Israel is expected to come under pressure Sunday at the biannual meeting of the Ad- Hoc Liaison Committee to free up development for the Palestinian Authority in Area C, the area in the West Bank under full Israeli control.

For instance, a report on the economic situation in the PA written in advance of the meeting by the World Bank, concluded that “the continued geographical fragmentation of Area C [envisaged under the Oslo Accords as a temporary arrangement], poses a binding constraint to real economic growth, essential to support the future Palestinian state.”

The report said Area C “is the key to economic cohesion and is the most resource-abundant space in the West Bank holding the majority of the territory’s water, agricultural lands, natural resources and land reserves that provide an economic foundation for growth in key sectors of the economy.”

According to the report, the only way for the PA to get out of its current fiscal crisis – in addition to continued financial support by the international community and reform efforts by the PA – is to significantly ease obstacles on the Palestinian investments in Area C. For example, to build its economy, the report read, the Palestinian private sector needed access to land in Area C.

One Israeli official responded to the World Bank’s conclusions regarding Area C by saying they were as predictable as they were shallow. “Of course they are going to blame the fiscal crisis on Israel,” he said.

He continued, “There is not one word that Hamas took Gaza, depriving the PA of access to the sea. There is no mention that the PA pays salaries to workers in Gaza, but gets not a penny back in tax revenues, or that Qatar and Saudi Arabia are withholding promised millions of dollars because of squabbles with [PA President Mahmoud] Abbas.”

The 1995 Interim Agreement between the PLO and Israel divided the West Bank into three areas of civil and security control.

While Areas A and B fall under various levels of Palestinian control, Israel maintains full control over Area C, which represents some 62 percent of the territory, but is mostly rural and includes only 6% of the Palestinian population.

Israel argues that the final dispensation of Area C was to be dealt with under the accords in final status negotiations, which never happened.

“If the Palestinians want to develop Area C, they need to negotiate,” one official said. “We can’t just say, ‘do what you want there’ – this necessitates security arrangements, agreements on exploiting resources and accords dealing with the transfer of goods, money and people.”

Development of Area C is a political decision that can only be taken within a framework of the political negotiations, the official said. “The World Bank ignores this necessary framework.”

The Foreign Ministry, which will be represented at the meeting taking place on the sidelines of the UN General Assembly meeting by Deputy Foreign Minister Danny Ayalon, released on Wednesday the report it will present to the PA’s donors.

While the World Bank report placed a heavy part of the responsibility for the PA financial crisis on Israeli obstacles to Palestinian development of Area C, the Israeli report said the crisis was caused by the shortfall in donor aid and the PA’s overspending of its 2011 budget.

“The public finance management system’s role in the current crisis may undermine its track record as a system that meets the requirements of a well-functioning state,” the report stated.

The Israeli reports also said that Israel has been forthcoming in Area C, and has approved 328 projects there.

According to the report, some of the projects were submitted by the PA, some sponsored by the international community and some initiated by the Civil Administration.

“Israel welcomes the international community’s support for approved projects in Area C and calls for a coordinated application process through the legal procedures and the Planning Committee,” the report read, giving an understated voice to Israeli frustration at Area C projects being pushed forward by some countries without first obtaining Israeli approval.

The Israeli report also underlined the degree to which the fall of Gaza to Hamas has been a heavy drain on the PA economic condition.

The Gaza Strip is outside of the PA’s reach, the report read.

“Despite this, the Gaza Strip places a significant financial burden on the PA, accounting for more than 50% of the PA’s total expenditures.”

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