Economic aid packages have been a major incentive for the PA in negotiations with Israel. (Photo Credit: Reuters)

Economic aid packages have been a major incentive for the PA in negotiations with Israel. (Photo Credit: Reuters)

The International Monetary Fund (IMF) published a report in which it outlined the stark economic future facing the Palestinian economy. The IMF has warned that the Palestinian Authority (PA) faces a budget deficit of $300 million by the end of 2013, and urged Israel to ease financial restrictions on Palestinians. According to the report, the main problem is the financing of “large deficits with unpredictable aid flows”, and it is predicted that “Palestinian GDP growth would slow from 11 percent in 2011 and 5.9 percent in 2012 to 4.5 percent by the end of this year”. This dire warning from the IMF comes ahead of a meeting of donors on September 23rd in New York.

International aid agencies and other experts have said that an easing of Israeli restrictions on Palestinian economic activity is necessary for growth to take place, and have emphasized the peace process as a way towards this. In line with this thinking is John Kerry’s plan to boost the Palestinian economy through the attraction of $4 billion of investment in the Palestinian private sector over the next three years.

However, any plans to “boost” the Palestinian economy, an occupied Palestinian economy, remain a band-aid on a larger and much more severe problem – the Israeli occupation. While donor money, which goes straight into the coffers of the PA, has been able to keep the economy afloat, this has also sustained the occupation by giving Israel a cost-free occupation. As an occupying power, the Israelis must bear the cost of that occupation. But alas, Western governments and aid agencies have been more than happy to fill this role, allowing the Israelis to invest in deepening and entrenching their occupation on the ground.

Illustrating this point, the European Union announced a 52 million Euro assistance package to “support development” in Palestine in order to help local government “invest in small infrastructure projects and improve management practices [and] promote social and economic development”.

What is the point of all of these magnanimous investments and “assistance packages” when the next Israeli incursion into Palestine may destroy the very infrastructure it seeks to build?

At the end of the day this is all window dressing and a distraction away from the main problem facing Palestinians today. Economic, political and social development cannot happen in a vacuum, and can certainly not happen under a repressive occupation regime.


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