Research and Briefings

CFI Briefing

CFI Statement on the sad passing of Baroness Thatcher

CFI was saddened to hear of the passing of former Prime Minister Baroness Thatcher at the age of 87. Stuart Polak, Director of Conservative Friends of Israel, issued a statement remembering Baroness Thatcher's strong support for ISrael, the Jewish Community and CFI.

Statement from Israeli Prime Minister Benjamin Netanyahu: 

President Shimon Peres mourned the passing of Baroness Thatcher, calling her "an extraordinary leader, a true friend of Israel and a personal friend of mine".

Peres stated that Thatcher "stood by us [Israel] in times of crisis and used her influence and power to help us make peace".

Peres memorialised: “There are people and there are ideals, sometimes they come together. She was a loyal friend of Israel. Her death is a loss to the political world".

The president discussed Thatcher's role in Israeli-Jordanian peace talks in the late 1980s, saying that "she served as a source of knowledge and wisdom to me and to the King of Jordan. We knew we could trust her council and dedication".
 

Israeli General Election: Israel coalition talks begin after surprise election deadlock

January 23 2013

• Coalition talks are set to begin in Israel after yesterday’s eventful general election that defied all pre-election polls to produce a tie of 60 seats each between the right-wing and centre-left blocs.
• The election brought a significant shift to the centre-left, with former TV personality Yair Lapid’s newly-formed, centrist, Yesh Atid party defying all pre-election polls and securing a surprising 19 seats.

Yesh Atid leader Yair Lapid addresses supporters on election night

• The Likud-Yisrael Beiteinu ticket led by Prime Minister Benjamin Netanyahu emerged from the election as the largest party with 31 seats; a dramatic 11 seats fewer than the two parties’ combined total in the last Knesset.
• Of the approximately 31 elected members of the joint Likud-Yisrael Beiteinu list, only 21 are from Netanyahu’s Likud party.

 
Benjamin Netanyahu and Avigdor Lieberman on election night

• Though the counting of final votes could yet lead to a few minor changes in the seat allocation, the right-wing bloc, which includes the ultra-Orthodox parties, is tied with the centre-left bloc on 60 seats, which includes the Arab parties.
• In the last Knesset the right wing bloc had 65, making this a significant shift to the centre-left.
• The Labor Party, led by Shelly Yachimovich, took 15 seats, making it the third largest party in the Knesset.
• The religious Zionist Jewish Home party led by Naftali Bennett, which had been the surprise of the electoral season before Yesh Atid’s remarkable election night gains, won 11 seats.
• Kadima — currently the largest faction in the Knesset led by Shaul Mofaz who replaced Tzipi Livni — suffered a remarkable collapse as it fell from 28 seats to a lowly 2 seats based on current final vote projections, narrowly crossing the Knesset’s 2% electoral threshold (73,000 votes).
• The Sephardi ultra-Orthodox religious party Shas took 11 seats, ultra-Orthodox United Torah Judaism party secured 7 seats and the left-wing Meretz party gained 6 seats.
• The combined Arab lists, including the Balad, United Arab List and Hadash parties, took 12 seats.
• Voter turnout was at its highest since 1999 with 66.6% voting (3.6 million), a 4% increase from the 2009 elections; as well as 80% of IDF soldiers that voted.

 
Knesset results after 99% vote count

What happens now?

• Despite a worse-then-expected result, Netanyahu is clearly best positioned to remain Prime Minister and head a stable government, by virtue of leading the largest party in the Knesset.
• The process to form a coalition following the finely balanced election has already begun with a number of party leaders expressing interest in joining with Netanyahu’s Likud-Yisrael Beiteinu ticket.

