Policy paralysis scuppers Palestinian economic dream

Wed Sep 5, 2012 10:32am EDT
 
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By Noah Browning

RAMALLAH, West Bank (Reuters) - Palestinian dreams of building a strong economy to speed up the state's drive towards independence could soon be plunged into darkness, quite literally.

The cash-strapped government of the occupied West Bank, the Palestinian Authority (PA), is so behind with its bills that the Israeli company that provides Palestinians' electricity has threatened to cut the power unless the PA pays outstanding debt of almost $80 million.

Poor planning and continued, rigid Israeli controls have caused boom time Palestinian growth rates of 9 percent in 2010 to fall by half, and struggling businesses are accusing the PA of not helping them as they face ruin.

Hopes, entertained by Israeli and Palestinian leaders alike, that the U.S.-backed Palestinian Authority could build a viable economy before statehood are fading fast.

"There is no illusion whatsoever that we can achieve our full potential given the restrictions under which we have to operate," Palestinian Finance Minister Nabil Kassis told Reuters.

Two decades after the Oslo interim peace accords, there is still no final treaty and the lack of progress has caused a sharp drop in foreign aid. United Nations agencies and Palestinian economists say the economic annexes of the Oslo pact, outlined in the Paris Protocol of 1994, have been implemented by Israel selectively and mostly to its benefit.

The government is grappling with a recurring deficit and external debt, both hovering above a billion dollars or nearly a fifth of gross domestic product. Some economists say economic growth could be as low as 3-4 percent this year, and with a fifth of the population unemployed, prospects for many of the West Bank's 2.5 million Palestinians are declining.

Bassim Khoury, head of Palestinian generic drug maker Pharmacare PLC, says he is doing his best to build a major West Bank business, but complains that the odds are against him.   Continued...

 
A Palestinian protester wearing a Guy Fawkes mask gestures as he stands near a burning effigy of Palestinian Prime Minister Salam Fayyad during a demonstration against the high cost of living, in the West Bank city of Hebron in this September 4, 2012 file photo. REUTERS/Mussa Qawasma/Files