World Bank Wakes Up To The Fact That A Palestinian State Is Not Economically Feasible

Donor countries meeting in Brussels recognized on Wednesday that the "Palestinian Authority (PA) is above the threshold of a functioning state" - an assessment immediately hailed as a "birth certificate" for a Palestinian state by PA premier Salam Fayyad.

In recent months, the World Bank, the United Nations and the International Monetary Fund (IMF) have certified that Fayyad's state-building plans are on track for completion in mid-2011.
Palestinians hail international 'birth certificate' of statehood, Haaretz, April 13, 2011

That was then.
This is now.

And somehow, in the interim, the Palestinian Authority transformed from being on the threshold of a functioning state to being a political and economic disaster.

Now, a year later, the World Bank says the Palestinian Authority is nowhere near becoming a state:

The Palestinian economy cannot sustain statehood while it continues to rely heavily on donors funds and the private sector fails to thrive, the World Bank said in a report its published Wednesday.

"No matter what steps the Palestinian Authority takes, it is unlikely to reach fiscal sustainability until there is a political settlement [peace deal] that allows the private sector to experience rapid and sustained growth," the report said.

But seriously, are we supposed to believe that the PA was really on track for statehood, and then suddenly got derailed?

Omri Ceren pointed out last year the Palestinian Authority's failure to create the infrastructure for a state:

The Palestinians don’t have a constitution, they don’t have an independent judiciary, and they don’t have a free press; they can’t hold elections and their President is seven years into his four-year term; their educational system is a cesspool of primitive and savage anti- Jewish bigotry.

The numbers on Palestinian borrowing and debt are nothing less than astonishing.

According to Ma'an, the PA started 2012 in major financial difficulty:

PA Prime Minister Salam Fayyad said in January that his government owed $1.1 billion in bank loans, as well as $400 million in unpaid revenues to private sector contractors.

Back in 2012, the Egyptian Foreign minister said the cost for a Palestinian state was prohibitive:

Egyptian Foreign Minister Ahmad Abu Alrit, said today in an interview on Egyptian television that the cost of establishing a Palestinian state after signing a peace treaty with Israel would move from 40 to 50 billion dollars. The Egyptian minister explained that this cost takes into account the need to meet the needs of the Palestinians, including the provision of services to residents as well as compensation for land they lost. He said regional countries should be drafted to cover this cost for establishing a Palestinian state is in the interests of all parties. [Google translation from the Hebrew]

It's as if the World Bank was as blind as the PA to the economics involved.

The key thing to take away from all this is that the immediate implication is that should Abbas follow through on his threat to bypass peace talks with Israel by going directly to the UN for recognition--the UN will look rather stupid actually giving them that recognition.

But is that enough to stop it?

Technorati Tag: Palestine and World Bank and Palestinian Authority and Abbas.