• Right-wing coalition?
o The political make-up of Netanyahu’s coalition could take a number of forms and is unlikely to become clear for a number of days as negotiations get underway.
o Conventional wisdom has it that Netanyahu will seek first to partner with the right-wing and the ultra-Orthodox parties, as he has done in the past.
o Shas and United Torah Judaism are often referred to as Netanyahu’s “natural” partners, and both lists have already signalled they are eager to join his coalition.
o Problematically for Netanyahu, this “natural” coalition secured just 60-61 seats in the election – a tiny majority in the 120-seat Knesset and would likely be a source of constant political problems for the Prime Minister.
o As an alternative, Netanyahu indicated in the immediate aftermath of the election that he wanted to create “as broad a government as possible”.
o A broader coalition government would likely include Yair Lapid’s 19-seat centrist Yesh Atid party which would provide a significant majority in the Knesset and make Lapid a senior coalition partner.
o Netanyahu reportedly telephoned Lapid overnight, telling him: “We have the opportunity to do great things together”.
o Lapid himself has called for a broad based government including parties from left and right.
o By bringing Yesh Atid into the coalition, Netanyahu’s coalition would receive a more moderate face and empower Netanyahu to pursue a more moderate platform, which could include efforts to revive the peace process.
o The move would also provide Netanyahu with more ‘wiggle room’ as the continuation of the coalition would not be subject to political blackmail by ultra-Orthodox parties Shas and UTJ.
o It is still unclear whether Yesh Atid’s secularist chairman, Yair Lapid, would be prepared to join a coalition that includes both of the ultra-Orthodox parties after he campaigned in favour of drafting Orthodox into the army and reducing subsidies for settlements and the Orthodox community.
o With 19 seats, Lapid could have significant leverage in any coalition discussions and would be expected to request a number of guarantees from Netanyahu to ensure he doesn’t betray his platform.
o Another slightly amended option could see Likud-Yisrael Beiteinu partnering with just Yesh Atid and Jewish Home.
o This scenario would give Netanyahu a slim majority of 61, but the absence of any ultra-Orthodox parties would enable the government to finally legislate for universal army conscription.
o Both Jewish Home chief Naftali Bennett and Lapid have made plain their readiness to join a government led by Netanyahu.
o If Tzipi Livni’s Hatnuah were to join as well, a stable centre-right government with 67 seats could emerge.

• Centre-left coalition?
o Despite the strong performance of the centre-left bloc, it is unlikely that they will be able to form a viable coalition.
o Even if Yesh Atid (with 19 seats) teamed up with Labor (15 seats), Hatnuah (6 seats), Meretz (6 seats) and Kadima (possibly 2 seats), the centre-left bloc would still fall a dozen mandates short of even a slim majority.
o It is very unlikely that such a bloc would be joined by either an Arab or an ultra-Orthodox party, whilst it would be equally unlikely that the centre-left parties would be willing to pay the political price the Shas and United Torah Judaism parties would demand.
o Labour leader Shelly Yachimovich has said she will not join a Netanyahu led coalition, and will try to engineer an alternative centre-left coalition by reaching out to the ultra-Orthodox parties.
o The Yesh Atid camp said Wednesday that they would not cooperate with Labour leader Shelly Yacimovich's bid to block another Netanyahu government.

• After an election, Israeli President Shimon Peres, following consultations with the elected party leaders, chooses the Knesset member most likely to form a viable coalition government.
• President Peres will receive confirmation of the final results next Wednesday after which point he will nominate the party leader best positioned to form a viable coalition. 
• While this typically is the leader of the party receiving the most seats, it is not required to be so.
• In the 2009 General Election, the current Knesset was formed by Benjamin Netanyahu of Likud even though Kadima had won more seats.
• The chosen party leader has up to 42 days to negotiate with the different parties, and then present his or her government to the Knesset for a vote of confidence.
• The existing government continues to serve in a caretaker capacity whilst this is taking place, and the new government takes office only once it has been approved by the Knesset.
• Once the government is approved (by a vote of at least 61 members), he or she becomes Prime Minister.
 

Prime Minister David Cameron: “My belief in Israel is unbreakable and commitment to Israel’s security is non-negotiable”

October 2012

Prime Minister David Cameron spoke of his strong support for Israel during his address to the United Jewish Israel Appeal (UJIA) in October 2012. In a warmly received speech, the Prime Minister emphasised his “unbreakable” belief in Israel and outlined three steps to securing Israel’s future.

