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Are we supporting Palestinians to fail?

BY GUEST OPINION | SEPTEMBER 20, 2011 7:20 AM

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While the Palestinian National Authority has been steadily widening political support for the upcoming U.N. vote, the international community has diverted attention from a central issue: the economic and social sustainability of the future state.

Anyone viewing the bonanza of a West Bank economy growing at a yearly rate of 9 percent cannot be anything but surprised. However, a recent World Bank report warns that the remarkable growth reflected in the real-estate boom in Ramallah today should be considered a matter of concern come September.

It so happens that the economy has been fueled for years by external funding aimed to counter the high levels of public spending done by the Islamist group Hamas in Gaza and the West Bank Fatah Party.

It is noteworthy that through the Palestinian Reform and Development Plan was approved three years ago, the Palestinian Authority was allowed access to grants of $7.7 billion, but Mahmoud Abbas's inefficiency in developing the infrastructure for economic independence has led this support to become an impediment to the future sovereignty of the Palestinian people.

Economic asymmetries

Since 1948, the Jewish state has faced and overcome existential challenges characterized by huge regional disparities. As enunciated by Golda Meir, Israel's secret weapon in their fight against the Arabs was to have no alternative.

In contrast, Israel today has an historic opportunity to take an active role in the creation of a Palestinian state by helping to improve its institutions and reducing economic asymmetries. The failure of neoliberal theories shows that market mechanisms are insufficient for this task and that correcting asymmetries to ensure a nonbelligerent status quo with the inhabitants of the West Bank and Gaza will depend largely on the role to be adopted by the Hebrew state.

According to the CIA, the per capita income in the West Bank and Gaza in terms of purchasing power parity, which is used to compare the economic variables of different countries in terms of cost of living, was $3,351 in 2010 — almost nine times lower than the per capita income in Israel, which stood at $29,805.

Although the Central Bureau of Statistics of the Palestinian Authority reports that unemployment in its territories has been declining since 2008, official sources in the United States assert that at the end of 2010 the unemployment rate was 37.4 percent in Gaza and 16.5 percent in the West Bank. These levels of unemployment are considered extremely high, accounting together for 254,310 unemployed workers. While Israel, for the same time period, had an estimated 192,740 unemployed workers, the unemployment rate of the Jewish state was estimated at only 5.8 percent and can be explained largely by frictional unemployment, which reflects workers transitioning from one job to another.

The scourge of unemployment is, of course, highly correlated with poverty, and data provided by the CIA are consistent with estimates of the U.N. Development Programme , indicating that over 70 percent of the population of the Gaza Strip and 46 percent of the population of the West Bank is under the poverty line, so that the estimated total of poor in both territories is nearly 2.5 million people. Israel claims a 23.6 percent poverty rate, but the basis of calculation — $7.30 per person per day, as compared with the standard set by the World Bank of $1.25 per person per day — prevents a quantifiable comparison with its Palestinian counterpart.

State Building vs. State Declaration

The declaration of independence of a Palestinian state is likely to respect territorial criteria based on 1967 borders, but the economic and social-development plans in favor of coexistence, are still uncertain.

The relative inability of the Abbas government to confront these urgent challenges, and the impossibility of envisioning the scene with a new moderate Palestinian partner, requires reformulating the approach to the upcoming Arab state.

Palestinians and Israelis must stop the current game of Chicken and see themselves as indispensable parts of a common solution that would honor the words of Prophet Isaiah, "I will make peace your governor and righteousness your ruler."

Gabriel Bacalor is managing director of Bacalor Strategic Consulting in Dallas.


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