Fayyad says Palestinian institutions ready for statehood

The Palestinian Authority prime minister says good government is prerequisite for independence, thriving economy.

By DAVID ROSENBERG/THE MEDIA LINE
April 5, 2011 18:51
4 minute read.
PA Prime Minister Salam Fayyad

PA PM Fayyad speaking (R) 311. (photo credit: Reuters)

 
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RAMALLAH -- Palestinian Authority Prime Minster Salam Fayyad said on Tuesday he is confident his government will have the institutional framework in place by the end of the summer necessary to win global support for an independent Palestinian state.

“It is our goal and our expectation that as a result of what we are doing – getting ready for statehood, developing institutions that delivery services competently and [developing] core values – that our state of Palestine will be founded,” Fayyad said. “I am very happy to tell you that in many areas of governance we are already there.”

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Fayyad has been cracking down on corruption and inefficiency as part of a two-year-old campaign to gain recognition for a Palestinians state from the United Nations General Assembly, probably in September. Israel is opposed to the plan, saying a state should be achieved through negotiations, even though they have been deadlocked for months.

Fayyad said the PA’s economic bodies, including the Palestine Monetary Authority and Central Bureau of Statistics (CBS), were already up to the standards he had set. He cited the Palestinian CBS for special praise, saying it was close to meeting the International Monetary Fund’s (IMF’s) highest benchmarks.

While he jokingly conceded that improvements at the statistics bureau didn’t excite his fellow politicians, Fayyad said it served as a barometer for how well other branches of the government were functioning because it was able to gather information from them in an accurate and timely manner.

"The fact that we have in this areas such high and exacting standards means that other institutions in the PA have matured enough to commit to those standards,” Fayyad said.

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In contrast to most Palestinian leaders, Fayyad spent much of his adult life in the West, getting a doctorate in economics from the University of Texas and enjoying a career at the World Bank and IMF. Since taking over a barely functioning administration four years ago, Fayyad has deployed a Western-trained security force to restore law and order and spent billions of dollars in foreign aid to build infrastructure and boost the economy.

Palestinian statehood has been recognized by Brazil, Argentina, Chile and other Latin American countries. France, Norway, Spain, and Portugal have upgraded local Palestinian representations. But Fayyad said that creating corruption-free institutions is as important as winning international support for a Palestinian state regarded as worthy of joining the community of nations.

Speaking at a venture capital conference in the West Bank city of Ramallah, Fayyad said he was anxious to wean the PA off foreign assistance both as part of the statehood drive and to encourage foreign investment. As well as good government and functioning legal system that can enforce contracts, investors want the government to show sustainable budgets, he said.

The PA has budgeted for $970 million in donor aid for 2011, down from $1.8 billion in 2008. He predicted that by 2013, the PA would have “graduated” from the need for any more assistance.

The prime minster said improving fiscal situation came hand in hand with the gradual recovery of the Palestinian economy from the years of the second Intifada in 2000-2005 when the economy contracted. The Palestinian Central Bureau of Statistics said March 23 that gross domestic product grew a preliminary 9.3% in 2010.

But the growth isn’t enough to create jobs for the 45,000 Palestinians who enter the labor market every year, he said. In the West Bank, the unemployment rate is probably above 15% and in the Gaza Strip it is more than twice that. Fayyad said attracting private sector investment was the only solution, especially as the fiscal stimulus of foreign assistance declines.

Fayyad said the next challenges facing the PA toward creating as full-fledged state and thriving economy were to bring an end to the Israeli occupation and to reunite the West Bank with the Gaza Strip, which was seized by the Hamas movement in 2007. Hamas refuses to recognize the government of Fayyad and President Mahmoud Abbas and talks to re-form a brief national unity government between the two have failed.

“We have to get our country reunited. It is absolutely essential for us to do so,” Fayyad said.

The prime minister also said high technology and telecommunications were an important growth driver for the Palestinians that was less sensitive to roadblocks than other industries.

The $29 million Sadara Ventures/Middle East Venture Capital Fund launched on Tuesday will invest in Palestinian internet and mobile start-ups. While Palestinian IT companies have combined sales of about $300 million, it is mostly geared to information technology services. Sadara’s partners said they hoped to break new ground by fostering the growth of new companies developing their own technology for global markets.

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