Prime Minister David Cameron MP addressing the UJIA Annual Dinner

Supporting Israel

The speech saw the Prime Minister pledge his Government’s support to Israel on a number of occasions.

Mr Cameron opened his speech by stating: “With me, you have a Prime Minister whose belief in Israel is unbreakable and whose commitment to Israel’s security is non-negotiable”.

Vowing that the UK would “always stand by Israel, protect Israel, and work with Israel on the path to peace”, Mr Cameron observed that he “longed for the day” when “making statements in support of Israel is as unnecessary as going to see President Obama and saying I support America’s right to exist”.

The Prime Minister reinforced this when observing that “support for Israel was in the DNA of the political party I lead” and “in the DNA of the country I lead too”.

The strong UK-Israel bilateral relationship was highlighted, with Mr Cameron praising record level trade and scientific collaboration projects.

Praising the Jewish communities contribution to Britain, the Prime Minister vowed to “always stand by the Jewish people”, before observing that “there is no contradiction between being a proud Jew, a committed Zionist and a loyal British citizen”.

Economic and cultural boycotts were strongly condemned, with Mr Cameron dismissing it as part of a “delegitimisation” campaign and stating that the Government would “never allow you to shut down 60 years’ worth of vibrant exchange and partnership that does so much to make both our countries stronger”.

Palestinian Incitement

Palestinian incitement was highlighted as an issue of concern for the British Government, with the Prime Minister emphasising that the UK would “not tolerate incitement to terrorism”.

The Prime Minister defined what he perceives as the three key steps to secure Israel’s future: “standing up to Iran, seizing the opportunities presented by the Arab Spring to spread and making the hard choices needed to resolve the conflict with the Palestinians”.

Middle East Peace Process

The Prime Minister reiterated his support for a renewal of direct peace talks and criticised President Mahmoud Abbas’ unilateral actions at the UN.

Identifying that difficult decisions and concessions would be needed from both sides, the Prime Minister called on Israel to continue supporting economic development in the West Bank, relaxing restrictions on Gaza, and halting settlement building.

Mr Cameron observed: “That means more support for economic development in the West Bank, relaxing restrictions on Gaza, ending the demolition of Palestinian homes, and yes, it means meeting Israel’s obligations under the Roadmap and under international law to halt settlement building. Britain’s position will not change. Settlements beyond the green line are illegal”.

Arab Spring and Hamas

Turning to the Arab Spring, Mr Cameron observed that he has “no illusions about the dangers that political transition can bring in the Arab spring countries”.

Addressing the rise of Islamist governments, Mr Cameron described the need to “judge governments by what they do”, making specific reference to President Mursi in Egypt.

In the event that Islamist attempt to “undermine the stability of other countries or encourage terrorism instead of peace and conflict instead of partnership”, the Prime Minister stressed that the UK “must and will oppose them”.

Highlighting this, the Prime Minister reasserted that his Government would “not waver from our insistence that Hamas gives up violence and that the rockets from Gaza must stop”.

The Prime Minister asserted: “Hamas must not be allowed to dictate the way forwards for Israelis and Palestinians”.

The Prime Minister acknowledged Israel’s security concerns emanating from the Arab Spring: “I understand how dark things were for Israel when surrounded by enemies on every border. And I understand how Israelis feel when gas masks are handed out to families; and car parks are converted into bomb shelters”.

Mr Cameron also recalled how the regions former regimes had “abused the Palestinian cause to smother their own people’s hopes and aspirations, dealing with frustration at home by whipping up anger against their neighbours, Israel and the West”.

Iran

A nuclear armed Iran was identified as a threat to Israel and the world and the Prime Minister asserted that “this country will work unwaveringly to prevent that from happening”.

