The Palestinian Economy: Alternative Futures

Abstract

The 1993 Oslo Declaration of Principles and subsequent agreements between the leaders of the Palestinian Liberation Organization (PLO) and Israel have led to the establishment of a Palestinian Authority in the West Bank and Gaza Strip with limited powers of self rule. The Palestinian-Israeli accords, based on a negotiated and gradual transfer of civil authority over large areas of the West Bank and Gaza Strip, also attracted the political and financial support of the world community, which pledged large amounts of aid for the reconstruction and development of the Palestinian economy. However, the slow disbursement of external aid, combined with setbacks in the implementation of the various agreements, has delayed the realization of the economic benefits of peace. Indeed, at its current pace the peace process may lack sufficient momentum to generate sustainability. This chapter assesses the present situation and proposes an alternative, more promising approach based on an acceleration and deepening of Palestinian empowerment leading to self-determination and statehood. Such a strategy, when combined with institutional and policy reforms in the Palestinian Authority, and when supported by greater flexibility on the part of Israel, carries the potential for launching the Palestinian economy on a path of self-sustained growth over the medium- to long-term.