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JERUSALEM: Even in the absence of an Israeli-Palestinian peace deal, steps can be taken now that could significantly brighten a gloomy Palestinian economic situation, according to the World Bank (WB).
In a new report, the WB said addressing external constraints on the Palestinian economy 鈥渋s the most important factor鈥� in any turnaround, but the Palestinian Authority, which administers limited self-rule in the occupied West Bank, also had to do its part to cut red tape stifling business activity.
Removing Israeli restrictions on Palestinian movement in so-called Area C in the occupied West Bank 鈥� where Israel maintains civil and security control 鈥� could boost the size of the West Bank economy by one-third in eight years, the WB said.
鈥淪uch growth would not only be enabled by better access to critical scarce resources, notably land and water, but also other natural resources that would allow Palestinian businesses to take advantage of Area C鈥檚 comparative advantages in agriculture, mining and quarrying, and tourism,鈥� it said.
Area C, designated by interim peace deals signed in the 1990s, represents 61 percent of West Bank territory, and Israel cites security concerns for the restrictions it imposes there.
According to the WB, currently less than 1 percent of Area C, which is already built up, is designated by the Israeli authorities for Palestinian use, while the remainder is heavily restricted or off-limits to Palestinians.
The report noted recent 鈥渆ncouraging but limited measures鈥� announced by Israel to allow a Palestinian industrial zone and the municipal boundaries of the Palestinian city of Qalqilya to expand into Area C.
As for the Hamas-run Gaza Strip, where Israel and Egypt maintain tight border restrictions, alleviating restrictions on the movement of goods and people would allow critical trade to rebuild the territory鈥檚 infrastructure and economy following the 2014 war.
Drop in donor aid
Conflict in Gaza and a drop in foreign donor aid combined to slow real average annual gross domestic product (GDP) growth in the West Bank and Gaza Strip to 2 percent between 2013 and 2016. It dropped to 0.7 percent in the first quarter of 2017, the World Bank said.
鈥淯nder a baseline scenario which assumes that the current Israeli restrictions remain in place and no improvement in the domestic economic and political environment, real GDP growth of the Palestinian economy is projected to reach 3 percent in 2017: 2.7 percent in the West Bank and 4 percent in Gaza,鈥� the report added.
鈥淭his growth level implies a near stagnation in real per capita income and an increase in unemployment.鈥�
Based on second quarter 2017 figures cited by the bank, employment in the West Bank, home to some 2.6 million people, is at 21 percent, and 44 percent in the Gaza Strip, which has a population of 2 million.