Iran’s nuclear and terror activities were criticised at length, with Mr Cameron dismissing the Iranian regime’s claim that its nuclear programme is intended purely for civilian purposes as “not remotely credible”.

Speaking on the day that the EU agreed to increase the pressure on Iran with another package of sanctions, the Prime Minister observed that until Iran “change course”, the UK have a “strategy of ever tougher sanctions”.

Mr Cameron expressed his belief that these “relentless” sanctions should be given time to work; recalling that Iranian oil exports have fallen by 45 per cent, inflation is soaring (as much as 50%) and the Rial has plummeted – losing around half its value between May and September.

Calling for the “courage to give these sanctions time to work”, Mr Cameron added that “in the long term, if Iran makes the wrong choice, nothing is off the table”.

Concluding, the Prime Minister observed that Israel would “continue to face acute threats and a hard road to peace”, but assured that “with strength and courage we can, together” tackle these challenges.

Click here to read the Prime Minister’s speech in full.
 

The Iranian Nuclear Threat
11 October 2010

Written by Benjamin Jackson (CFI intern)

________________________________________

Contents:
1) Introduction
2) Iran’s Nuclear Ambitions
3) Evidence Iran is Producing a Nuclear Weapon
4) Iran’s Resistance to Mediation and Negotiation
5) Current Sanctions Against Iran’s Nuclear Programme
6) Ramifications of a Nuclear Iran
7) Conclusion

______________________________________

Introduction

This briefing outlines the threat of Iran’s nuclear programme. It analyses Iran’s nuclear ambitions and outlines how Iran may be using a civilian nuclear programme to disguise it efforts to research and ultimately acquire a nuclear device.

_______________________________________

Iran's Nuclear Ambitions

In 2010 Iranian President Mahmoud Ahmadinejad declared Iran a “nuclear state”. Ahmadinejad has repeatedly referred to Iran’s “inalienable right” to a nuclear programme and stated the process is both “unstoppable” and “non-negotiable”.

• Iran has already constructed several nuclear sights and publically outlined plans to build 10 new uranium enrichment plants in secret mountainous locations.
• The US, supported by western intelligence agencies including the UK, France and Germany, suspect Iran is trying to use civilian nuclear technology as a façade for producing nuclear weapons.
• Former British PM Gordon Brown accused Iran of: “serial deception” regarding its pursuit of nuclear power.
• Tehran has declared it will not negotiate on nuclear enrichment despite repeated calls by the international community to engage in talks designed to curb its nuclear portfolio. 
______________________________________

Evidence Iran is Producing a Nuclear Weapon

Iran’s Secrecy:

• Iran has signed the Non Nuclear Proliferation Treaty (NPT) and insists its nuclear programme is for civilian use only.
• Despite these actions, officials in Tehran continue to be evasive about its nuclear programme.
• In 2002 an Iranian exile group obtained documents revealing a clandestine nuclear programme.
• Secret nuclear facilities have been revealed in Natanz and Qom, in violation of International Atomic Energy Agency (IAEA) rules.
• The IAEA Director Yukiya Amano stated in September 2010 that the nuclear watchdog could not verify Iran’s assertion that it is not attempting to produce weapons grade material because of the limited access to information and visits to Iran’s nuclear facilities.
• Iran has denied inspectors access to information regarding proposed new enrichment facilities it plans to build. It has also denied inspectors access to a heavy water production plant.

