Why the Palestinian economy urgently needs a stimulus

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Palestinian children at a refugee camp in Khan Yunis in the southern Gaza Strip on Dec. 31, 2018. (AFP)
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Nasser Saidi. (Supplied)
Updated 26 June 2019
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Why the Palestinian economy urgently needs a stimulus

  • Battered West Bank and Gaza economies in urgent need of investments
  • President Trump's senior adviser on the Middle East, Jared Kushner, unveils $50bn stimulus package at "Bahrain workshop"

MANAMA: The experts are unanimous: The battered Palestinian economy is in urgent need of stimulus and investment to lift it out of a cycle of chronic depression.
But there is no clear consensus that the proposals put forward by Jared Kushner, US President Donald Trump’s senior adviser on the Middle East, are the appropriate means of doing so.
Kushner is unveiling a $50 billion economic stimulus package at the Peace to Prosperity workshop being held in Bahrain’s capital Manama.
By any economic indicator, the West Bank and Gaza Strip are well down the global league. Gross domestic product (GDP) of around $15 billion puts them near Malta and Albania in the world growth tables compiled by the International Monetary Fund.
According to the World Bank, unemployment averaging around 31 percent for the two parts of Palestine, and hitting a dramatic 51 percent in Gaza, is among the highest rates in the world.
Palestine is dependent on foreign aid and grants, and Israel’s forbearance, to come anywhere near balancing its national budget, but most of the time it runs a sizable deficit.
By any normal standards, Palestine is an economic basket case. If it were a corporation, it would have filed for bankruptcy long ago.
“Grants, financed from our own income and supplemented by trust funds contributed by donors, fund the Palestinian Authority’s projects in water and sanitation, municipal, education and social protection sectors,” the World Bank said recently.
There is little doubt as to the cause of the Palestinian malaise: The Israeli occupation, and the more or less permanent state of hostility it creates, preventing Palestinians from living a normal economic life.
“The lack of progress toward peace and reconciliation creates an unsustainable economic situation,” the World Bank said.
“The Palestinian internal polity is sharply divided between Gaza and the West Bank. Due to a steep deterioration in Gaza and a slowdown in the West Bank, the Palestinian economy witnessed no real growth in 2018.”

The distortions of the Israeli occupation have led to a lack of infrastructure and increasing the cost of doing business.

Nasser Saidi, Middle East economist

The UN Conference on Trade and Development (UNCTAD) was equally certain of the cause of the chronic economic slump.  “Occupation has hollowed out the agricultural and industrial sectors and weakened the ability of the economy of the Occupied Palestinian Territory to compete at home and abroad,” it said.
“The fact that, today, real GDP per capita in the Occupied Palestinian Territory is at the same level as in 1999 is a clear indication of the human cost and lost economic potential resulting from occupation,” it added.
“Economic growth in all sectors is constrained by the loss of land and resources to Israeli settlements and the annexation of land in the West Bank.”
UNCTAD highlighted the problem of youth unemployment in Palestine. “This marginalization of young people discourages investment in education, lowers the accumulation of human capital and deprives the economy of potential entrepreneurs and creative thinkers,” it said.
Eminent Middle East economist Nasser Saidi told Arab News: “The distortions of the Israeli occupation — the barriers and obstacles — have led to a lack of infrastructure and increasing the cost of doing business.” He added: “A lot of these were put there in the name of security, but many of them are unnecessary. If you want to address the economic issues, you need to remove these barriers.”

INNUMBERS

$50bn - Total value of stimulus package

$28bn - Economic package for Palestinian territories

$7.5bn - Economic package for Jordan

$9bn - Economic package for Egypt

$6bn - Economic package for Lebanon

He believes that Kushner’s proposals will have only a “very limited” impact. “These aren’t really investments, they’re more like long-term loans to the Palestinians, and you have to question their ability to service the loans,” Saidi said. “What’s really needed is a Marshall Plan for Palestine, but this isn’t it. It barely addresses the issues in Gaza, for example, which is essentially a large number of people in what is effectively a concentration camp. How can they hope to be productive in an economic sense?”
Other Middle East experts shared this skepticism, and pointed to the problem of corruption in Palestine.
“The Kushner peace plan faces extraordinarily long odds, and not just because the problem has persisted for a century,” Ellen Wald, an American consultant and author of the recent book “Saudi, Inc.,” told Arab News.
“Economic plans have been tried before, just not on this scale. The Palestinian Authority also receives funds every year. Unfortunately, there’s extreme corruption in the (Palestinian) territories, and peace isn’t just a matter of buying people off.”


Iranian official in surprise visit to Lebanon

Updated 18 July 2019
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Iranian official in surprise visit to Lebanon

  • Some of the threats made by the Zionist enemy are not in favor of the region’s security, Abdollahian says

BEIRUT: “Lebanon must be kept out of all regional crises,” said Iran’s Shoura Council assistant speaker for international affairs, Hossein Amir Abdollahian, during a surprise visit to Beirut on Wednesday.

“We say at the top of our voice that Iran and its allies will not allow the Zionist entity and the US to damage the region’s security.”

Following his meeting with Parliament Speaker Nabih Berri, Abdollahian said that Tehran “is convinced that the security of Lebanon is the security of the region and the Islamic Republic of Iran.”

Abdollahian added that “some of the threats made by the Zionist enemy are not in favor of the region’s security.”

He described his talks with Berri as “good and constructive.”

“We will not allow Israel, US to interfere with regional security.”

Hossein Amir Abdollahian, Iran’s Shoura Council official

Abdollahian said: “We have come today to reaffirm that Iran fully supports the people, army, resistance and government of Lebanon, and we look forward to developing relations between our two countries until they reach the highest levels.”

He said he believes that the statements of Israeli Prime Minister Benjamin Netanyahu are for “domestic consumption,” accusing him of “making some moves in the region that are not in his favor.”

Netanyahu responded to a message from Hezbollah Secretary-General Hassan Nasrallah on Sunday by threatening Hezbollah during Israel’s Cabinet meeting.

Netanyahu said: “Let me be clear that if Hezbollah dares to commit an act of stupidity and attack Israel, we will deal a crushing military blow on Lebanon. But unlike Nasrallah, I do not intend to detail our plans. It would be enough to recall that, for years, Nasrallah dug terror tunnels, and we demolished them within a few days.”