The donors meet in Brussels today — with everyone in crisis

By: Omar Shaban

Today in Brussels the donors' conference for the Palestinian Authority convenes — a twice-yearly meeting, in Brussels and in New York. About 40 states and relevant international institutions take part. Before the meeting are economic documents and reports from several quarters — the World Bank, the international Quartet, and the United Nations — reviewing economic performance in the preceding period and containing recommendations and proposed alternatives. Here are some indicators of the situation now and in the foreseeable future:

• The Palestinian economy was expected to grow at 2.5% in 2020; with the corona crisis and its repercussions, a contraction of 7% is expected if the return to normal is swift, and of 11% if the crisis continues to the end of 2020.
• The corona crisis's repercussions for the Authority's financial situation were catastrophic, coming after the liquidity crisis of 2019 caused by the halt of the transfer of clearance revenues with Israel. The situation was bad before corona arrived.
• International funding of the Palestinian Authority is in continuous decline: from 27% of gross domestic income in 2008 to only 4% in 2019.
• Economic growth in 2018 was 1.2% in the West Bank — the lowest since 2003 — while the rates were zero in the Gaza Strip in 2018 and negative at 3.5% in 2019.
• Unemployment rates continued rising, reaching 24% in the second half of 2019 in the northern governorates and 42.7% in the Gaza governorates.
• The deficit in financing the 2020 budget is expected to rise to more than a billion and a half dollars.
• In the near term the Palestinian economy's crisis will continue — indeed deepen — with the corona crisis and its repercussions, which will doubtless affect living standards and poverty. The share of families living below the poverty line is expected to reach 14% in the northern governorates and 53% in the Gaza governorates.
• The emergency budget the Authority prepared under the conditions of the corona crisis anticipates cutting public expenditures by 30% owing to the sharp fall in revenues.
• The reports present ideas and proposals for economic and financial policies to enable the Authority to get through the crisis, among them developing the technology and communications sectors and developing programmes of social care and solidarity. All the international reports presented to today's donors' conference concluded by saying that “the alternatives before the Palestinian Authority for getting through the crisis are limited”.
• All the reports affirmed that the persistence of the Palestinian division, and the Israeli restrictions at the crossings and between the governorates, are among the fundamental causes of the economic and financial crisis running for years.
• The reports commended the Authority's early efforts in confronting the corona crisis and its success in curbing its repercussions.

In sum: –

The liquidity crisis of 2019, the corona crisis since the beginning of March, the current political crisis with Israel, and the restrictions imposed under the agreements have made the situation, now and ahead, a dark one. The international community's capacity to help will remain limited as before. The donor states themselves are living through enormous economic crises because of the corona crisis, which will reduce the level of their support for the Palestinian Authority.

There is no escape from strengthening the internal factors, achieving Palestinian unity, and introducing radical reforms to the Palestinian institution, so that together we can get through these multiple, compound crises.