Palestinian economy in ‘crisis’ over Israel standoff: World Bank

The World Bank estimated that easing restrictions on such goods ‘could bring additional six-percent growth in the West Bank economy and 11 percent in Gaza by 2025.’ (AFP)
Updated 17 April 2019

Palestinian economy in ‘crisis’ over Israel standoff: World Bank

  • The World Bank said the unresolved standoff deepened a ‘fiscal crisis’ that could increase the Palestinian Authority’s financial gap
  • The Palestinian Authority has seen a dramatic drop in direct foreign aid

JERUSALEM: The World Bank warned Wednesday of a deepening economic crisis in the occupied West Bank if the Palestinian Authority and Israel do not resolve a dispute over tax transfers.
Israel collects around $190 million a month in customs duties levied on goods destined for Palestinian markets that transit through its ports, and then transfers the money to the PA.
In February, Israel decided to deduct around $10 million a month from the revenues — the sum the PA paid families of prisoners or prisoners themselves serving time in Israeli jails — prompting the Palestinians to refuse any funds at all.
Israel sees the payments to those who have carried out attacks against Israelis as encouraging further violence.
The PA describes the payments as a form of welfare, while Palestinians venerate prisoners jailed by Israel as heroes for their cause.
In its Wednesday report, the World Bank said the unresolved standoff deepened a “fiscal crisis” that could increase the PA’s financial gap from $400 million in 2018 to one “exceeding $1 billion in 2019.”
“This is expected to choke economic activity, threatening to push the West Bank into negative growth,” the World Bank said.
“A resolution to the stand-off over clearance revenues is essential,” it said, referring to the tax transfers.
The bank also called for a change in Israel’s restrictions on Palestinian imports of so-called “dual-use goods” — products and technologies that can be used both for civilian and military purposes.
Israel bans 56 items from the West Bank and the Gaza Strip, and an additional 62 to Gaza only.
It has fought three wars with Palestinian militants in Gaza since 2008 and maintains a blockade on the enclave run by Islamist movement Hamas.
As a result of the restrictions, “the Palestinian economy is unable to access key production inputs and modern technology, challenging its ability to expand its production frontier and grow in a sustainable manner,” the report said.
The World Bank estimated that easing restrictions on such goods “could bring additional six-percent growth in the West Bank economy and 11 percent in Gaza by 2025.”
The bank’s report will be presented to the international donor group for Palestinians, known as the Ad Hoc Liaison Committee, at its meeting in Brussels on April 30.
It also noted “a continuous decline in real per capita income and a further rise in unemployment and poverty” in the Palestinian territories, with 52 percent of Gaza’s labor force jobless in 2018.
The Palestinian Authority has seen a dramatic drop in direct foreign aid, which has gone from 10 percent of gross domestic product five years ago to 3.5 percent last year.
In 2018, the United States cut hundreds of millions of dollars in Palestinian aid.

Cirque du Soleil walks a tightrope through pandemic

Updated 06 June 2020

Cirque du Soleil walks a tightrope through pandemic

  • Suitors wage backstage battle to rescue debt-stricken Canadian circus icon
  • Among the potential bidders is former fire eater Guy Laliberte, who fouded the acrobatic troupe in 1984

MONTREAL: Its shows canceled due to the COVID-19 pandemic, an already heavily indebted Cirque du Soleil’s fight for survival has invited an intense backstage battle to try to save the Canadian cultural icon.

High on a list of potential suitors is former fire eater Guy Laliberte, who founded the acrobatic troupe in 1984 but later sold it.

“Its revival will have to be done at the right price. And not at all costs,” said the 60-year-old, determined not to see his creation sold to private interests.

The billionaire clown said after “careful consideration,” he decided “with a great team” to pursue a bid, but offered no details.

Under his leadership, the Cirque had set up big tops in more than 300 cities around the world, delighting audiences with contemporary circus acts set to music but without the usual trappings of lions, elephants and bears.

Then the pandemic hit, forcing the company in March to cancel 44 shows worldwide, from Las Vegas to Tel Aviv, Moscow to Melbourne, and lay off 4,679 acrobats and technicians, or 95 percent of its workforce.

Hurtling toward bankruptcy, the global entertainment giant and pride of Canada commissioned a bank in early May to examine its options, including a possible sale.

Meanwhile, shareholders ponied up $50 million in bridge financing for its “short-term liquidity needs.”

Laliberte, the first clown to rocket to the International Space Station in 2009, ceded control of the Cirque for $1 billion in 2015.

It has since fallen into the hands of American investment firm TPG Capital (55 percent stake) and China’s Fosun (25 percent), which also owns Club Med and Thomas Cook travel. The Caisse de depot et placement du Quebec (CDPQ) retains the last 20 percent.

The institutional investor, which manages public pension plans and insurance programs in Quebec, bought Laliberte’s last remaining 10 percent stake in the business in February, just before the pandemic.

Since 2015, the Cirque has embarked on costly acquisitions and renovations of permanent performance halls, while its creative spirit waned, according to critics in the Quebec press.

Meanwhile, it piled on more than $1 billion in debt.

Fearing that the Cirque would be “sold to foreign interests,” the Quebec government recently offered it a conditional loan of $200 million to help relaunch its shows as restrictions on large gatherings start to be eased worldwide.

But the agreement in principle is conditional on the Cirque headquarters remaining in Montreal and the province being allowed to buy US and Chinese stakes in the company at an unspecified time in the future, “at market value” and with “probably a local partner,” said Quebec Minister of the Economy Pierre Fitzgibbon.

“The state does not want to operate the circus, but the circus is too important to Quebec (to leave it to foreigners),” he said.

In addition to Laliberte, other prospective buyers include Quebecor, the telecoms and media giant of tycoon Pierre Karl Peladeau, whose opening lowball bid was outright rejected.

“It is essentially the value and reputation of the brand” that has piqued interest in the company, says Michel Magnan, corporate governance chair at Concordia University in Montreal.

But “as long as there are restrictions on gatherings of people, the future is not very rosy” for the Cirque, he said.

Several challenges await, according to Magnan.

“There were a lot of people working in all of these shows. Where are they now? What are they doing? How are they doing? In what shape are they, what state of mind?” he said.

“The more time passes, the more this expertise risks evaporating.”

Small consolation: The Cirque resumed its performances on Wednesday in Hangzhou, China, five months after a coronavirus outbreak in the city.