be further eroded, hurting his ability to implement any future peace deal.
Mideast envoy Tony Blair has been trying to get several large economic projects off the ground, including three West Bank industrial parks, shuttling between Israeli and Palestinian leaders in recent months.
However, progress on the parks has been slow, largely because of disputes over Palestinian movement.
One park, near the city of Hebron, is frozen because Israel won't allocate land on its border with the West Bank, Hebron Mayor Khaled Osaily said. For Palestinians, a park inside the West Bank is not feasible because products would have to be shipped through time-consuming Israeli border crossings instead of going directly from the park to Israel, the mayor said.
Israeli Defense Minister Ehud Barak recently promised visiting Secretary of State Condoleezza Rice to push that project forward. Blair met with Barak on Monday, part of another round of talks ahead of Friday's donor meeting in London, but his aides would not comment on the talks.
On the upside, the Palestinian government has invited hundreds of business people from around the world to an investors' conference next month and plans to present some $1.5 billion worth of projects.
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