Economic Issues

Persistent Failure: World Bank Policies for the Occupied Palestinian Territories


The World Bank’s growth report on the Occupied Palestinian Territories concludes – unsurprisingly – that growth is unsustainable because it is aid-driven, and yet it recommends private sector-led growth as a way forward. Can such growth or indeed any form of sustainable development really take place under the conditions of prolonged occupation, colonization, and dispossession? This question badly needs to be addressed because so few development organizations, least of all the Bank, do so. Al-Shabaka Program Director Alaa Tartir and Guest Author Jeremy Wildeman do so by deconstructing the Bank’s report, bringing to light the danger of present and past recommendations, and calling for a completely new approach.

Wielding Unwarranted Influence

In July 2012, the World Bank released a new report, Towards Economic Sustainability of A Future Palestinian State: Promoting Private Sector-Led Growth. It provides a prognosis for the state of the Palestinian economy, the obstacles it faces, and its major weaknesses and structural distortions. The report also provides policy recommendations for the development of a sustainable Palestinian economic model based on export-driven, private sector-led growth. The report’s frank conclusion is that recent Palestinian economic growth is illusory and unsustainable precisely because it is aid-driven and those aid levels are expected to decline over time. This conclusion comes as no surprise to many long-time observers, who have heralded the report as further proof from a major international institution that the current aid model is not working1 and needs to be reformed. For others, the report’s conclusions provide further evidence that the Palestinians are not yet ready to have their own independent state.

Regardless of the different interpretations of the report’s findings, what is surprising is that the World Bank does not appear to be learning from the experiences and mistakes in its own policy recommendations after 20 years of involvement in Palestinian economic and aid planning. The World Bank continues to provide policy recommendations that are not contextually relevant, fail to take into account the day-to-day realities of occupation, and seem bereft of a historical understanding of the Government of Israel’s long-standing policies toward the Palestinians. By providing recommendations advocating a model of growth that relies on closer economic integration with Israel and an export-driven economy based on the East Asian “Tiger” economies, the World Bank is making proposals which are doomed to fail and would only result in the further waste of valuable time and resources at precisely a point in time when the Palestinians can least afford it. The development of a market-driven, export-driven economy is completely impossible under occupation. At best, the World Bank recommendations provide a distraction from the primary need for the Palestinians, ending the occupation and Israeli rule, rather than creatively finding new ways to adapt to it.