Palestinian Economy Booming, Thanks To Foreign Aid
Gaza, Palestinian Territory (TML) – In the lobby, a pair of workers is hanging large portrait photographs of Yasser Arafat and Mahmoud Abbas, while outside a construction scaffolding sits close by the front entrance, but otherwise the West Bank’s first five-star hotel is open for business.
Banners advertising the Palestinian stock exchange’s annual conference in the grand ballroom adorn centerpieces, while smartly dressed women and men in dark business suits mingle over drinks. Indeed, the demand for conference space is so strong that the Ramallah-based Movenpick Hotel began hosting them before weeks before its first guests checked in.
The peace talks with Israel have stalled, and Hamas and Fatah remain at loggerheads over who is the legitimate ruler of the Palestinian areas. But, the economies of the West Bank and Gaza Strip are shrugging off their uncertain political future and booming. Yet, economists warn, the boom is a precarious one.
“When the political situation allows it, the economy recovers and people rush out and say that is economic development. That’s not what’s happening,” Nathan Brown, professor of political science and international affairs at the George Washington University, told The Media Line.
The International Monetary Fund estimates that their combined gross domestic product will grow 8% this year. In Gaza, whose economy is coming back to life as Israel has eased its three-year-old blockade, GDP is likely to grow 16% in the first half of 2010.
Indeed, Gaza is due to gets its first five-star hotel soon as well, the Palestinian Ma’an news agency reported this month. The hotel was ready to open in 2007 when Hamas seized control of the enclave and forced the developers to mothball it.
Ramallah, the West Bank’s commercial center and unofficial capital, is replete with construction sites, but the prosperity is relative. The West Bank and Gaza are still engaging in catch-up from the days before the Intifada exploded in 2000. The subsequent fours years of violence left 3,400 Palestinian dead ( as well as over 1,000 Israelis) and left the West Bank divided by Israeli army checkpoints’ that continue to choke commerce to this day.
In Gaza, GDP per capita is only 60% of its level in 1994, the year the Oslo peace process with Israel got underway, according to the IMF. More than a third of the working age population is unemployed. The West Bank has fared better, but its per capita GDP only clawed back to its pre-Oslo level last year. Its jobless rate was 16% in the fist half of the year.
Law and order in the cities, and Prime Minister Salam Fayyad’s campaign to clean up the Palestinian Authority’s finances and a crack down on corruption have all helped boost economic growth in the West Bank. Israel has eased the checkpoint regime. But the main driver for prosperity is huge levels of foreign aid that is used principally to fund the Palestinian Authority’s budget deficit.
The Palestinian Authority is slated to get $1.2 billion in outside assistance this year, a sum equal to about 15% of its GDP. Investment in infrastructure, whether it’s by foreigners or the private sector, is minimal. U.S. Secretary of State Hilary Clinton pledged $150 million more last week. The latest infusion of money brings America’s total direct budget assistance to $225 million for this year alone and overall U.S. support and investment to almost $600 million for the year.
At the Swiss-owned Movenpick, the clientele is mainly business people, not tourists, said Communications Manager Katreena Khalil. The hotel boasts seven conference rooms and is hosting a business woman’s club, but business in Ramallah means mainly government, the United Nations and the non-government that distributes the aid largesse and run health and educational programs.
“What you see is that anything related government expenditure is doing very, very well. But no external investors are rushing to get in,” said Brown.
Moreover, economic growth is focused on residential building, Paul Rivlin, a senior research fellow at the Moshe Dayan Center for Middle East and African Studies at Tel Aviv University, told The Media Line.
“The problem is that in an economy that is filled political uncertainty and numerous restrictions,” said Rivlin, author of the book Arab Economies in the 21st Century. “One of the things you can make quick and easy money and meet needs is construction. Building factories has a payoff only when you start production.”
Rivlin said he doubted that the West Bank is threatened with the kind of property bust the U.S. and Dubai have suffered because it isn’t based on speculative investments or poor lending practices. But, he said, poor unless the fundamental situation changes, the long-term prognosis for the Palestinian economy remains poor.
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U.S. Chamber of Commerce and National Association of Water Companies Continue Water is Your Business Series in Cambridge, Massachusetts
Highlight the Relationship Between Water Infrastructure, Business, and the Economy CAMBRIDGE, Mass., Nov. 15, 2010 /PRNewswire-USNewswire/ — The U.S. Chamber of Commerce, the National Association of Water Companies (NAWC) and the Cambridge Chamber of Commerce today hosted a forum at the Sheila Doyl
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Get a Small Business Loan With No Collateral
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Record Low Rates Drive Increase in Business
The average 30-year fixed-rate mortgage fell 7 basis points in Freddie Mac’ most recent survey. It was the lowest level on record for the 30 year. In an apparent response to the new lows, mortgage activity was 8 percent higher based on the latest Mortech-Mortgage Daily Mortgage Market Index report.
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Statement on the Initial Bowles-Simpson Commission Proposal
WASHINGTON–(BUSINESS WIRE)–Business Roundtable Executive Director Larry Burton offered the following remarks on the proposal put forward yesterday by National Commission on Fiscal Responsibility and Reform Co-Chairs Erskine Bowles and Alan Simpson: “The debt crisis our country faces is real and needs to be addressed. We are on an unsustainable path and will lose our national competitiveness in an increasingly interconnected global economy if it is not addressed. Solutions will not be easy; the
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Appraisal Business Insider
a la mode restructured its business to provide mortgage and real estate services from two separate divisions. A tool that allows lenders to build their own appraiser panels and automate their appraisal processes is the appraisal firewall from SharperLending LLC. CoesterReverse.com was launched by Coester Appraisal Group for ordering appraisals on reverse mortgage transactions.
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Business On the Decline at Ginnie
Ginnie Mae reported that the volume of mortgage-backed securities it guaranteed during September was off slightly from August. Volume was down 15 percent from September 2009. More recent data from eMBS indicates that October volume was even worse.
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Fitch Affirms Stafford County, VA’s GOs at ‘AA’; Outlook Stable
NEW YORK–(BUSINESS WIRE)–Fitch Ratings has taken the following rating actions as part of its continuous surveillance efforts: –$257.2 million general obligation (GO) bonds affirmed at ‘AA’; –$42.1 million economic development authority (EDA) lease revenue bonds, series 2008 affirmed at ‘AA-’. The Rating Outlook is Stable. RATING RATIONALE: –The county economy continues to benefit from its proximity to Washington, D.C. as well as its own expanding economic base. –Financial performance has s
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First Acceptance Corporation Reports Operating Results for the Quarter Ended September 30, 2010
NASHVILLE, Tenn.–(BUSINESS WIRE)–First Acceptance Corporation (NYSE: FAC) today reported its financial results for the first quarter ended September 30, 2010 of its fiscal year ending June 30, 2011. Operating Results Revenues for the three months ended September 30, 2010 were $53.1 million, compared with $57.3 million for the same period in fiscal year 2010. Income before income taxes for the three months ended September 30, 2010 was $0.5 million, compared with $2.9 million in the same period
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