The headline “Palestinian Authority in danger of economic collapse” reminds me of hundreds of similar headlines since the PA was established back in 1994. Since then the PA has been receiving foreign aid at levels unprecedented in history, relative to the product and income generated by the Palestinians. The aid provided so far reaches $10 billion and dwarfs the Marshall Plan of U.S. aid to Europe after World War II.
In retrospect the aid was a colossal mistake. It relieved the Palestinian leadership of its responsibility for the economic well-being of the residents. Responsibility was placed on the shoulders of the international community, including Israel. The PA became used to solving its problems by begging others for handouts.
The Palestinian administration learned to ignore economic considerations and the Palestinian bureaucracy grew to monstrous proportions. Dozens of unnecessary projects were started in the PA areas that were not completed. Senior PLO officials opened private funds into which international aid money was channeled, escaping international scrutiny. The PA became hooked on foreign aid as if it were an addictive substance.
Because of the huge and readily available aid a strong middle class did not emerge in the PA, but a rotten and corrupt class of government officials appointed to their offices by the ruling party. Because of the foreign aid, private investors avoided coming to the PA. It is a known choice: either you have foreign aid or you have foreign investment. Because of the aid, almost all of which was public, the Palestinian business sector was stifled. Had the donor countries restrained themselves in the amount of aid they gave the Palestinians, Palestinian per capita income today would be twice what it is.
Anyone who wants what is good for the Palestinians, a hard-working, educated, and enterprising people, must demand not that the aid to the PA be increased but that it be sharply cut. The Hamas electoral victory only proved the futility of the aid. It is time for the Palestinians to take their fate in their hands. It is time for economic considerations to take their place in their national strategic picture.