Analysis: The Coming Collapse of the Palestinian Economy

The Arab Spring along with chronic corruption have brought the Palestinian economy to its knees.

The Palestinian economy inside of Judea and Samaria is in official crisis mode. The long-term effects of the Arab Spring as well as rampant corruption have effectively brought to an end to several years of modest growth inside the territories administered by the Palestinian Authority.

Regarding the Arab Spring, Muslim nations swept up in it have responded by dramatically increasing domestic spending. As a result, the emphasis of many governments that had once provided financial aid to the Palestinian economy has shifted, with the aim of maintaining internal stability.

According to the Palestinian Finance Ministry, NIS 630 million (roughly $182,000,000) in aid has arrived from abroad since the beginning of 2014, a 65-percent decrease from the first quarter of 2013.

Corruption and the Palestinian Economy

Along with the decline in interest in the plight of the Palestinian Arabs, a second reason for the dire state of the Palestinian economy is rampant corruption inside the Palestinian Authority.

Billions of dollars in international aid granted to the PA may have been squandered or misspent, a report by the European Court of Auditors revealed in late 2013.

The European Court of Auditors was established in 1975 by the European Union to monitor the income and spending of money given by it in foreign aid.

According to the report, roughly €2.3 Billion ($3.1 Billion) made its way from Europe to territories administered by the PA between 2008 and 2012.

To date, much of this money remains unaccounted for.

In addition, EU investigators who visited Jerusalem and areas controlled by the PA were unable to obtain information or speak to PA officials about corruption in the regions they controlled.

PA Chair Mahmoud Abbas (Photo: Issam Rimawi/Flash90)

PA President Mahmoud Abbas responded to this damning indictment by blaming the “Israeli occupation” for the Palestinian economy’s state of malaise.

Yet while much of the mass media perpetuates Abbas’s ‘blame Israel’ narrative, Palestinian Arabs living under PA rule evidently think that their leaders are the ones responsible for the faltering Palestinian economy, the result of chronic institutional corruption.

In 2012, the Palestinian Center for Policy and Survey Research found that 72.9 percent of people surveyed believed the PA administrated territories in the West Bank (Judea and Samaria) was corrupt.

Another poll by the Palestinian Center in 2013 showed that 79 percent believed the Abbas administration to be corrupt.

In fact, while the PA’s refusal to recognize the Jewish character of Israel continues to be a major stumbling block to a peace deal, many Palestinian Arabs are ambivalent about the issue, the Israeli daily Ma’ariv reported in February.

According to the Ma’ariv report, Arabs living in PA-administered territories are much more concerned with mundane issues — such as earning a decent living and providing for their children — than relatively abstract topics, including human rights and the final status of Jerusalem.

Author: Gidon Ben-Zvi, Staff Writer, United with Israel

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