(photo credit: AP [file])
Dramatic steps to improve the Palestinian economy are needed to achieve a lasting peace in the Middle East, a report by the British government said on Monday.
A vicious cycle of poverty and unemployment in the Palestinian territories is a key factor for violence and insecurity, said Ed Balls, one of the report's authors and Prime Minister Gordon Brown's most trusted adviser during his 10 years as Treasury chief.
"For the Palestinians, further economic malaise will only increase humanitarian suffering," said the report. "For the Israelis, economic deterioration in (Palestinian territories) can only increase security risks."
The report, "Economic Aspects of Peace in the Middle East," commissioned by Brown in 2005, said despite international aid worth US$10 billion since 1993, the Palestinian people were getting poorer and 65 percent now live below the poverty line.
It calls for an easing of restrictions on the movement of Palestinian people and goods and the removal of barriers to travel within the West Bank.
Balls, now Education Secretary, said the study also recommends a diversification of the Palestinian economy, a reduction in public expenditure and greater private investment.
The report signals a shift in Brown's approach from ex-leader Tony Blair, who focused on promoting engagement between the Palestinians and the Israelis.
Foreign Secretary David Miliband said Britain hoped "giving people an economic stake in their own future we will support the forces of moderation."
In a meeting with Palestinian Authority President Mahmoud Abbas last week, Prime Minister Ehud Olmert proposed lifting some West Bank roadblocks among other concessions ahead of a US-sponsored peace conference in November.
Palestinians say the roadblocks are strangling their economy and severely disrupting daily life. Israel says they are necessary to prevent suicide bombings and other attacks.
Miliband said the UK continued to press for political progress. "But we also need to recognize the importance of economic issues," he said.
But Palestinian officials and charity leaders at the report's unveiling in London described it as unrealistic.
"If they don't tackle the political issues I think the entire exercise is futile," said Manuel Hassassian, the Palestinian Liberation Organization's representative in London.