Salam Fayyad, the World Bank and the Oslo game

Most Palestinian analysts maintain that the Oslo agreements are to blame for the collapse of the Palestinian economy.

By Neve Gordon
Al-Jazeera

"Triggered by gas-price increases, tens of thousands of Palestinian taxi, truck and bus drivers in the West Bank observed a one-day strike, effectively shutting down cities. This, as Al Jazeera reported, was the culmination of several days of protests where thousands of Palestinians, frustrated by the economic crisis in the West Bank, took to the streets. After these protesters forced the closure of government offices, Prime Minister Salam Fayyad decided to decrease fuel prices and cut the salaries of top Palestinian Authority officials in an effort to appease his angry constituents. 

Prime Minister Fayyad, a former IMF executive, undoubtedly knows that both his previous decision to increase gas prices as well as his recent decision to decrease them will have no real effect on the looming economic crisis. Report after report has documented the Palestinian economy's complete dependence on foreign aid, while underscoring the severe poverty and chronic food insecurity plaguing the population. These reports all suggest that Israel's occupation is to blame for the unfolding economic debacle, raising the crucial question of why the Palestinians" wrath was directed at Fayyad rather than at Israel. 

The clue to this enigma can be found in the missing chapter of a World Bank report published barely a week after the protests subsided. Warning that the fiscal crisis in the West Bank and Gaza Strip is deepening, the World Bank blamed the Israeli government for maintaining a tight grip over 60 per cent of the West Bank, denying Palestinians access to the majority of arable land in the area as well as limiting their access to water and other natural resources. 

Remarkably, the economists who wrote the report highlight the impact of severe Israeli restrictions to Palestinian land but say nothing about economic policy. They seem to suggest that if only the Oslo process had been allowed to go forward, then the Palestinian economy would not be so badly off. Therefore they fail to mention the detrimental effect of the Paris Protocols, the Palestinian-Israeli Interim Agreement of April 1994 that spells out Oslo's economic arrangements. 

Interestingly, the three foundational documents that Fayyad has published since he began his tenure as Prime Minister - Palestinian Reform and Development Plan from 2008; Ending the Occupation and Establishing a State from 2009; and Homestretch to Freedom from 2010 - also fail to discuss the stifling effect the Paris Protocols have had on Palestinian economy......"