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
The wall built by Israel winds across the landscape – part of a barrier Israel says ensures its security against suicide bombers but the international court of justice says is illegal and Palestinians decry as a land grab. While Israel’s controls hamstring commerce, they are a boon to the property market.
“Land in Palestine is one of the only safe investments, both because the Oslo agreements made it more scarce and because it has historically never gone down in value,” Abdul Hadi said.
“The same doesn’t apply for real estate, and while value hasn’t dropped, some housing projects are sitting empty, and people haven’t bought them up yet.”
Abdul Hadi’s firm is investing in a members-only executive club and spa with views of the sweeping Mediterranean littoral below, and importing a luxury restaurant from Jordan, but prospects for undertakings that would create a substantial number of jobs and spur growth have dimmed.
Sectors like agriculture, manufacturing, and construction actually contracted in the first quarter of this year, according to preliminary figures from the World Bank.
“The problem is an unfriendly investment environment, caused by the Israeli occupation’s wall and restricted access. It makes investors unsure about putting money into Palestine,” said Mohammed Shtayyeh, a minister in charge of the Palestinian Economic Council for Development and Reconstruction.
Around two-thirds of the West Bank is policed and administered exclusively by Israel, and the Palestinian-run cantons float precariously in an interstice of Israeli settlements, military bases and roads.
But Shtayyeh admits his government also deserves blame.
“The PA is not the owner of the means of production, but it should have encouraged more interest by the private sector and foreign direct investment in developing the productive base here,” he said.