Haaretz (Editorial)
December 18, 2007 - 12:35pm

When Foreign Minister Tzipi Livni declared in Paris on Sunday that "a developed Palestinian economy is in Israel's interest," we can assume that she meant that it is also in the interest of the Palestinians. After all, it is for the Palestinian, not the Israeli interest that more than 90 representatives of states and organizations gathered in order to express their willingness to contribute to the economic development of Palestine.

This is an important international expression of confidence in the government of Salam Fayyad. Its practical expression is the commitment of the European Union and of the United States to contribute more than $1 billion out of the $5.6 billion the Palestinian Authority is looking to raise. Hopefully the rest of the contributing nations, and in particular the Arab states, will manage to rally the remaining sum that is so necessary for the transformation of the failed Palestinian economy into an appropriate economic infrastructure of a future state.

The Fayyad administration has indeed succeeded in the short time it has governed to make some important achievements, especially cutting the number of those employed by the government and in putting in place measures for closer and more transparent supervision over the way funds are spent. On the other hand, it has not been able to allocate any funding to development, and this year it has accumulated a $1.8 billion budget deficit because of its enormous outlays, most of which are in salaries.

Part of the increase in these expenses stems from appointments made by the previous government, as part of a corrupt system in which wages were paid in return for political support or as favors to cronies. That government paid dearly with the loss to Hamas in the 2006 elections. However, a significant part of the increase in the number of those employed by the government stems from the absorption of nearly 35,000 workers who used to work in Israel or the settlements, and who became unemployed as a result of the intifada.

It is agreed by all that the Palestinian government cannot continue as the main provider for the Palestinian labor force. It requires an acceleration in the public and private sectors in order to lift this heavy burden off its shoulders. But it cannot act alone. The World Bank report released on the eve of the international donor conference in Paris states that even if the Palestinian Authority receives all the funds it aspires to, unless restrictions imposed by Israel are lifted, economic growth may be negative - possibly -2 percent. This is so because the road blocks, whose numbers only increase, and other trade restrictions imposed by Israel, do not allow the private sector to flourish and an atmosphere is created where foreign investment is discouraged.

These are not false claims that Fayyad is trying to disseminate, but the words of the World Bank, which lays direct blame on Israel's policy.

The Foreign Minister is not entitled to ignore the warning included in this report. Even more so after Israel promised, on a number of occasions, to lift a large number of the road blocks, and significantly ease Palestinian movement between parts of the West Bank. If Israel's security and a blooming Palestinian economy do not contradict each other, as Livni maintains, she must take immediate action to lift the roadblocks that infringe on the Palestinian economy.


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