The surprise of the hidden Palestinian economy

As Palestinians and Israelis sink into another tragic round of reciprocal violence, the micro economies of each sector are also taking a direct hit. Small traders in the centre of Jerusalem or Nablus, providers of tourist services, businesses looking for investment, etc, – with some irony, there are similar effects on both sides of the divide.

The Palestinians often claim that Israel can absorb the financial downside, as it has a larger economy. Maybe, but I am not sure why this is a justification for violence. And surely traders should want to protect their precious sources of revenue rather than support violence that destroys such wealth.

Palestinians and their advocates will also point to the weak base of the Palestinian economy, which has become a spark for much of the new troubles this month. There is a wealth of documents, detailing how the economy in Gaza and the West Bank continues to worsen.

But again, some of the murderers of Israelis have come from reasonable social backgrounds. To be blunt, there are many poorer regions in the world, and their inhabitants are not throwing rocks at innocent children and women in protest.

So, I must assume that the Palestinians are rejecting a perceived lack of hope. It is that damn occupation that is causing the desperation. Maybe, until along comes two little known facts, hidden away from the view of CNN, New York Times, the Guardian et al.

First, the Israelis often complain that the Palestinian leadership has been tainted – no, ridden – with corruption. For example, just look at how the widow of Chairman Arafat, Suha, lives in luxurious exile. More recently, there have been a series of leaked documents re Palestinian corruption, reportedly outlining rape and severe financial wrong doings at high levels of the Ramallah government.

And into this arena has jumped the respected magazine, “The Economist’, not usually noted as a friend of Israel. The editorial wondered how long it will be before locals reject the continuing “extravagance and graft in Ramallah“.

The Palestinian Authority (PA), the limited self-governing body in the occupied territories, has been plagued by waste, graft and accusations of both since its inception in 1994 following the Oslo accords. When auditors looked at the books three years later, they concluded that nearly 40% of the budget had been frittered away.

Second, and here is a genuine surprise for Palestinian economy, “a joint study by the Palestinian Central Bureau of Statistics (PCBS) and the Palestine Monetary Authority (PMA) ….. has revealed that the Palestinian economy’s investment outside Palestine outweighs investment in Palestine from abroad by the end of Second quarter of 2015.”

To clarify for the non-economists: The Palestinian economy of its various sectors had invested outside Palestinian territory by more than the investment amount in the Palestinian territory from abroad to the tune of US$1,254 million. And if I can remind my readers – that is just what is recorded…officially!

So you have to wonder. If much of this money was left in ‘Palestine’, theoretically available for use on behalf of that nebulous average man on the street, how much of this current violence would still be taking place……….and which continues to destabilise the economies of all?

About the Author
Michael Horesh is a recognised business coach and mentor, and has helped clients collectively to create millions in added value over the past decade. He has substantial understanding of the workings of the Israeli economy and the financial situation of the Palestinians, as well as an incisive way of looking at Middle East issues.
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