“Peace may crumple due to Palestinian penury”

The World Bank spent much of last year discussing with the Palestinian Authority, the Israeli government and the international community about what has to be dome to revive the Palestinian economy. Growth does not guarantee peace but stagnation makes it more difficult.
When the Israeli government announced its plan to withdraw from Gaza, in June 2004, the World Bank was asked to analyze its repercussion in the economies of the region. The Bank concluded that the economic situation would not change much. Thus, the report asked for the creation of a sustainable international assistance. During the second Intifada, international assistance to the Palestinians represented 300 dollars annually per inhabitant, which did not prevent a 40% decrease of the Palestinians’ incomes. It is an example of what an assistance policy can cause in a deteriorated political environment.
It is necessary that Palestinians can circulate more freely and that the Palestinian Authority makes reforms. It has to liberalize its economy. Those are preliminary conditions for the delivery of international assistance.