RAMALLAH, April 13 (JMCC) – The World Bank has soundly endorsed the Palestinian goal of state-building, calling for concerted international efforts to support the national project.

In a report issued Monday, the bank called for Israel to continue easing movement and access restrictions, further pursuit of a Palestinian Authority reform agenda, and sustained support from the international community.

“The PA is well on the way to delivering on its promise to create a Palestinian state that can deliver services and economic prosperity to its population,” said Mariam Sherman, World Bank Country Director for West Bank and Gaza, in a press release. “However, concerted action is required to create an enabling environment for sustainable private sector growth: continued lifting of economic restrictions by Israel, accelerated implementation of the PA’s reform agenda, and improved predictability of financial support by the donor community.”

The report, submitted to the Ad-Hoc Liaison Committee meeting in Madrid, comes on the heels of a Palestinian Central Bureau of Statistics economic forecast for 2010 that indicates that recent growth in the Palestinian economy depends largely on freedom of movement in the Palestinian territories, especially the Israeli military’s lifting of its blockade on people and goods moving in and out of Gaza.

“The largest impediment to private sector investment in the West Bank and Gaza remains the restrictions on movement and access to resources and markets imposed by the Government of Israel,” writes the World Bank.

PALESTINIAN STATE-BUILDING

The World Bank’s support for the state-building project of the Palestinian government comes with reservations, however.

Heavy dependence on donor assistance remains a “cause for concern,” said the bank.

Nasser Abdel-Karim, economics professor at Birzeit University, shares this worry that the recent growth in the Palestinian economy is precarious.

“We cannot say the growth is sustainable,” he said. “Neither can we say it comes from private sector investment. To be sustainable the social growth must be internal, and this is not the case.”

The International Monetary Fund also released a report this week arguing that a breakthrough in the peace process between Israel and the Palestinians is essential for durable Palestinian economic growth.

A GROWING DISPARITY

Moreover, the longer that Palestinians are divided politically and physically between the West Bank and Gaza Strip, the greater the imbalance in their economies.

Figures indicate that the occupied West Bank and Gaza Strip together saw remarkable growth of 6.8 percent in 2009. Gaza alone, on the other hand, experienced a mere one percent growth rate due to deteriorating economic conditions created by the Israeli military blockade.

The World Bank report supports the need for opening Gaza’s borders. Currently, the Strip’s economy has been driven literally underground into a vast network of tunnels and a prosperous black market economy.

This alternative economy is threatened, however, as Egypt builds a deep steel barrier underground along its border with Gaza. According to some reports, hundreds of tunnels have now been reduced to a handful.

“You might have backfire from Gazans who see the West Bank is prospering while Gaza is deteriorating,” says economist Abdel-Karim. “That will not help reunify or reunite the Palestinian people.”

“Once the siege is over you may have two parts of the same society and economy that are completely different in structure and performance. Then you will have to direct a lot of resources later on to fill the gap, which could put a big financial and economic burden on the West Bank.”

The Palestinian leadership has been divided between Hamas in Gaza and the Fateh-controlled Palestinian Authority in the West Bank since Hamas forces overran Palestinian Authority security installations in 2007.