Massive aid to the Palestinians can slow economic decline, but won't revive their private sector sufficiently to gradually ease their need for external support, the World Bank said Thursday, challenging assumptions that have long guided donor countries.
The Palestinian economy has considerable potential for growth, the bank said in a report. However, development continues to be stymied by Israeli restrictions on Palestinian trade and movement in the West Bank and the growing isolation of the Hamas-run Gaza Strip, the bank said.
As a result, Palestinians are becoming more, not less, dependent on foreign aid, the report said.
"In this policy environment and pending a political resolution to the conflict, aid should be recognized for what it is - more of a stabilizing measure, slowing down socio-economic decline, than a catalyst for sustainable economic development," the report said.