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Misleading Media Claims on West Bank Economy

Arab Media Watch

Thursday, 24 September 2009 12:02

August 2009 saw an unusual smattering of comment in the British press presenting a rosy picture of the West Bank economy and a buoyant outlook for the future. This included:

· Ron Prosor, Israeli ambassador to the UK, writing on 26 August in the Daily Telegraph: "A combination of Israeli concessions and the responsible Palestinian leadership of President Abbas and prime minister Fayyad saw the West Bank Palestinian economy grow by 5-7 per cent in 2008." He added: "As Israel continues to implement measures to ease movement and trade, the rate of economic growth is predicted to double." (Prosor's piece came around the same time as a similar piece by Michael Owen, Israeli ambassador to the US, in the Wall Street Journal, which claimed that the West Bank was a "model of prosperity," enjoying "gleaming" economic forecasts and a "financial boom".)

· A Telegraph editorial on the same day, referencing Prosor's piece and stating that "better co-operation between Israel and the Palestinian Authority has led to a tangible improvement in the wellbeing of those living in the West Bank, with the economy growing by an impressive 5-7 per cent last year."

· A Times editorial, also on 26 August, stating that in the West Bank, "growth is already running at 7 per cent...If it can be raised to 12 per cent, prosperity would alleviate some of the Palestinians' grievances and give them a stake in peace, stability and outside investment."

· An extract from the Jerusalem Post, reprinted in The Independent's "As the world sees it" section, stating: "Life under the 'occupation'...isn't at all bad...The West Bank economy is doing relatively well."
The sources of these claims are unclear and, according to a June 2009 World Bank report and a July 2009 'Summary of Findings of IMF Mission' , most are inaccurate or misleading. Here are the facts:

West Bank Economy: 2008
· Rather than growing by 5-7% in 2008, real GDP growth in the West Bank in 2008 was estimated by the World Bank at "about 2 percent, which translates to an almost 1 percent decline in real per capita terms, resulting in a per capita income of just over US$1,000 in 2008."

· Far from being "impressive," the World Bank specifically commented that the growth figures in the West Bank contrasted unfavourably with other economies entering a post-conflict period, which can usually expect double-digit rates of growth. The Bank stated: "The fact that the West Bank economy is dramatically failing to fulfill its potential, even in periods of relative stability in the security situation, only underlines the extent to which economic restrictions are still preventing any real upturn in economic activity...Indeed, the post-conflict economic booms in other countries were mostly not hampered by the extreme restrictions facing the Palestinian private sector today."

· Given that real GDP growth per capita is the measure that is most correlated to actual standards of living, the decline in real per capita growth contradicts the Telegraph's claim that the figures reflect "a tangible improvement in the wellbeing of those living in the West Bank."

· Nor do the unemployment figures reflect any "tangible improvement." According to the World Bank, the high unemployment rate of 19% in the West Bank in 2008 was up from an average of 18% in 2007.

West Bank Economy: 2009
· According to the International Monetary Fund report, macroeconomic conditions in the West Bank have improved as a result of security reforms by the Palestinian Authority, and the relaxation of Israeli restrictions on internal trade and movement of people. Contrary to The Times' claim that "growth is already running at 7 percent," the IMF states that growth "could reach" an overall figure of 7% for 2009 if Israel continues to relax the restrictions, failing which it predicts that "real GDP per capita would decline further in 2009, along the same trend started in 2006."

· The IMF also states that unemployment "remains high, at about 20 percent in the West Bank," and that "any sustainable increases in real GDP per capita will require not only the removal of internal trade restrictions, but also the removal of trade restrictions between the Palestinian territories and Israel."

· The World Bank points out that its projected growth figure of 5% for the West Bank and Gaza in 2009 "would still leave living standards below pre-closures levels in 2000. Real GDP is estimated to have declined by a cumulative 13 percent (or a cumulative 34 percent in real per capita terms) since the beginning of the second Intifada in 2000 and the resulting increase in Israeli restrictions on movement and access. Therefore, the income level for the Palestinian economy is well below its potential and even with the assumed relaxation of Israeli restrictions starting in 2009, real income per capita in 2011 would still be about 27 percent below its level in 2000. The rate of unemployment is projected to remain high at 23 percent in 2011, compared to 11 percent in 2000."

Additionally, while Prosor singles out the economy of the West Bank and attributes its improvement to "a combination of Israeli concessions and the responsible Palestinian leadership" in an article arguing that Hamas is leading Gaza down the drain, both the IMF and the World Bank attribute such negative economic indicators as the rise in unemployment levels and the decline in real GDP per capita in Gaza to the persisting Israeli blockade.

Global Arab Network

Shipra Dingare - AMW adviser

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