IAEA Report

• In September 2010 the IAEA issued a detailed report highlighting that Iran is on the brink of developing an atomic weapon.
• Iran has continued to enrich uranium despite repeated calls from the Atomic Energy association and the UN Security Council to stop whilst claims about its Nuclear Programme are investigated.
• The report bluntly states that the IAEA “remains concerned about the possible existence in Iran of past or undisclosed nuclear related activities involving military organizations”, which includes the possible “development of a nuclear payload for a missile”.
• The report detailed that Iranian scientists have overcome the most significant technical hurdle to producing weapons-grade uranium, since it has made at least 22 kg of enriched uranium with at least 20 per cent purity.
• Whilst the uranium will need to reach 90 per cent purity before it becomes weapons-grade, experts have indicated that this is a relatively easy process and the 22kg it possesses is already enough to arm a warhead.
• The announcement that Iran has enriched uranium to 20 per cent caused considerable alarm as Iran had not managed to enrich to levels higher than 5 per cent as recently as February 2010. 
• The same report also recorded that Iran's stockpile of low-enriched uranium, the feedstock of both civilian and military nuclear programmes, has risen by around 15 per cent since May 2010 to reach 2.8 tons.
• This is some of the strongest evidence yet that Tehran has defiantly moved ahead with its nuclear portfolio irrespective of economic sanctions implemented in May 2010 and diplomatic pressure from across the international community.

Non Co-Operation with IAEA Inspectors and the UN Security Council:
 
• Iran’s co-operation with IAEA inspectors is selective with Iran barring inspectors from various facilities at its nuclear plants and refusing to present documentary evidence at others.
• IAEA inspectors are consistently barred from entering Iran, and in some cases expelled. In 2007 Iran expelled 38 inspectors and in June 2010 it barred 2 IAEA inspectors from the country after they reported undeclared nuclear activity by scientists.
• The IAEA has rebuked Iran for denying information about plans for new enrichment facilities that Iran has said it intends to build, as well as being denied access to a heavy-water production plant, forcing it to rely solely on satellite imagery to assess the plant's operations. 
• Heavy water production is a vital element in converting nuclear fuel to a suitable form to be used in nuclear weapons.
• The IAEA’s September 2010 report notes that, “the agency is ... concerned that the repeated objection to the designation of experienced inspectors hampers the inspection process and detracts from the agency's ability to implement safeguards in Iran”.
• Iran also continues to test machinery that can be used to make weapons based uranium.

Iran’s Energy Independence:

• Iran has no need for Nuclear power. It has the world’s third largest proven oil reserves and 30% of global oil.
• Iran has 16% of the world’s natural gas.
• Nuclear power currently generates less than 1% of Iran’s energy needs.

______________________________________

Iran's Resistance to Negotiation and Mediation 

• Iran continues to remain intransigent over the issue of its nuclear programme, refusing negotiation or any mediation.
• The UN Security Council has ordered Iran to stop uranium enrichment and halt all activities related to its nuclear programme; especially enrichment of uranium.
• Technology used to enrich uranium for civilian purposes can also be used to enrich uranium for a level needed for a nuclear explosion.
• In return the UN Security Council is offering Iran help in cultivating civilian nuclear power, trade concessions and the lifting of independent US sanctions.
• In 2009 former IAEA Director General Mohamed El Baradei described negotiations with Iran over its nuclear programme as: “a dead end”.
• Iran has repeatedly scuppered deals designed to help it obtain nuclear fuel for civilian purposes.
• In February 2010 Iran rejected a deal with France and Russia that would greatly advance its civilian nuclear programme and ensure it was fit for civilian purposes only.
• This involved all Iran’s nuclear fuel-rods being sent to France and Russia in one shipment. France and Russia would then process the uranium and send them back as fuel rods fit for civilian purposes only.
• Senior Iranian officials consistently snub IAEA negotiators and recently failed to attend an agreed meeting with then IAEA chief Mohamed El Baradei.
______________________________________

Current Sanctions Against Iran's Nuclear Programme

• Iran is currently in breach of six Security Council Resolutions regarding its nuclear activities: Resolution 1696, Resolution 1737, Resolution 1747, Resolution 1803, Resolution 1805, and Resolution 1929.
• The latest UN SC Resolution 1929, demands cessation of all Iranian nuclear activities including; enriching to 20%, cessation of construction of the facility in Qom and full cooperation with IAEA investigation into the military aspect of its nuclear programme.
• Current UN sanctions against Iran include a travel ban for certain officials connected with its nuclear program, a complete arms embargo and a freeze on all assets of its Revolutionary Guard which controls Iran’s nuclear programme.
• The US and EU have bolstered these with unilateral measures; most notably the blacklisting of certain Iranian banks and insurance firms as well as separate travel bans for members of the Iranian regime.
• The US has designated Iran’s Revolutionary Guard as a supporter of terrorism and imposed separate sanctions on all its commercial and military activities.
• Germany refuses to export nuclear fuel or technology to Iran or refund any money Iran has already paid it.
• Canada has invoked additional sanctions, extending travel bans on Iranian nuclear scientists and freezing some assets from proscribed Iranian banks.
______________________________________

