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Palestine is better than its reputation – debunking the de-development myth

Steen Jorgensen's picture
Also available in: العربية
*We present two blogs that address the complex challenge of development in fragile and conflict affected environments. Dr. Alaa Tartir of Al-Shabaka, the Palestinian Policy Network, uses the example of the Palestinian Territories to emphasize the need to understand the political dimensions of instability in order to develop effective policies to address it. Steen Jorgensen, World Bank Country Director for the Palestinian Territories argues that aid is especially urgent in fragile environments, to protect the most vulnerable and promote the development that is key to ultimate peace and stability.
 
Have the efforts of the international community and the Palestinian Authority (PA) in the twenty years since the Oslo agreement led to improvements in the lives of Palestinians – the answer is yes.  Would the results have been even better without the blockade of Gaza, Israeli restrictions and lack of implementation of existing agreements – the answer is also yes.

Terms like “de-development” for what has happened in Palestine in the last decades render invisible the hard-working, long suffering Palestinians who are fighting daily for a better life for themselves and their children.  It is also an inappropriate way to present the excellent progress Palestine has made in spite of the lack of a peace agreement and runs the risk of further marginalizing the Palestinian issue.  It is also factually incorrect.

On economic progress GDP per capita today is more than US$4500 (in purchasing power parity dollars), 20 years ago it was around US$3300. So on average Palestinians have increased their purchasing power by more than a third in 20 years since Oslo. This is equivalent to an average GDP growth rate of 3.4 per cent until 2014.  For those who do not believe GDP as indicator, in the same period tertiary education enrollment has increased from 16 to almost 50 per cent. Today, out of every 1000 children, 20 more live to the age of five compared to 1990. Today, 23 children die before the age of five, as compared to 73 among other and similar “medium human development” countries.  Last year, there was a total of 147 thousand births in Palestine, meaning that 2940 more babies born will survive until age 5 compared to 20 years ago. These figures contradict the argument that what has happened in Palestine over the last two decades can be described as de-development.

To be fair, we need to distinguish between the West Bank and the Gaza Strip.  In the last 20 years, the West Bank’s economy grew by 250 percent and per capita income increased by 183 percent.  The 250 per cent compares favorably with other Middle Income Countries in the Middle East and North Africa (MENA) region.  This was fueled by donor support which was well administered by the PA.  Our research has shown that the GDP today would have been a third higher if Palestinians had access to Area C.

Unfortunately Gaza is a very different story, in 20 years the economy has only grown 2 percent. And yes, there has been de-development in Gaza due to the blockade, repeated wars and poor governance, as documented in a recent World Bank report (AHLC Report May 2015).  But what does that mean?  Should donors pull out because of the wars and the blockade that have destroyed the economy – and leave the poor inhabitants of Gaza with no support?   In my view, ongoing support is essential. That is what the World Bank can, should and will do to address the political constraints to development – especially in fragile situations like Palestine.  

Palestine has done well for itself with the donor aid (at least in the West Bank) in spite of the Israeli restrictions. How about the World Bank?  According to the Independent Evaluation group of the World Bank Group, 74% of all World Bank financed projects met their development goals in the last 10 years compared to only 66% for the MENA region. Has World Bank assistance helped?  Yes!  Does Palestine do better than the rest of the Region? Yes! Could we do even better? Yes! How can we do better?  This is where the new World Bank Group MNA strategy comes in.  With the explicit recognition of the role of rebuilding the social contract, enhancing regional cooperation, building resilience for refugees and enhancing recovery and reconstruction, we have a chance to push forward.

Unfortunately, the current aid-dependent economic progress has run its course. We are now in our third year of per capita economic contraction and unemployment rates continue to grow.  A new effort is needed to reshape the Palestinian economy towards a vibrant private sector led growth path with social justice. The Palestinian economy can never reach its full potential until there is a peace agreement.

In the meantime, there are many things we can work on to improve the lives of Palestinians, to support good governance and to promote private sector led growth. We should re-double efforts, as we know that inclusive growth promotes peace and stability. 

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