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MIRAGE OR MIRACLE? Why West Bank’s high life should be a cause for concern…
Government spending and living on credit at all levels of Palestinian society is rampant and, as the euro zone crisis has shown, may prove to be the economy's undoing.
July 7, 2012 5:40 by Reuters
Aid for the donor-dependent Palestinian Authority (PA), which exercises limited self-rule in the West Bank under interim peace deals with Israel, has slowed to a trickle.
Salaries for a swollen public sector again cannot be paid in full this month. The productive base for the economy is shrivelling while unemployment climbs along with poverty.
An economic crisis has deepened – growth is down from a peak of 9 percent in 2010 after the lows of the Intifada to 5.4 percent in the first quarter of 2012 from the same 2011 period.
The Palestinian Authority accounts for almost a third of the $3.5 billion in credit given by banks in the Palestinian territories but, with donor aid flagging and revenues down, it is not clear how much longer that can last.
A Palestinian request for a $1 billion loan from the International Monetary Fund was turned down, officials said this week. And foreign aid is waning partly because of global economic conditions and partly in a backlash to the Palestinians’ abortive bid for statehood at the United Nations last fall.
Israeli-Palestinian violence has dropped off dramatically since the end of a 2000-2005 Palestinian uprising. But peace and coveted statehood remain elusive. Negotiations with Israel have been frozen since 2010 amidst bitter misgivings among Palestinians over Jewish settlement building in the West Bank.
LOOKING TO THE LAND
The appeal of property becomes clear by looking out the windows of the stately 10th-floor office of Kareem Abdul Hadi, a manager in Palestine Development and Investment Inc., or PADICO, the biggest privately-owned enterprise in the Palestinian territories and a holding company for everything from swish eateries and luxury hotels to real estate and construction.
Cement highrises surge from the ground in the middle of verdant patches of nothing – “bald spots”, Abdul Hadi dubs them – rendered largely out of bounds to Palestinian administration and construction as per the 1994 Oslo agreements setting out different zones of control in the West Bank.