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Who's paying for all this?

One of the key issues on which the success or failure of the Israeli-Palestinian accords will hinge is that of aid and the adoption of sound economic policies, the World Bank has warned. In a special report prepared at the request of the Palestinians, the Israelis and other parties to the Middle East peace negotiations, the World Bank notes: "The economy of the Occupied Territories is currently in turmoil".

Income levels have stagnated over the past decade; unemployment and under employment are rising rapidly; infrastructure and social services are grossly overstretched.

The World Bank estimates that at least $3bn in aid will be needed over the next decade to improve schools and services such as water, sewage and electricity all of which, where they exist at all, are in a bad state of disrepair.

In an interview shortly before the signing ceremony on the White House lawn on 13 September, President Bill Clinton said he expected economic contributions from the United States to be modest. He saw America's role as one of providing seed money whereas the bulk of the aid package would be provided by the Gulf Arab nations, the EC, Japan and Scandinavia, all of which are believed to have indicated their willingness to offer economic support.

Speaking to members of the press in Washington, Mr Clinton confirmed he had held a telephone conversation with King Fahd of Saudi Arabia on the subject of funding.

The Saudi monarch is reported to have said that despite continued ill feeling over Palestinian support for Iraq during the Gulf war, the kingdom was prepared to contribute funds itself and also help raise money from its Gulf neighbours to aid in setting up the new infrastructure. Oman and the UAE are also believed to have pledged support.

Meanwhile, EC foreign ministers meeting in Belgium sanctioned an additional $575m over the next five years to be spent in the West Bank and Gaza. The funding will be in addition to the $64.5m a year already paid to the Palestinians. Yasser Arafat has been invited to attend talks with EC officials in Belgium to discuss economic reconstruction in the West Bank and Gaza.

Additionally, Palestinian and Israeli experts will be invited to meet with EC officials separately, to confer on the best means of utilising funds to improve healthcare, education other crucial services.

Jacques Delors, president of the EC, was present at the historic signing ceremony in Washington. Although supportive of the accords and optimistic of their chances of success, he was at pains to warn western countries against making rash promises of huge aid donations without proper assesment of the Occupied Territories capacity to absorb aid. "We have seen what happened with Russia", Mr Delors noted.

The World Bank report expressed the opinion that with efficient handling the Palestinian economy could be set to expand, thanks to high levels of education and entrepreneurial flair.

However, it could just as easily detriorate if the new Palestinian adminstration adopts poor policies and receives too little aid.
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Title Annotation:analysis of the economy by the World Bank on the peace accord signed by the Palestinians and Israelis
Publication:The Middle East
Date:Oct 1, 1993
Words:502
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