CEPR

Nov 26, 2014

What happened to the state-building project in Palestine?

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The World Bank report "Stagnation or Revival?" (March 21, 2012) draws a bleak picture of Palestinian state-building projects and reveals the real problem which is the absence of political objectives behind those initiatives, argues Dimitris Bouris.

 


ashton2 2002005cSalam Fayyad (left) with Catherine Ashton (right) in , March 19, 2011. Source: AFP.
 

Almost a year ago, in April 2011, the World Bank, the International Monetary Fund (IMF), the United Nations (UN) and the European Union (EU) were sending a clear message: the Palestinians were ready for statehood.
 

At that point, the IMF claimed that the Palestinian Authority was "able to conduct the sound economic policies expected of a future well-functioning Palestinian state" and the World Bank had argued that "if the Palestinian authority maintains its performance in institution-building and delivery of public services, it is well positioned for the establishment of a state at any point in the near future."


The UN, also at the same meeting, had concluded that "in six areas where the UN is most engaged, government functions are now sufficient for a functioning government of a state". And on behalf of the EU, Catherine Ashton had declared that "the Palestinian Authority has made significant progress on this state-building agenda. Today Palestinian institutions compare favourably with those in established states". Fayyad on his part had characterised the meeting as a "birth certificate" for Palestinian statehood.


But while the 'birth certificate' was there, the 'baby' disappeared. Mahmoud Abbas did not succumb to US and EU pressure, walked into the UN and asked for recognition of a Palestinian state by the Security Council. Since then, the so much praised Fayyad state-building plan has become silent. And unfortunately in this case the saying 'no news, good news' is valid.


News came these days from a World Bank Report, presented 21 March, to the ad-hoc Liaison Committee meeting in . The report argues that "the Palestinian Authority continues to experience a severe fiscal crisis, which threatens to become protracted given recent and projected declines in donor assistance" and goes on to argue that "the current trend of reduction in donor aid would likely aggravate the Palestinian fiscal crisis, potentially jeopardising gains made in recent years in institution-building."


So is the international community jeopardising its own state-building efforts with regard to the Palestinian state-building project? Yes it is; but for a different reason than the one expected.


The international community in general and the EU in particular should take responsibility of the not so optimistic news coming out from the World Bank report. Not because they have reduced the donor aid but because they did not link their state-building initiatives with clear political objectives. They purred vast amounts of money to legitimise a state-building project conducted by an emergency government which was never democratically elected and a President whose term has expired since January 2009. By adopting a 'West Bank first' approach they have fostered the building of institutions not in the Palestinian Territories in general but only in Area A of the West Bank where the PA is supposed to have full administrative and security control. As a result, the so-called state-building project to which we refer for the last years is in reality a project which takes place only in 17.7% of the West Bank and excluding the Gaza Strip which is still cut from the rest of the world.


By complying with the realities of the Israeli occupation, the international community in general and the EU in particular have sabotaged themselves as genuine and capable state-builders. Although the situation in the Palestinian territories has significantly been improved this was done at the expense of a genuine state-building project which would take into account local needs and demands while at the same time putting pressure for the ending of the Israeli occupation and Gaza's siege. This is confirmed by the above mentioned World Bank report which argues that although the PA "is making a concerted effort to strengthen its fiscal position, including taking steps to raise domestic revenues and control expenditures ... these efforts will not be successful unless they are supported by concrete and known actions of the Government of Israel, such as the sharing of relevant tax information on Palestinian revenues". The report also argues that "Israeli restrictions remain the biggest constraint facing Palestinian private-sector growth".


In September 2010, Nathan Brown, a well-respected scholar, had stated that "Fayyad is not the problem, but Fayyadism is not the solution to Palestine's political crisis" and he also supported that "technocratic management can probably keep Palestinian institutions afloat and even improve their functioning in some limited ways. But it does not even pretend to offer a solution for the deeper problems afflicting Palestinian politics - division, repression, occupation, alienation, and wide-reaching institutional decay". Brown was right.


The Fayyad plan had two components - establishing the state and ending the occupation. The international community so far focused on the first component and although an improvement has been observed the 'final product' is still not there. Maybe the AHLC meeting is a good opportunity for more attention to be paid to the second component?


Dimitris Bouris holds a doctorate from the University of Warwick and is research assistant at the Council for European Palestinian Relations (CEPR) in London. This article was first published in EurActiv on March 21, 2012.