JERUSALEM: The West Bank economy could strengthen significantly this year if Israel continues to ease its restrictions on all Palestinian trade and movement in the territory, the International Monetary Fund (IMF) said Wednesday. The forecast was the latest sign of an improvement in security and economic conditions in the Occupied West Bank that could bolster Western-backed Palestinian President Mahmoud Abbas and US-sponsored peace efforts with Israel.
A Summary of Findings by the IMF Mission to the West Bank and Gaza said the economy in the West Bank could grow by as much as 7 percent in 2009. It predicted a 3 percent inflation rate. “This would represent the first significant improvement in living standards in the West Bank since 2006,” said Oussama Kanaan, the IMF’s representative in the Palestinian territories.
“However, if the relaxation of Israeli restrictions does not continue in the remainder of the year, real GDP per capita would decline further in 2009, along the same trend started in 2006,” he said in a statement.
In the Gaza Strip, poverty and unemployment will deepen unless Israel relaxes its blockade of the territory, he said.
Under US pressure to ease Palestinian hardship, Israel has recently removed several key West Bank checkpoints, including one at the entrance to the city of Jericho.
Palestinians and Western officials have long complained that Israel’s network of roadblocks in the West Bank, which it says is a security necessity, has hampered economic growth.
The IMF put unemployment at about 20 percent in the West Bank and 34 percent in the Gaza Strip, territory controlled by Hamas Islamists.
Israel tightened Gaza border restrictions after Hamas took over the territory in fighting with the Fatah group in 2007.
Israeli Prime Minister Benjamin Netanyahu says he is committed to policies that will boost the Palestinian economy in the West Bank. But new conditions he sets for a peace settlement have angered the Palestinians, and political talks are frozen.
Middle East envoy Tony Blair, visiting the West Bank commercial hub city of Nablus this week, said the economy is improving “because the Palestinians are providing their own security today and the Israelis are starting to lift the access and movement restrictions.”
“There could be immense change here,” Blair said, if political talks were able to resume soon with prospects of a deal to create a Palestinian state at peace with Israel.
Despite improving economic conditions, the Palestinian Authority still needs $900 million to cover its 2009 budget, according to the IMF.
Kanaan stressed that discussions with donors indicated that about $600 million of that sum could be disbursed by the end of this year.
“The gap could be much higher if donors, especially Arab donor countries, do not fulfill their commitments,” he added.
Donor states have announced massive pledges for the Palestinians over the last two years in a public show of support for Abbas in his power struggle with the Islamist Hamas movement, which won a 2006 Palestinian election and took over the Gaza Strip a year later.
These included $4.5 billion in pledges at a conference in the Red Sea resort of Sharm el-Sheikh in March to help rebuild the Gaza Strip after an Israeli offensive in December and January, and to help fund Abbas’ West Bank-based government.
However, Western diplomats involved in the process have said that many of the pledges – made at five donor and investment conferences since December 2007 – were counted more than once, had yet to materialize or were too vague and conditional to rely on.