(MENAFN - Arab News) Economic growth in the Palestinian territories is a product of international financial aid and not driven by sustainable domestic growth, the World Bank has claimed.
A report issued late last week by the global financial institution argued that the expected 8 percent growth in the West Bank and Gaza for 2010 can largely be attributed to external financial aid and a donor-dependent economy.
The World Bank also announced the approval of a 40 million grant to the Palestinian Authority, bringing its total support of the PA's Reform and Development Plan, which focuses on state-building, to 120 million.
The financial group said that private investment in the Palestinian territories continues to be hampered by Israeli imposed restrictions on movement of people and goods. Nontheless, the report said, the Palestinian Authority is "well-positioned to establish a state" as the government has succeeded in developing state institutions.
"Actions can and should be taken to remove the remaining obstacles to Palestinian private sector development," Miriam Sherman, World Bank country director for the West Bank and Gaza, said in a statement. "Without these (actions), economic growth will not be sustainable growth, the Palestinian Authority will remain donor dependant, and its institutions - no matter how robust - will be unable to underpin a viable state."
The report outlined a series of Israeli restrictions on the Palestinian economy, including the prohibition on exports from Gaza, the curtailing of access to West Bank land and water resources and the inability of investors to freely enter Israel, the West Bank and Gaza. The report also cited Israel's banning of "dual-use" (civilian and military) raw materials, essential for the productive sectors of the Palestinian economy.
The Israeli government tried to deflect some of the blame directed at it by the World Bank in a report issued last week, underscoring the measures taken by Israel to improve the Palestinian economy.
The Israeli report, issued ahead of the Ad Hoc Liaison Committee (AHLC) donor meeting this Tuesday in New York, cited the removal of 409 roadblocks in the West Bank since April 2008, a 50 percent increase in Israeli entry permits issued to Palestinians and the new government policy of easing imports into the Gaza Strip, adopted by Israel on June 20.
According to the report, Israel undertook these measures "in spite of continued security threats, and due to Israel's desire to ease the movement and access of Palestinian civilians on the ground."
The AHLC in April renewed its pledge to assist Palestinian Prime Minister Salam Fayyad's two-year state-building program, entitled "Palestine: Ending the Occupation, Establishing the State" and first presented in August 2009.
Fayyad's plan focuses on improving Palestinian institutional performance, public service delivery, quality of life and economic prosperity.
By David E. Miller