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

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.”


$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.”

Dick Cheney: Upcoming decade bleak if US adopts ‘disengagement’ policy

Updated 10 December 2019

Dick Cheney: Upcoming decade bleak if US adopts ‘disengagement’ policy

  • Former US vice president sounds warning during panel discussion on ‘The global order 2030’
  • Remarks seen as indirect criticism of President Trump’s pledge to pull forces out of Syria

DUBAI: Dick Cheney, one of the most influential vice presidents in US history, has warned that “American disengagement” from the Middle East would only benefit Iran and Russia.

The 78-year-old politician’s warning came during a speech at the Arab Strategy Forum (ASF) in Dubai, an annual event in which the world’s leading decision-makers address global challenges and opportunities in “a precise, balanced and politically scientific manner.”

Cheney’s remarks could be seen as indirect criticism of US President Donald Trump’s pledges to pull forces out of northern Syria.

Addressing conference delegates, he cited the withdrawal of US troops from Syria and the 2015 lifting of sanctions against Iran during Barack Obama’s presidency, as events that amplified instability in the region.

“Our allies were left abandoned, and no one wants to feel that way again,” said Cheney, who was chief executive of Halliburton between 1995 and 2000 and held high posts in several Republican administrations.

The former VP’s remarks came during the forum’s concluding session titled, “The global order 2030: The Unites States and China,” which was attended by Dubai’s ruler Sheikh Mohammed bin Rashid Al-Maktoum.

Joined by Li Zhaoxing, a former Chinese foreign minister, in a candid panel discussion, Cheney offered his views on the world order in the next decade within the context of Iran’s regional ascendancy, China’s rise and Russian ambitions in the Middle East.

“I am not here to speak on behalf of the US government, or to speak to it,” Cheney said, adding that his talking points reflected concerns he suspected everyone shared.

“For decades, there’s been a consensus of America’s influence in the world and how to use it,” he said, citing instances where US disengagement had caused the political situation in the Middle East to implode.

“Humanity has benefited from America’s protectionism of the world and its relationship with its allies in the region.”

According to him, the upcoming decade would be bleak should the US adopt a disengagement policy, with the pressures most felt by supporters and partners in the Middle East.

Turning to the role that the US and China would play in the global status quo by 2030, Cheney said there were still concerns over China’s reputation.

“We had hoped that there would be a political evolution in China, but that hasn’t happened yet,” he added.

Li said: “China will never learn from a world superpower and will never try to be hegemonic,” citing as examples China’s strong relations with the UAE and the wider Arab world, and the impact of the Belt and Road Initiative (a global development strategy) on Chinese foreign policy.

“History is the best teacher, but the US has forgotten its own history. You don’t keep your promises,” added Li, directing his statement at Cheney.

Cheney said that since the end of the Cold War, the US had expected that its policy toward China would have had a beneficial effect on its behavior and helped to deepen bilateral relations.

“It was disappointing to see that these expectations were not borne out – China has only grown richer, the regime has become more oppressive, and instead of evolving, it became more assertive,” he said.

In a separate ASF meeting at the Ritz-Carlton, Dubai International Financial Center, Karim Sadjadpour, senior fellow at the Carnegie Endowment for International Peace think tank, discussed Iran’s policies in a session titled, “The race for relevance and influence in the region: GCC, Iran, Turkey and Russia.”

Sadjadpour said he expected in the next 10 years to see the arrival of “an Iranian Putin” with a military background as the country’s next leader.

“After 40 years of a clerical regime and a military autocracy, there is now a rise of Persian nationalism. This is a shift from the sheer revolution ideology,” he said.

Sadjadpour said there had been an evolution of “Shiite Arab” identity during the past two decades, with the focus more on religion than nationality.

Under the circumstances, he noted that Sunni Arab powers had an important role to play in welcoming Shiite Arabs into their fold “and luring them away from Iran.”

The analyst added that the future of the Arab world could not be explored and forecast without considering a growing mental health crisis. “Today, hundreds of millions of people in the region suffer from PTSD (post-traumatic stress disorder), and the effects of this will be with us for decades to come, resulting in issues like radicalism.”

He said there was a need for training thousands of counselors in the field of mental health in order to reach out to those whose lives had been robbed by extreme violence and conflicts.