Ramifications of a Nuclear Iran

• A nuclear armed Iran is a threat to both regional and global security, not least the security of Israel.

• Threat to Israel
o Israel has good grounds to feel threatened since Iran was internationally condemned in 2005 after President Ahmadinejad threatened to “wipe Israel off the map”, and has repeatedly spoken of the need to “remove Israel from the Middle East”.
 

• Threat to Britain
o Iran does not act as a responsible state within the International community and poses a direct threat to British interests.
o Former Foreign Secretary Jack Straw has previously detailed that in 2006 Iran privately offered to stop aiding the insurgency in Iraq if the UK would ignore Iran’s nuclear programme.
 

• International terrorism
o Iran is a leading state sponsor of state terrorism, financing and training the insurgency in Afghanistan, Iraq and provides support to extremist Islamist terrorist groups across the Middle East.
o A nuclear armed Iran would be difficult to deter from providing support to terrorists and equally difficult to hold to account.
o Iran has been rebuked by the IAEA for its failure to cooperate with inspectors to ensure nuclear material is held securely at plants, raising the prospect that nuclear material is being secretly exported to unknown entities.
o A nuclear Iran could provide nuclear weapons to terrorist organisations or other states who oppose the West and Israel.
 

• Regional power struggle
o A nuclear armed Iran could unleash a potentially catastrophic power struggle throughout the Middle East. Arab states including Saudi Arabia and Kuwait have already requested IAEA help to harness nuclear power.
o As of 2006 Morocco, Tunisia and Algeria and Egypt entered into detailed discussions with the IAEA designed to intensify their research into nuclear power.
 

• Energy crisis
o Iran could provoke a major international energy and trade crisis if it were to act on its threat to blockade the Strait of Hormuz if it felt “threatened”. This would trigger an energy crisis as much of the US and European oil and other goods flow through this area.
______________________________________

Conclusion

The evidence indicates Iran is trying to produce a nuclear device, using a civilian nuclear programme as a cover. It is in serious violation of six UN Security Council resolutions regarding its nuclear programme. It refuses to suspend uranium enrichment and continues to hamper IAEA access to its nuclear activities. Thus far, Iran has been resistant to negotiations and confidence building measures.

Most western countries are sufficiently worried about Iran’s nuclear programme to implement sanctions through the UN, with many others unilaterally imposing harsher penalties.

The repercussions of a nuclear armed Iran are potentially disastrous. Not least has it threatened to obliterate the sovereign state of Israel, but it remains a premier financer of terrorism and has the potential to provoke a major regional power struggle and arms race.

_________________________________________________________________________

_________________________________________________________________________

CFI Briefing
Palestinian Economy  
11 October 2010

Contents:
1) Introduction
2) State of the West Bank Economy
3) State of Gaza Economy
4) Factors for Future Growth
5) Conclusion
_____________________________________
 

Introduction
 

This briefing will discuss the overall health of the Palestinian economy. The first two sections utilise recent statistics to examine the current state of the Palestinian economy in both Gaza and the West Bank. These sections will include an assessment of the role of external actors, namely Israel and the international community, in the involvement and support of the territories economy. The final section will explore the future factors required for growth.
_____________________________________
 

