Major projects and investments spearheaded by Middle East envoy Tony Blair and Western powers to promote economic growth in the Palestinian territories have had little effect, the World Bank said on Thursday.
The international lending agency said in a report Israeli restrictions on the Palestinians was holding up many of the projects.
It said efforts led by the U.S. government under former President George W. Bush to promote private sector investment had made little tangible difference.
The projects singled out in the report included mobile phone provider Wataniya Palestine, whose launch had been delayed because Israel had yet to release promised radio frequencies.
Others were large-scale housing initiatives and construction of industrial parks in the Israeli-occupied West Bank.
"In the face of the ongoing economic restrictions imposed by the GoI (government of Israel), most of these projects have not gotten off the ground to date," the World Bank said.
It cited Israeli roadblocks and checkpoints that hinder trade and travel, as well as restrictions on Palestinian building in the West Bank where the Western-backed government of Palestinian President Mahmoud Abbas holds sway.
Likewise, billions of dollars pledged by Arab and Western donors to rebuild the Gaza Strip after Israel's military offensive earlier this year had yet to materialise.
Hamas Islamists, shunned by Western powers for refusing to recognise Israel and renounce violence, seized Gaza in 2007 after routing forces loyal to Abbas's secular Fatah faction.
OSLO MEETING
The World Bank, whose report will be presented to a donors' meeting in Oslo on June 8, estimated real 2008 GDP growth in the West Bank and Gaza Strip at about 2 percent, which translates into a decline of almost 1 percent in real per-capita terms.
"What little growth has occurred, has taken place in the West Bank," the bank said.
"The fact that the West Bank economy is dramatically failing to fulfil its potential, even in periods of relative stability in the security situation, only underlines the extent to which economic restrictions are still preventing any real upturn in economic activity," it added.
Despite a series of Western-backed investment conferences, the World Bank said: "In the current environment, few investors are willing to take risks and borrow from the banking system".
If Israel took more steps to ease restrictions, the World Bank projected real gross domestic product growth could rise to 5 percent in 2009, 6.5 percent in 2010 and 7.5 percent in 2011.
Israeli Prime Minister Benjamin Netanyahu has promoted what he calls a "triple track" approach toward peace with the Palestinians that would include talks on political issues, on boosting the Palestinian economy and on strengthening Palestinian security forces.
Palestinian leaders have rejected any notion of an "economic peace" and have said U.S.-backed talks with Israel could not resume until Netanyahu committed himself to the goal of Palestinian statehood and to freezing Jewish settlement growth.
Wataniya Palestine is owned by Kuwait's National Mobile Telecommunications Co. (Wataniya), a unit of Qatar Telecommunications Co. (Qtel), as well as a holding company for Palestinian public assets.
The company has received U.S government and World Bank assistance in raising funds to construct its network.
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