Senior economist responds to World Bank report that criticized Palestinian economy: 'Crisis created due to Israel's control over checkpoints, our dependence on foreign aid'

Elior Levy

Published:   http://www.ynetnews.com/articles/0,7340,L-4260943,00.html

The Palestinian economy is unlikely to bounce back this year, and though Israel is not fully to blame, it bears great culpability, a top Palestinian economist said in response to a World Bank report stating that the Palestinian Authority's economy "isn't strong enough to support a state," citing heavy reliance on foreign aid.

Dr. Mohammed Shatiya, an economist of the Fatah Central Committee, agreed with the World Bank's conclusions, assessing that PA's economy is in decline, as unemployment and poverty rates rise. "The World Bank report is accurate in its assessments of the Palestinian economy," Shatyia said. "All signs indicate that the Palestinian economy will not recover this year."



Ramallah. Unemployment rates increase (Photo: Ohad Zwigenberg)

The World Bank report, which was released on Wednesday, said sustainable growth will come only through an emphasis on trade, integration and creating a dynamic private sector. The bank noted that Israeli restrictions remain the biggest impediment to investing, creating high uncertainty and risk.


Shatiya agreed that Israel has great responsibility in the PA's economic crisis, but that other factors are also involved. "The crisis was created due to Israel's control over checkpoints and investments, but also due to the Authority's dependence on foreign aid".

 
Shatiya also estimated that the PA's economic growth will be lower in 2012, as the crisis has hit all sectors, including the government. Since the Palestinian economy was reliant on foreign aid – "the main employers are the PA and UNRWA, both relying on foreign aid," Shatiya said –and the private sector is limited in terms of investments and loans, the recent economic growth occured in a bubble.

Shatyia expressed hope that the PA's economy would improve, as Arab countries vouched to financially aid the Palestinian Authority.