At last there is good news coming out of Palestine and, while there is still a long way to go, positive signs that real change is taking place. Confidence and investment flows are increasing. The economy has recorded impressive GDP growth, reaching an estimated 7% in 2012, rising to 10% in 2013. In this special report researched and written by Neil Ford, Pat Lancaster, Larry Luxner and Pamela Ann Smith, we look at how and where Palestine is getting the cooperation it needs and so richly deserves.
WHATEVER THE STATE OF 'PEACE talks' to end the Israeli occupation and create an independent Palestinian state, the coming months and years are likely to see a renewed focus on the private sector economy in the West Bank, Gaza and East Jerusalem. Investment-from Palestinians in the diaspora, private Arab funds and foreign corporations, as well as from important 'donors,' such as the World Bank, the US Overseas Private Investment Corporation (OPIC), the UK, the European Union, Japan and Canada--is increasing, reflecting the sector's remarkable resilience in the past few years, and its huge potential in the medium-term. Expanding and developing it further is now also seen as crucial to stemming unemployment, particularly among the youth in Palestine, and to making the economy less dependent on Israel and foreign aid.
The latest boost of confidence came from the World Bank and its affiliate, the International Finance Corporation (IFC), in Washington, which announced a $55 million programme in July to diversify trade, increase exports, promote small- and medium-sized businesses (SMEs) and develop 'high-value' services. Neglected areas, such as agriculture and manufacturing industries, are also to be emphasised to help rebalance an economy which has seen the main growth come from real estate, construction, public services, tourism and trade with Israel.
"While Israeli restrictions in the Occupied Territories of Palestine remain the biggest impediment to investing, and most growth comes from donor-funded government spending, there are still positive actions that the Palestinian Authority can take now, that will both lay the ground work for a sustainable economy and contribute to growth today and in the future," commented Mariam Sherman, the World Bank's country director for the Territories. "There are numerous committed businesses active in the market, but much more needs to be done to support their growth and the entry and prosperity of more businesses."
"Private-sector development is one of the focal sectors the EU has set for 2012 in an effort to promote a sustainable, job-creating economic environment," John Gatt-Rutter, the EU's Representative, said in Ramallah in February as the EU launched its new Trade Diversification and Competitiveness Enhancement Programme. "A comprehensive package will be implemented to support the private sector in reaching new markets and developing marketing strategies. Businesses in the services sector," he added, "will be targeted mainly through advice and technical support...