State of the West Bank Economy
 

• The economy of the West Bank has shown a course of development entirely distinct from that of the Gaza Strip. Indeed, economic growth has outpaced both Israel and the West for the last four consecutive years. Economic growth in 2006-2007 for the territory reached about 4-5 per cent and unemployment dropped about 3 per cent. Growth has continued at a consistent pace with GDP rising 8 per cent in 2008, 7 per cent in 2009 and a further 9 per cent expected growth for 2010 (source IMF).
• Critical to economic growth according to the IMF has been the Palestinian Authority’s successful economic reforms of the financial sector. The PA in the past 12 months has established a modern credit scoring system enabling Palestinians to borrow money more easily as well as changed its banking sector making it in accordance with international standards. Complementing growth in GDP has been a rise of more than 20 per cent in average wages and a rise of 35 per cent in internal trade since 2008.
• Leading the economic surge has been the tourism, sales and construction sectors. Tourism in Bethlehem increased to about twice its previous levels (in 2009 1.5 million tourists visited the city as compared to 700,000 in 2007).  Jericho has seen a similar tourist’s boom experiencing a 50 per cent increase in the last year alone. Figures recently published by the Palestinian Central Bureau of Statistics following a survey on domestic tourism show that around 40 per cent of Palestinian took a local trip in 2009, spending a total of $10.5m ($7.7m in the West Bank and $2.8m in Gaza). The number of guests staying in hotels rose by 13.7 per cent between June 2009 and March 2010, and occupancy rates increasing by 10.6 per cent, to 32.7 per cent.
• Growing wealth and greater access to international capital have led to a construction boom. Rawabi, the first planned Palestinian city, will be built north of Ramallah with funding provided in part by Qatar. Other major building projects include a series of new shopping malls opened in Jenin and Nablus in the past year as well as the construction of two luxury hotels - a five star hotel in Ramallah city centre and a four star hotel in its outskirts. In 2010 Jenin opened its first cinema complex in 20 years; the facilities include a 400 seat film house, an open air cinema and small guest house on site. Ramallah also opened a commercial centre in July 2010. The new $400m project covers an area of 50,000m2 and includes commercial houses, entertainment facilities, shops and hotels. There are 13 commercial towers in total and the project has provided thousands of jobs.
 

a) Israeli and International Support for West Bank Growth
• Israel has supported the growth of the West Bank economy by taking a series of measures to foster economic activity, including improving movement and increasing financial support.
• Movement restrictions have been eased in order to help facilitate increased Palestinian business activity. Since 2007 the Israeli military has dramatically reduced the number of checkpoints, from 41 in July 2007 to 16 today, with all operating as “normally open”. Israel has also removed 409 roadblocks throughout the West Bank. The Crossings Management Authority recorded a 57 per cent increase in the number of entries of Palestinian pedestrians into Israel in 2009, reaching 6,825,247 in 2009, compared to 4,340,362 in 2008. During the first half of 2010 the daily average of pedestrians entering Israel from the West Bank numbered 17,350 and the daily average of vehicles entering Israel numbered 21,420.
• Israel continues to transfer financial packages to the PA and supports international donor conferences which have produced substantial financial commitments to the West Bank. Israel provided 2,299 million NIS in the first half of 2010, compared to 2,029 million NIS in the parallel period of 2009.
• According to the World Bank in 2001, $929m were given by the international community to the PA. This number declined in subsequent years due to violence and instability in the territories; however, since 2007 global aid has reached record amounts.
• The European Union announced in July 2010 a new financial aid package of €71m for the Palestinian Territory. This is in addition to the existing EU commitment of €158.5m for 2010, of which €120m contributes towards the salaries and pensions of PA civil servants and €38.5m is provided in support of the most vulnerable Palestinian families.
• In December 2007, during the Paris Donor Conference, which followed the Annapolis Conference, the international community pledged over $7.7 billion for 2008–2010. Financial aid to the Palestinians is among the highest in the world and represents over 50 per cent of the Palestinian budget.
• A stable security situation combined with growing international financial support and a burgeoning domestic economic situation is positively transforming the West Bank.
_______________________________________
 

