World Bank: Israel hampering Palestinian economy

Israeli restrictions have inhibited what otherwise would have been substantial progress in the Palestinian economy, the World Bank reported.

In a report released Monday and timed for a meeting of the Ad Hoc Liaison Committee for assistance to the Palestinians, a group of wealthy nations that coordinates economic aid for the Palestinians, the World Bank’s Palestine desk said the Palestinian Authority’s two-year effort to build statehood institutions had made “substantial progress.”

“In areas where government effectiveness matters most – security and justice; revenue and expenditure management; economic development; and service delivery – Palestinian public institutions compare favorably to other countries in the region and beyond,” the report said. “These institutions have played a crucial role in enabling the positive economic growth in the West Bank and Gaza in recent years.”

Confounding the progress in part, it said, were Israeli restrictions.

“Though significant, this growth has been unsustainable, driven primarily by donor aid rather than a rebounding private sector, which remains stifled by Israeli restrictions on access to natural resources and markets,” it said. “Ultimately, in order for the Palestinian Authority to sustain the reform momentum and its achievements in institution-building, remaining Israeli restrictions must be lifted. The resulting revival of the private sector can be expected to grow the tax base and gradually reduce dependence on external assistance.”

Israel says it has removed a substantial number of restrictions on Palestinian access by shutting down many of the inspection points it has throughout the West Bank. It maintains the remainder of checkpoints as well as controls along its border with the Gaza Strip to contain terrorist threats.