Making the Palestinian economy and civil society function are key steps toward statehood. A current snapshot shows very mixed results, though continued border checks by Israeli are blamed for choking back progress.
RAMALLAH - The offices of the Palestinian Ministry of Planning, in Ramallah's upscale Al-Masyoun neighborhood, were all abuzz last week. The civil servants on staff were just finishing a much anticipated report due to be submitted at the end of September, just in time for the meeting in New York of the United Nations general assembly.
The report is an assessment of what is known as the Fayyad plan, named after the Palestinian Prime Minister, Salam Fayyad. This middle-aged man is well-liked by Western government leaders, who never miss the opportunity to praise his talents and integrity. In August 2009, Fayyad had announced that he would give himself two years to build the foundations of a legitimate nation, which could then be promptly proclaimed to the international community.
"The main message of this report is that we are ready to run our own country," explains Bashar Jumaa, a senior executive at the Ministry of Planning. "We follow the lines of the reports made by the World Bank and the International Monetary Fund, which have acknowledged that the Palestinian Authority made progress and which have concluded that we deserve to have a real State."
The text's submission is supposed to match the diplomatic push being made by the Palestinian leadership, which wants the UN to review and upgrade Palestine's status from simple observer to a full member-state status. There is no doubt that President Mahmoud Abbas will brandish the report so as to win support from most countries. "We've been ready for decades now," explains Bashar Jumaa. "Our misfortune, as Palestinians, is that we have to prove it. We are not as lucky as the Southern Sudanese whose state has been recognized by the international community last July just after they proclaimed it."
The Palestinian Authority is particularly proud of its progress in the area of governance. The public deficit has dropped from 29% of gross domestic product (GDP) in 2007 to 16% last year, resorting to tough incentive measures in the payment of water and electricity bills, as well as improved tax collection that has increased revenue by 50% between 2009 and 2010.
Last spring, a French diplomat claimed that "to have such results in such a short time was unprecedented, particularly for a non-State. The Israelis' arguments according to which Palestinian people are either terrorists or corrupt or incompetent are not valid anymore. Fayyad has laid the foundations for a real State."
Israeli checkpoints choke growth
However, those measures were not enough to stabilize the budget of the Palestinian regime, which faces a significant deficit. In July, employees only received half of their salary because of a delay in the payment of promised financial assistance.
Economic performance is also disappointing. It was supposed to be the main strong suit of Salam Fayyad, who used to work at the IMF. According to a recent report made by the United Nations Relief and Works Agency for Palestine Refugees (UNRWA), the standard of living in the West Bank had dropped at the end of 2010, while unemployment was rising from 23.5 to 25%.
According to the World Bank, the building and investment frenzy in Ramallah, as well as the GDP's 8 to 9% growth rate, confirmed these past two years by the World Bank itself, don't really reflect the actual state of development, which is still choked by the continued strain of Israeli checkpoints. Instead, it is more a reflection of the growth of aid from the international community.
Such assistance exceeded $7 billion between 2008 and 2010, which corresponds to the world's highest allocation per inhabitant after the one granted to the tiny republics of the Pacific Ocean such as Palau and the Marshall Islands. "In a country that nearly has no control over its economic resources, whether it's earth, air, water, or borders, it is complete nonsense to talk about development," admits Sam Bahour, a management consultant.
When it comes to the country's institutions, despite visible progress in terms of transparency, Salam Fayyad's efforts were never truly made a reality. Even if the European Union invested tens of millions of dollars in the creation of Palestinian custom officers, the Jewish State still refuses them to deploy to the Allenby Bridge border between the West Bank and Jordan, like they did in the 1990's.
"On paper, we've achieved many things and we've trained ourselves to be as perfectly operational as any other state, but the problem is that Israel won't give us the space to put our skills into practice," says Hatem Yousef, the Palestinian Prime Minister's economic adviser.
"Building a state in Palestine is a virtual experiment," adds a foreign expert. "No matter how hard you try, reality always threatens to crush your efforts."
The continuing cleavage between Hamas, which controls the Gaza Strip, and Fatah, which runs the West Bank, has undermined the implementation of the Fayyad plan. In the absence of a working Parliament, dozens of laws were not passed, hindering the modernizing task undertaken by the prime minister, especially in the justice department.
In parallel, by associating security reform, one of his big projects, with anti-Islamism, and by turning a blind eye on the abuses made by his pro-Fatah police officers, Fayyad greatly contributed to the maintaining of the intra-Palestinian divide. "We often feel like the efforts we make end up protecting Israel rather than helping our own people," criticizes Azem Kawasmeh, a popular citizen leader.
In an article published last June, the American academic Nathan Brown, who knows the Palestinian political system very well, concluded on a half-satisfying note: "Western countries have always had high expectations of Salam Fayyad. Unfortunately, he's never been really able to meet them." As talented as he is, Fayyad can only aspire to be the prime minister of an "artificial" State.
Read the original article in French
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