Palestine: World Bank Hands Out Urgent Political and Economic Advice

According to a World Bank report, to be released on Monday, the Palestinian Authority is heading for an “acute fiscal crisis” due to lower economic growth and a drop in aid money. Although the “Palestinian public institutions compare favorably with other countries in the region" in areas such as security, justice, economic development and service delivery, the report continues:

Economic growth in [the West Bank and Gaza Strip] has slowed down in 2011, and together with the shortfall in external funding, this has led to a fiscal crisis for the Palestinian Authority.

The report predicts that the Palestinian economy will grow by 7% this year, down from 9% in 2010 and adds:

The 2011 budget called for external budget support of $967m based on assumptions of strong growth … In the first half of the year the PA only received $293m.

So, what are the messages wanted to be delivered now? There are three messages.

The first message is to the State of Israel:

Ultimately, in order for the Palestinian Authority to sustain the reform momentum and its achievements in institution-building, remaining Israeli restrictions must be lifted.

Mariam J. Sherman, World Bank country director for the West Bank and Gaza Strip, blamed "the closure regime" for difficulties and said in a statement: 

Ultimately, sustaining the PA's reform momentum and maintaining its achievements in institution-building is dependent on the revival of the private sector.

The second message is to donors, especially the European Union and the United States, as the Bank calls on international leaders to take an urgent steps before it is too late for Palestinian stability

The last and clearest message is to Ramallah:

If the PA maintains its performance in institution-building and delivery of public services, it is well-positioned for the establishment of a state at any point in the near future.

So, clear advice to Ramallah not to insist on the UN vote on statehood, in the face of the resistance from Washington: with continuing, sustainable advances in its economy, the West Bank is an excellent candidate to become a state. In the meantime, there are steps to be taken: donations, an easing of Israeli restrictions, and a Palestinian Authority focused on institution-building. And the negotiating table is the "best" way of achieving the sustainable economy as well as political settlement.