UK publishes report on Palestinian economy

Report identifyies the necessary conditions for economic progress in the Palestinian Territories as a prerequisite to an independent state.

September 20, 2007 11:14
3 minute read.
UK publishes report on Palestinian economy

uk economic conf 224 88. (photo credit: Courtesy)


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The UK government published a report this week identifying the necessary conditions for economic progress in the Palestinian Territories with the rationale that a viable Palestinian state, living in peace and security with Israel, requires a sustainable Palestinian economy. "Economic Aspects of Peace in the Middle East" was presented by the Foreign Office in Parliament on Monday. The Foreign Office said the government was committed to pushing forward economic development and assistance to the Palestinians to help create the conditions for a two-state solution. "The starting point of the British government's approach is clear, there can be no lasting solution without security for Israel and a just settlement for the Palestinians," Foreign Secretary David Miliband said. "So the UK is unstinting in its support for the principle of a two-state solution. We are determined to support all those in the region who are committed to peaceful progress towards this goal." The 56-page report, which was commissioned by the government in September 2005, emphasizes the importance of economics in conflict resolution. "History has shown that the political, security and economic aspects of conflict are interlinked," Miliband said. "By giving people an economic stake in their own future we will support the forces of moderation. Those of us from outside the region must tread with some humility. Outsiders cannot, in the end, substitute for local leadership and reconciliation. But we can and must offer practical support. It is in that spirit that the British Government is launching this report." In the foreword of the report, Prime Minister Gordon Brown said: "I retain my strong belief that political progress needs to be firmly supported by economic growth. As I have learnt from the dramatic changes seen over recent years in Northern Ireland, by providing moderates with a material stake in their own future, we increase the cost of returning to conflict. This will help initiate a virtuous cycle of progress, with ever-increasing prosperity leading towards greater security for Palestinians and Israelis alike." The report sets out five key five building blocks needed for sustainable economic progress in the territories:

  • The economy needs to be stabilized by reducing public expenditure, specifically the public wage bill, which, it suggests, could be temporarily underpinned by donor-funded employment and investment programs.
  • A stable relationship needs to be established between the Palestinian and Israeli economies to provide a reliable framework for private sector growth.
  • The right balance between short-term security and allowing for movement and access must be found.
  • The Palestinian economy must diversify its trade links and improve its access to global markets.
  • The private sector needs to be supported by enhancing the investment climate. "This report is an important contribution to our understanding of the economic challenges involved in advancing peace and stability in the Middle East," Secretary of State for International Development Douglas Alexander said. "It recognizes the need for the easing restrictions on the movement of Palestinian people and goods. Israel and the PA need to act urgently to fulfill their obligations in order to achieve this." Secretary of State for Children, Schools and Families Ed Balls said: "Bringing prosperity to the Palestinians and security to the Israelis is critical to the stability of the region and the world. We need to build a dividend of peace that will itself entrench that peace and create a new prosperity that would make a return to past conflicts all the more costly." He said the Palestinians must have an economic relationship with Israel but the Palestinian economy must diversify and reduce its dependence on Israel. "But given the historic links between Israel and the Palestinian territories, there is no medium-term solution to Israeli security without a Palestinian economic relationship with Israel," Balls said. "We have tried to identify the key economic building blocks which have to arrest further deterioration and set out a detailed economic road map to what must be our goal, a vibrant Palestinian economy trading with its neighbors, region and world and providing employment and prosperity for all its citizens." Jon Cunliffe, Brown's advisor on international economic affairs, said: "The high, and noticeably increasing, levels of poverty, unemployment and instability that Ed [Balls] and I have seen on our four fact-finding trips to the region convince me that there can be no sustainable peace without economic growth and the growth in employment that is necessary to give the Palestinian people a real stake in their future."

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