State of the Gaza Economy

• The Gaza Strip, a costal enclave south west of Israel has been controlled since 2007 by the Palestinian extremists group Hamas.
• The economy of the Gaza Strip is severely limited by high population density, limited land access, strict internal and external security controls, and restrictions on labour and trade access across the border.
• Although the economy is in a difficult state and growth has been limited in recent years, the territories per capita income was estimated at $3,100 in 2009 placing it above Morocco and neighbouring Egypt. The United Nations Development Programme’s Human Index Rankings (which takes into account life expectancy and education in addition to economic wellbeing) found that Gaza - ranked 110th in the world - ranks higher than many neighbouring Arab states including Egypt (123), South Africa (129) Morocco (130) and India (134).
• Estimated growth for 2010 according to the IMF is a remarkable 16 per cent.
Such impressive growth can be attributed to the loosening of Israel’s embargo as well as the maintenance of ceasefire. A significant rise in the flow of goods since 2009 has resulted in a substantial drop in prices of commodity goods - most Gazan goods are currently cheaper than in neighbouring Egypt.
• The chairman of the National Islamic Bank in Gaza has stated that, a “liquidity crisis” in the Strip’s bank is over. The enclave’s banks currently run a large surplus of liquid cash.  
 
a) Israeli and International Support For Gaza economy
• Israel has continued to transfer since 2007 funds to Gaza to pay for the salaries of Palestinian Authority employees in the Strip.
• Israel has loosened the economic blockade against Gaza despite Hamas remaining in firm control of the territory.
• Israel continues to receive over 10,500 patients in critical need from Gaza providing health care free of charge.
• Foreign donors have pledged $1.6m billion to help reconstruct Gaza - this includes over $200m from the United Nations and $300m from the United States. This number is equivalent to 7.5 times more per head ($579.95) than aid allocated to Haiti ($77.47) following the countries devastating earthquake.
• Alongside the EU’s financial aid package for the Palestinian Territories, the EU, with the Palestinian Authority, has launched a €22m programme to help reconstruct the private sector in Gaza in July 2010. The programme aims to repair the machinery and equipment that was damaged during Operation Cast Lead in January 2009. Over 1,000 companies are eligible for support through the programme. In the first phase, 203 companies will benefit from €4.8m of support.

 
_______________________________________

Factors for Future Growth

• Continued economic growth in both territories is largely dependent upon continued economic reform - currently undermined in Gaza by Hamas policies - and continued amelioration in the security situation.

a) Implementing economic reforms:
• In the West Bank additional reforms are needed to maintain high growth rates, with particular focus needed in changes to the public sector pension system and access to credit for small businesses.
• Absence of market reforms in Gaza will curb any long term high growth rates.

b) Stabilising the security situation:
• With the end of the intifada, foreign direct investment has increased significantly following years of decline. Successful peace negotiations promise a further significant windfall in foreign aid and investment.
• Improved security situation will prompt Israel to further remove its restrictions on traffic movement and exports from the territories which will fuel additional growth.

_______________________________________ 
 

Conclusion
 

While the Palestinian territories remain underdeveloped and face severe constraints towards long term growth, the economic situation when contrasted with neighbouring regional states appears to be less dire than expected. Both territories are currently undergoing an economic boom which places the living standards of Palestinians above many of its larger neighbours, including Egypt.
 

Despite the economic stabilisation of the Palestinian territories a concern has been the distinct and separate economic development occurring between Gaza and the West Bank attributed in large part to the different regime types in the two territories. In the Hamas held Gaza Strip much needed economic reforms are simply not taking place. Furthermore, given the nature of the organisation the international community has been reluctant to provide direct funds for fear that it will divert economic resources for terrorist and military activities directed at Israel.
 

The West Bank, in contrast, under the moderate leadership of Abbas has worked to de-escalate violence and concentrated political efforts on stability and economic growth. The results of such polices has been an upsurge in foreign direct investment, a marked diminishment of Israeli restrictions on movement and border closures, as well as a marked improvement in the livelihood of Palestinians in the territories.