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Good News and Bad News

Gaza : Palestine | Sep 19, 2010 at 7:12 AM PDT
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Palestinian optimism _ in Gaza,  West Bank

Tired of hearing bad news from the Palestinian territories?

If so consider this: in the first quarter of 2010 the economy of the occupied West Bank and the Gaza Strip grew at an astonishing 11.5% compared to the same quarter the year before.

Broken down, real GDP growth in the Gaza Strip stood at a whopping 15% while the West Bank enjoyed a slightly more modest 10% increase.

These are just some of the pretty impressive sounding numbers contained in a new World Bank report on the Palestinian economy being released next week for a donor’s conference in New York.

In addition to signs of continued economic growth, fewer Israeli restrictions, and increased investor confidence the study, in part, credits the reform measures taken by the Palestinian Authority for the seemingly rosy economic news.

“These include increased efficiency of the social safety net system that is now one of the most advanced in the region, improved fiscal standing through greater revenue collections and a decrease in recurrent expenditures and an improved security situation in the West Bank” said World Bank vice-president Shamshad Akhtar.

But before you break open the champagne let’s briefly consider the bad news.The Palestinian economy is nowhere near being ready to stand on its own two feet.

The vast majority of that impressive growth, says the World Bank, has been driven by financial aid from donor countries and while there has been a slight increase in the amount of private investment the report indicates that it “remains well below what is needed to replace donor aid as the main source of growth”

To get the Palestinian territories off the life support system of donor aid, the reports says, will require the Israeli government to lift many more of the economic and security restrictions it now keeps in place including allowing exports out of Gaza, permitting Palestinian access to more of their land and water in the West Bank, and allowing for a greater and freer flow of raw materials into both territories.

Unless these and other measures are taken in addition to continued Palestinian reforms the World Bank report concludes, “The Palestinian Authority will remain donor dependent and its institutions, no matter how robust, will not be able to underpin a viable state.”

These are pretty sobering words that underscore the caution needed in reading too much into the economic good news from the West Bank and the Gaza Strip.

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Aun Muhammad is based in Lahore, Punjab, Pakistan, and is an Anchor for Allvoices.
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