Group to boost Palestinian economy, cut link to Israel

The Palestinian prime minister is heading a new group designed to inject vitality into the economy and strengthen partnerships among the public, private and civil sectors.

al-monitor A worker arranges boxes of tomatoes at a wholesale vegetable and fruit market in Beita, West Bank, Sept. 2, 2012. Photo by REUTERS/Mohamad Torokman.

May 29, 2019

RAMALLAH, West Bank — ​The Palestinian government appears to have a clear vision to promote its economy, though it remains to be seen whether the plan — which involves disengaging from Israel and achieving sustainable development — is viable.

The Palestinian National Group for Economic Development held its first meeting May 14 in Ramallah, chaired by Prime Minister Mohammad Shtayyeh.

“The economic group undertakes to promote the country in the spirit of partnership, in accordance with the directives of President Mahmoud Abbas, to strengthen the productive sectors as much as possible and focus on industry and agriculture, to give [locally made products] the attention they deserve,” Shtayyeh said, launching the meeting.

The group consists of experts and officials in various economic fields from the public and private sectors.

Minister of Social Affairs Ahmad Majdalani, a member of the group, told Al-Monitor it aims to promote the national economy by establishing independence from Israel using a comprehensive development vision and an economic plan based on dividing Palestinian governorates into specific investment and production areas. For example, he explained, the governorates of Nablus and Hebron were identified as industrial clusters, Bethlehem and Jerusalem as tourist clusters, and the northern West Bank governorates such as Jenin, Tulkarm, Qalqilya and Tubas were designated agricultural clusters.

“We have a clear plan, and we began with the government's decision to stop medical referrals to Israeli hospitals. There are steps under study … such as importing electricity and fuel from Jordan and promoting solar energy as one of the sources of electricity in Palestine,” Majdalani said. “We are gradually embarking on the disengagement process because we need to ensure available alternatives both locally and abroad in every step we take in this regard.”

Majdalani noted that the PLO made the political decision to separate itself economically from Israel, and it is the government’s responsibility to find ways to do it.

In March 2015, the PLO Central Council decided to define the relationship with Israel both politically and economically and to stop security coordination. It then remade that same decision on Oct. 29, 2018. The decision was never implemented.

The group will meet monthly. In June, it will focus on how to promote and strengthen local products, a member of the group told Al-Monitor on condition of anonymity. “The group will have the task of formulating economic policies and strategies that will help the government make progress in the economy, which is suffering a lot because of Israel's control over the crossings and Area C" in the West Bank, the source said.

“During the first meeting, the group focused on brainstorming about its plan of action for the coming period. It discussed the files to be addressed, most notably promoting local products, providing job opportunities to reduce unemployment, improving exports, and stimulating the economy to raise productivity in quantity and quality," the source said, adding, “No one can say we're capable of cutting Israel off just like that, especially in light of the commitment to the Oslo Accord and the Paris Economic Protocol."

He continued, “Yet there are certain steps being taken to become independent in many fields, particularly in terms of energy by importing from Jordan."

The source noted there will be a reciprocal agreement with Israel on allowing products and goods into each other's market.

Forming the national group falls in line with the government's 100-day, $245 million plan, which Shtayyeh announced during his May 20 Cabinet meeting. He noted this plan seeks to promote tourism and industrial and agricultural production, reduce unemployment, fight poverty, establish industrial cities and create pilot projects.

Shtayyeh stressed during the Cabinet meeting that the plan is based on gradually pulling away from Israel economically and achieving self-reliance, through several means, some of which are already in motion, such as transferring patients to Palestinian, Jordanian or Arab hospitals instead of Israel's; boosting local products by focusing on industrial cities and providing infrastructure; increasing investment in clean energy; and re-examining the structure of the electricity sector.

Meanwhile, Amjad Ghanem, secretary-general of the Palestinian Cabinet, told Al-Monitor the national group will encourage investment in Palestine, improve the business climate, pass legislation "to provide incentives and facilitate the establishment and management of business in Palestine, as well as work to open foreign markets."

He added, “We are training a team of trade attaches and economists who will join the embassies of Palestine in the countries with which we have commercial relations, to increase the reach of Palestinian products — such as in Kuwait, Saudi Arabia, Turkey, Malaysia and Indonesia — all the while focusing on improving the quality of local products.”

One of the most important issues on the group's agenda, he said, is supporting and increasing the number of industrial zones to provide the infrastructure necessary for economic development.

Members of the group are Finance Minister Shukri Bishara, Minister of Local Government Majdi al-Salih, Minister of Agriculture Riad Attari, Minister of Economy Khalid Al-Assaily, head of the Palestinian Economic Council for Development and Reconstruction Mohammed Abu Awad, Palestinian Monetary Authority Gov. Azzam Shawa and Palestinian Central Bureau of Statistics President Ola Awad. Other members include the chairmen of the Federation of Palestinian Chambers of Commerce, Omar Hashem; Palestinian Businessmen Association, Osama Amro; Palestine Trade Center, Arafat Abu Sneineh; Palestinian Food Industries Union, Bassam Walweel; Association of Banks in Palestine, Maher Masri; and Palestinian Investment Fund, Mohammad Mustafa.

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