How One Palestinian Territory Outpaces Another — With a Booming Economy

How One Palestinian Territory Outpaces Another — With a Booming Economy

Why you should care

These territories lead the world in unemployment, but there is a surprising silver lining for one.

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Geo facts & figures

Most of the news from the Palestinian territories usually hits all expected dour notes — the violence, the political rift between Gaza and the West Bank, a tight Israeli military cordon that some would call prudent, others suffocating. And yet that grim roundup obscures some unexpected good news, and possibly a source for hope: the relative economic stability of the West Bank, which is practically inaccessible to many Gaza residents, thanks to strict Israeli immigration laws.

While Gaza’s economy shrank by 0.3 percent in 2017, the West Bank’s economy grew by 4.3 percent.

That shift is encouraging, considering that the World Bank predicted the global economy itself would only grow by 3.1 percent in 2018. The rest of the Middle East and North Africa region has “declined markedly,” according to the World’s Bank’s annual outlook published in January, down to just 1.8 percent in 2017 after 5 percent the previous year.

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A Nine West store in Rawabi, a high-end multiuse development in the West Bank.

Source Linda Davidson/Getty

The West Bank, on the other hand, is stacking growth, adding to an increase of 3.5 percent the year before, according to a report from the International Labour Conference (ILC) this summer. Conditions in the landlocked territory that includes East Jerusalem and Ramallah were better than in its noncontiguous neighbor of Gaza, creating a tale of two economies in the Palestinian territories.

The Gaza economy “ground to a halt” last year, leading the ILC to say Palestinian unemployment had reached the highest levels in the world, with more than a quarter out of work — and almost half of young people left jobless. The situation in Gaza is dire, according to a July release from the Palestinian Central Bureau of Statistics: Half of Gaza lives in poverty, the lights are turned on for only six hours a day, and barely a tenth of the population has access to safe drinking water.

What Israel allows us is not development but economic activity.

Sam Bahour, managing partner, Applied Information Management

Meanwhile, nearly all residents of the West Bank had clean water and steady electricity, and only 13.9 percent were considered impoverished. The growth was thanks in large part to the success of the commerce, restaurant and hotel sectors, with strength also in construction businesses. “I call the West Bank the five-star restriction,” says Sam Bahour, who connects Palestinian businesses with American companies through his firm Applied Information Management, acknowledging the Israeli military’s continued control over the territories.

The West Bank faces significant challenges, most notably limited travel limitations that stymie the free flow of goods. But Palestinian businesses have responded by seeking customers globally, such as the United States. “We have money in the banks and people who are innovative and want to invest,” Bahour says, but he worries some domestic projects are seen as too risky, hence the move to “open up export markets,” as he says.

The gains so far have helped create a blueprint for what a hub with a financial future might look like: in many ways, an economy based on supporting growth with tense neighbors. Israeli companies are increasingly needing more workers, creating a potential opening for better cooperation. Some 131,000 Palestinians now work in Israel, mostly in construction, supporting 650,000 people in the West Bank. The Palestinian population is young, meaning that so long as jobs are created, there will be a willing workforce ready to fill them. Political action, if taken, could lead to further gains. The World Bank has reported that if “Area C,” which accounts for 61 percent of the West Bank and remains under Israeli security control, were opened up, it could grow the West Bank economy by a third within eight years.

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The beach in Gaza City.

Source Chris McGrath/Getty

Sure, the system has flaws: The permits can be costly, and the work is dangerous and exhausting with long commutes owing to the border crossing. That leaves some, such as Bahour, pessimistic: “What Israel allows us is not development but economic activity. Nothing that is infrastructurally oriented, nothing that would serve the creation of an economy worthy of a state.”

But the “factual interdependence of labor markets calls for effective coordination and cooperation,” writes Guy Ryder, director general of the International Labour Organization, and unions have “led the way through collective bargaining agreements with employers, who also recognize the need and advantages for Palestinian labor. They have opened the way to govern.” So perhaps the West Bank won’t just be the source of economic gains in the Middle East but diplomatic ones as well.

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