Wednesday, July 23, 2008

Don't waste the money

Since they are unable to substantively advance a diplomatic arrangement that will end the prolonged conflict in this region, visiting leaders have developed the habit of comforting the Palestinians with financial aid while compensating the Israelis by recognizing their right to live in security and comfort. They add a rebuke about Israel's settlement policy and season it with a call to remove most of the roadblocks. For the most part, their subsequent visits are characterized by meetings with more unemployed Palestinians and visits to additional roadblocks and outposts. And so, with each consecutive visit, the strength of the Palestinian Authority, under the leadership of Mahmoud Abbas and Salam Fayyad, wanes, while the public standing of Hamas increases. There is no better illustration of the international community's lack of effectiveness in the violent and poverty-stricken Middle East.

Yesterday it was the turn of British Prime Minister Gordon Brown to contribute to this depressing ritual. At a joint press conference with Abbas in Bethlehem, the visitor announced that his government would increase its financial aid to the PA. But Brown did not make do with that. At a meeting with President Shimon Peres, he announced his intention of initiating an "economic road map" for the Middle East, which would benefit regional development and stability. He further added that British companies were interested in participating in the establishment of joint industrial areas for Israel and the PA, in developing small- and medium-sized businesses and in assisting in finding housing solutions for the Palestinian population in the West Bank. Amid all of this, Brown also called on Israel to cease construction in the settlements, stressed his support for Israel's right to live in peace and security, and recommended implementing a more flexible policy with regard to crossings and roadblocks.

World Bank economists can tell Brown that companies and serious investors are in no hurry to set up businesses in areas where the free crossing of goods and people is merely wishful thinking. The restrictions on the West Bank increase the costs of business transactions and result in uncertainty and inefficiency. According to World Bank data, published at last September's gathering of the PA donor countries, the donations of almost half a billion dollars in the first half of 2007 did not halt the Palestinian economy's decline.

World Bank economists warned that without a long-term economic plan, these contributions would not spur real growth. One of their more salient proposals was to implement, as soon as possible, the agreement Israel signed in 2005 to ease the passage of goods and people in the West Bank and to enable exporting goods from the Gaza Strip. The bank's May 2005 report claimed that blocking the access to some 50 percent of the West Bank had a detrimental effect on the Palestinian economy's ability to overcome the crisis.

As long as the West Bank is dissected by innumerable roadblocks and closures, there is not much value in festive declarations about an "economic road map." Worse than that - the reports about hundreds of millions of dollars that make their way into the PA's coffers increase the alienation between the political elite and PA staffers, who benefit from the donations, and the general public that spends its days at the roadblocks.

By Haaretz.com Editorial