World Bank rules the current Palestinian setup unsustainable

Palestinian President Mahmoud Abbas

Reuters//Amr Abdallah Dalsh

By Ruth Michaelson in Ramallah

A report by the World Bank released yesterday has ruled that the current Palestinian political and economic setup is unsustainable due to heavy reliance on foreign aid.

The report concluded that despite increasing restrictions on freedom of movement of both resources and people, there has been a 7.7 growth in Palestinian GDP between 2007 and 2011, but the growth has not occurred in trading sectors.

Dossier: Gaza 2009

GDP from manufacturing and agriculture have dropped significantly, as these are affected by increasing restrictions on freedom of movement, of both people and resources.

Following a sustained and on-going period of financial crisis within the Palestinian Authority over the payment of civil servants, the report cited the current setup of the Authority as fundamentally unsustainable in terms of both size and requirement of aid to fund basic operations.

The report also undermines the potential for a future Palestinian state as per the 1993 Oslo Accords, and comes as Palestinian President Mahmoud Abbas is preparing to relaunch the bid for Palestine to gain non-member state observer status within the UN.