Palestinians can now add withering stagflation to a contracting economy.
Property boom taking shape in Ramallah
With property prices tumbling from New York to Dubai, it's interesting to know there is at least one place where property is actually rising in value. Pack your bags for Ramallah, the emerging city-state of Palestine. So effective has Israel been at garroting the West Bank economy that working-age Palestinians are emigrating to Ramallah from places like Jericho, Nablus, Bethlehem and Jenin to look for jobs. Property prices are rising accordingly in a region already plagued by rising inflation, unemployment and a Palestinian Authority (PA) that has been rendered by occupation and its own incompetence as unfit to govern. Together with a contracting economy, the Palestinians can now add withering stagflation to their lot.
Of course, no one following the US presidential campaign would have the slightest clue about the deteriorating situation in Palestine. If candidates John McCain and Barack Obama agree on anything, it is to avoid any reference to Israeli-Palestinian affairs beyond Pavlovian declarations of fealty to the Jewish state. And even if they did, they would probably cite a September study from the Israeli ministry of foreign affairs that reports the Palestinian economy actually improved during the first half of this year.
According to the report - which identifies the West Bank as "Judea and Samaria" and doesn't even bother with Hamas-controlled Gaza - employment, wages, tourism and the number of work permits issued by the Israeli government to Palestinian labourers are all up, while the Israeli Defence Force has removed a hundred road blocks. Even the PA is talking up the economy, citing last May's business conference in Bethlehem, which attracted 1,500 investors.
But while you can lead a horse to water - assuming you can get the required travel permits and negotiate the thicket of checkpoints and barriers surrounding it - you can't make it drink. Sam Bahour, a business consultant and West Bank resident who has done graduate work on Israeli-Palestinian economic relations, says the economy is as bad as ever. "As politicians talk peace, people on the ground are seeing the same old thing, particularly with the settler movement," he says from Ramallah by phone. "The Israeli government is allowing more settler violence and the Palestinian Authority has been reduced to the role of a postman, delivering permit requests from occupied to occupier, whether for travel, building, or exporting and importing."
While the PA is heralding a second investor conference scheduled for Nov 22 in Nablus, it is unlikely to generate anything more substantial than the Bethlehem confab, which yielded little in the way of new projects. There are good reasons for this, and they are quantified in an understated but devastating World Bank report issued last week. In the parts of the West Bank controlled by Israel - known as "Area C" - "recurrent destruction of trees, private homes and public infrastructure, as well as settlers' encroachments on private land create a permanent state of insecurity that deters investment", according to the report.
Outside Area C - beyond those Palestinian-controlled towns and cities quarantined by Israel's security wall - residents are beholden to their occupiers for building permits that are "rare and difficult to obtain, with only a handful approved annually for the past several years". Meanwhile, the report goes on, "unlicensed construction continues due to the needs of an expanding population, despite a demolition rate that far exceeds building approvals by the Israeli authorities". As a result, land is becoming prohibitively expensive, even as residential development crowds out other economic activities on what little land is available.
Unlike the Israeli government report, which includes no macroeconomic data, the World Bank lays out the sobering truth: since 2000, Palestinian GDP and per capita GDP have contracted respectively by 14 per cent and 40 per cent, and poverty is on the rise. The report's summary recommendation is equally stark. As long as Palestinians are bottled up like worker ants in colonies of urban areas, "the investment climate will remain unfavourable and business opportunities much below potential".
The Israeli study is also contradicted by the most recent biweekly UN report on traffic flows through the choke points of Gaza and the West Bank, which cites a levelling out in the number of barriers to movement in the West Bank, but no measurable reduction. Since the Agreement on Movement and Access was signed between the two sides almost exactly three years ago, the report notes, the number of Israeli-imposed obstacles to mobility in the West Bank has increased by 62 per cent.
While politicians and bureaucrats worldwide lament the global financial crisis, it is worth noting that the Palestinians have for decades endured conditions that would make anyone old enough to remember the Great Depression nostalgic for it. email@example.com