Palestinian Economy Is Teetering On Brink of Collapse, Study Finds
By: Danny Rubinstein posted on Tuesday, Oct 30, 2012
Last
Saturday [Oct. 13], I visited a folk festival in the [West Bank
Palestinian] Christian village of Taybeh, east of Ramallah — not to be
confused with the Arab city [of Tayibeh] within the Green Line. The
village of Taybeh is known primarily thanks to the beer-producing Taybeh
Brewery, which is marketing to Israel as well and is quite popular in
some of the pubs in the country. [As said,] the village of Taybeh should
not be confused with the Arab city by the similar name located within
the Green Line.
The
Palestinian Police were present on the scene, to maintain law and order
during the various events of the festival. A police sergeant standing
next to me complained that he and his colleagues had not yet received
their September wages, although it was already almost mid-October. He is
28 years old, a native of a village in the environs of [the Palestinian
town of] Jenin; he is married and has two children. He is serving in
Ramallah and lives in a tiny rented apartment in the [Ramallah] suburb
of Bitunya. He earns 2,500 shekels [just about $660] per month. The rent
costs him 800 shekels [around $211] a month and he has to make do with
what's left to meet his family's basic subsistence needs. After some
more small talk, he feels that he can trust me and embarks on a tirade
against the Palestinian [Authority] seniors who, he charges, are
stealing the money [of the hard-working poor], leaving him and his
fellow men practically nothing. You can hear talk like that on every
street corner in the West Bank.
The [Palestinian] public-sector employees account for [more than] a quarter of the Palestinian purchasing power
For
the best part of the past 16 months, the Palestinian Authority failed
to pay on time the wages of more than its 200,000 public-sector
employees. The delays in salary payments are caused by delays in the
transfer [to the Palestinian Authority] of emergency aid funds and
Palestinian tax revenues collected by Israel on behalf of the
Palestinian Authority. The economic implications of the situation are
far-reaching and disastrous, argues economist Yitzhak Gal in a report
prepared by him for the monthly e-newsletter Iqtisadi (September issue,
published by the Tel Aviv University Moshe Dayan Center for Middle
Eastern and African Studies [under the heading "The Palestinian Economic
Crisis: A Loud Wake-Up Call"]). The situation is liable to have
dangerous [social and political] consequences due to the fact that the
Palestinian public-sector employees, including the security
establishment personnel, account for [well] over a quarter of the
Palestinian purchasing power. Their low salaries are a mainstay of
economic and social stability in the West Bank. “As these salaries have
not been paid on time and in full,” the report explains, "the economic
security of the public-sector employees is undermined “and the shock
waves spread to the West Bank society at large.” Furthermore, [many of]
these public-sector employees are unable to meet bank loan repayments
and the devastating effect is felt throughout the financial system.
The purported economic growth has been nothing but a fleeting mirage
Wage
levels in the Palestinian territories are evaluated with reference to
the purchasing power and standard of living of the local inhabitants.
The close ties with the Israeli market are reflected in similar price
levels in the West Bank and Israel, in particular when it comes to the
price levels of fuel, communication services and a whole array of basic
food products. [Since wages in the Palestinian territories are much
lower than in Israel,] the real purchasing power of Palestinian
households is much lower than that recorded in Israel. Comparisons of
related international data conducted by Gal show that the Palestinian
GDP [gross domestic product] per capita [when adjusted to local
purchasing power] is far lower than that of neighboring Arab counties,
and is only slightly higher than that of the poorest countries in the
region. In other words, the Palestinians' standard of living and poverty
level are similar to those found in countries like Sudan or Yemen. In
view of these findings, the report warns that the economic crisis in the
Palestinian Authority is “A Loud Wake-Up Call.”
The
economic growth witnessed in the territories since the Second Intifada
waned [in 2004] has been nothing but a fleeting mirage, as it followed a
deep recession and was exclusively based on international aid funds.
However, in recent years the external financial support to the
Palestinian Authority has been on the decline, which has further
undermined the ailing Palestinian economy, aggravating its structural
weakness, that is, the huge gap between the massive imports and the
meager exports. As a consequence, the economic crisis [in the
Palestinian Authority] is liable to deepen even more and, combined with
the political impasse, it may put the economic and social stability of
the Palestinian Authority at a risk and threaten its leadership with
chaos. As the crisis unfolds, it may well develop into an uncontrollable
wave of violent protests and drag Israeli –Palestinian relations back
to the all too familiar vicious circle of violent confrontations,
terror, stricter Israeli restrictions [on movement and access] and other
penalization measures imposed by the Israeli regime, which would
further deepen Palestinian destitution and despair and could trigger an
even more violent round of hostilities.
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