The World Bank on Thursday endorsed a Palestinian reform plan that requires $5.6 billion in international aid over three years, but warned that the money will not stem economic decline in the West Bank and Gaza unless Israel also eases Palestinian movement and trade.
The Palestinians plan to ask for the aid at a conference of donor countries next week in Paris.
The World Bank said the plan is "a process around which the Palestinian Authority, Israel and the donor community can coalesce."
However, if Israel's closures remain in place, these large sums would at best slow a "downward cycle of crisis and dependence," the report said. By contrast, a considerable easing of Israeli restrictions and subsequent recovery of the Palestinian private sector could lead to double-digit economic growth, the World Bank said.
Israeli defence officials have refused to remove roadblocks and barriers.
In the development plan, the Palestinian government pledges to cut government spending and reform institutions.
About 70 percent of the aid would initially go to budget support and 30 percent to development projects, such as boosting tourism. The balance would shift more and more toward development as the Palestinian government recovers.
The plan predicts an annual economic growth of about 5 percent, provided that Israel gradually eases its restrictions on travel and trade. The Palestinian population grows by almost 4 percent a year, and such modest economic growth would initially have little effect on per capita income.
The World Bank said that Palestinian reforms alone would not reverse economic decline. "They must be fully supported by both the large increase in aid and the relaxation of the (Israeli) closure regime ...," the bank wrote.
If donors pledge the full amount requested, but Israeli restrictions remain in place, the Palestinian economy would keep shrinking by about 2 percent a year, it wrote.
In the worst scenario — less than full donor support and continued Israeli restrictions — "growth will fall sharply and the already growing poverty levels will rise dramatically," the report said.
By contrast, if there is full donor support and considerable easing of movement, it revive the private sector and "drive growth rates to even double-digit levels," the bank said.
The roadblocks are making it increasingly difficult for manufacturers to ship goods, even within the West Bank. The West Bank and Gaza are cut off from each other, and Gaza has been largely isolated since June when Hamas seized control by force, and Israel and Egypt halted border traffic.
Ninety-five percent of Palestinian trade is with Israel, the bank noted, but shipping goods from the West Bank has become more difficult with the building of Israel's separation barrier in the West Bank.
Ron Pundak, head of Israel's Peres Centre for Peace, said the donors should be cautious, making sure the Palestinians carry out promised reforms and that Israel eases restrictions.
"Otherwise, if you are investing in a factory or an agricultural centre and the goods cannot move from one place to another, it's a waste of money," he said.
Güncelleme Tarihi: 13 Aralık 2007, 14:15