Even economic peace requires PA reform

Current donor efforts to prop up the Palestinian economy, while well intentioned and much needed, are no substitute for the internal participatory systems of transparency and accountability.

October 24, 2017 22:28
3 minute read.
A STREET in Ramallah. The Palestinian economy is suffering.

A STREET in Ramallah. The Palestinian economy is suffering.. (photo credit: REUTERS)

The Palestinian economy is struggling. Youth unemployment is as high as 30%; twice that in Gaza. A visit to Ramallah might suggest otherwise with – among other outlets catering to local middle class tastes a Cinnabon recently opened downtown. But with 70% of the population under 30 and jobs the number one concern of Palestinian society, according to a September poll by the Palestinian Center for Policy and Survey Research, appearances are misleading, and the donor community is searching for solutions.

In some quarters, the convenient remedy to Palestinian economic woes, and their potential implications, is the full realization of Palestinian national objectives. Even marginal improvements in access to land, resources and transportation links could have a significant effect on the economy, according to a September 2017 World Bank report. But as a Palestinian private sector participant commented in a recent focus group, “Not all our problems are related to the occupation, some of our problems are more related to the representatives of our society and the decision makers.”

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According to the World Bank, in addition to specific measures by Israel and the donor community that could spur economic growth, there are steps not requiring complementary external actions that the Palestinian Authority (PA) should be taking to tackle unemployment and strengthen the internal foundations for economic development. These include addressing regulatory gaps and licensing challenges in order to boost investor confidence; investment in vocational training to address labor force deficits; and measures to address reversals in institution building and governance. With respect to the latter, the World Bank cited a steady decline since the 2003-2010 period; arguably the last time the donor community prioritized PA internal reform.

While Palestinian leadership may find excuses to ignore the World Bank’s latest recommendations, they cannot easily dismiss them as academic or bureaucratic prescriptions. On the contrary, the bank is merely reflecting the very real concerns and practical demands of a Palestinian private sector all too familiar with internal constraints to economic growth including an opaque policy making process in which the public, not to mention the private sector, is largely absent.

10 years since the elected Palestinian Legislative Council ceased functioning – a decade during which rule by presidential decree became the norm – Palestinians find themselves today without domestic channels for policy input and few, if any, checks on the PA executive. The general public today fears speaking out, according to the PCPSR poll; is concerned about overall civil liberties; and perceives PA institutions as corrupt. The private sector view of the prevailing situation in the PA is no more favorable. “All of the civil and governmental institutions make life harder for businessmen, and they treat us all as if we’re thieves,” another focus group participant lamented.

Excluded from internal economic policy debate and perceiving themselves as merely a source of extraction for the PA (“the only thing they’re good at is chipping money away through VAT”), the result is a Palestinian private sector – most notably its small and medium sized enterprises – both hesitant and constrained in fulfilling the role envisioned by donors in underpinning peace, and demanded by staggering local unemployment statistics.

While World Bank reporting has provided a valuable vehicle for Palestinian private sector input into how the donor community can best support local economic development, such efforts have had little leverage over actual decision making in the PA. In much the same way, Palestinian public opinion polling provides the public periodic opportunities to voice its concerns and frustrations, but ultimately has proven ineffective in keeping the PA’s authoritarian tendencies in check over the past decade.

At the end of the day, current donor efforts to prop up the Palestinian economy, while well intentioned and much needed, are no substitute for the internal participatory systems of transparency and accountability that the private sector – as well as the general public – seeks, which sustainable Palestinian economic growth demands and the donor community needs to once again prioritize if longer-term goals are to be achieved.

The author is a project management consultant who has overseen numerous survey research initiatives in the West Bank and Gaza, including a summer 2017 focus group study. Previously, he served as senior adviser in the US State Department’s Middle East Partnership Initiative.

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