In the wake of collapsed peace talks with Israel, it's fair to say that the Palestinian economy is in crisis. After several years of modest growth, the 'Arab Spring' entered, along with all of its impacts, effectively turning the tables on the Palestinians.
Until the revolutions that sprang up in across the Arab world, the Palestinian issue was high on the list of priorities for Mideast leaders (at least outwardly), but now, it has been pushed to the side of the road.
Arab nations, even those who did not experience direct change from the revolutions, started putting money into domestic issues. In the end, governments shifted their emphasis in a different directions.
- Israel begins implementing economic sanctions against Palestinians Gaza's economic woes pile up, unemployment soars
- Peace is good for economics
Most Arab governments, if they still distribute funds, are sending their money to help Syrian refugees, preferring to help them instead of closing the deficit created by the Palestinian Authority. Even the US, which adds $500 million yearly to the Palestinian budget, have been dragging their feet during the last round of the peace process.
The problem is reflected in the data: According to the Palestinian Finance Ministry, NIS 630 million in aid has arrived from abroad since the beginning of the year. That's a 65 percent decrease from the first quarter of 2013.
Contributors to PA aid since the beginning of the year are: Saudi Arabia, Qatar, the World Bank and the European Union. The amount donated is a mere fraction compared to what the PA needs to function, most of which's income comes from monetary aid.
The PA deficit stood at $1.3 billion at the end of 2013 and is projected to reach $1.6 billion by the end of 2014. The effects of the crisis will be felt by businesses in the West Bank that will have to make do with late or even partial paychecks.
280,000 unemployed PalestiniansThe decline in interest in the plight of the Palestinians, together with the lack of political prospects for a peaceful solution, creates concerns in the business sector of the West Bank.
The worry comes mostly from the decline in the quality of living (income per person fell by 2 percent last year) and a possible rise in unemployment in part due to Israel's frustration at a unity deal signed between Fatah and Hamas in Gaza on April 23.
In the 20 years since the Oslo accords, the Palestinians haven't created any replacement for their complete dependence on Israel (trade, employment, energy demands), despite many ooperation with other Arab sources.
Dr. Samir Halaila, the Palestinian's most senior economist and the man behind Padico, Fadico, the biggest company working for the development of infrastructure in the West Bank, warned that continuing along the current status-quo will lead to a decline in the labor market.
He recently said that the Palestinian economy is dependent on high growth rates of 8 percent per year at least for the next decade in order to bring down unemployment rates to a level he called, "reasonable."
Halila also knows that this goal will be difficult if not impossible to achieve and so, like many others, he's concerned that the economic future of the Palestinians is not auspicious.
In Halila's opinion, the PA needs to declare an economic state of emergency due to currently low growth rates and high unemployment.
According to official figures from the PA, unemployment was at 28.5 percent at the end of 2013 (including Gaza) and the International Monetary Fund indicates that maximum growth for 2014 will reach 2.5 percent.
According to the estimates, 280 thousand Palestinians are currently unemployed. As the largest employer in the Palestinian economy, the PA announced that they wouldn't be hiring any new workers for the time being because of a severe cash shortage.