x Abu Dhabi, UAETuesday 25 July 2017

IMF: West Bank economy can grow if Israel eases up

The economy could post its strongest performance in years if Israel broadens recent efforts to ease restrictions on Palestinian trade and movement.

RAMALLAH, WEST BANK // The West Bank economy could post its strongest performance in years in 2009, but only if Israel broadens recent efforts to ease restrictions on Palestinian trade and movement, the International Monetary Fund said today, offering a rare upbeat assessment after years of downturn. The growth, projected to be as high as seven per cent, could further stabilise the West Bank, bolster US-led peace efforts and ease the financial burden on the international community.

Donor countries spent some US$1.8bn (Dh6.6bn) in 2008 alone to cover the Palestinian government's deficit, in part to make up for a stagnant economy. Donor countries have also repeatedly urged Israel to scale back a series of restrictions imposed after the outbreak of Israeli-Palestinian fighting in 2000 to restrain militants. They include military checkpoints, a massive West Bank separation barrier, cumbersome inspections of Palestinian cargo at crossings into Israel and Jordan and the two-year closure of the Hamas-ruled Gaza Strip.

In recent weeks, Israel recently eased restrictions, such as removing some major West Bank checkpoints, as part of Prime Minister Benjamin Netanyahu's offer of "economic peace" to the Palestinians. Mr Netanyahu has rejected the idea of full Palestinian independence, along the principles accepted by his predecessor, but said he's ready to help improve quality of life in the West Bank despite security risks.

The Palestinians have said they would not settle for anything less than full statehood. They're also sceptical about Israel's economic promises, noting that ventures worth hundreds of millions of dollars, including plans to build a new city in the West Bank and establish a second cell phone provider, remain on hold because Israel has stalled on key permits. "The Israeli restrictions still pose obstacles to the improvement of the economy," said the Palestinian prime minister Salam Fayyad, an internationally respected economist.

The IMF said today that economic conditions in the West Bank have started to improve. The report cited the easing of Israeli restrictions on internal trade in the West Bank, along with improved Palestinian security performance that has boosted investor confidence. Israel would need to remove the remaining restrictions on trade and movement within the West Bank to raise real GDP growth by as much as seven per cent this year, which would be the first significant increase in Palestinians' standard of living since 2006, the IMF said.

For solid growth to be sustained beyond 2009, trade restrictions between the West Bank and Israel would also need to be eliminated, said the IMF representative in the Palestinian territories, Oussama Kanaan. *AP