In April, 2011, the International Monetary Fund (IMF) and the World Bank both declared that the Palestinian Authority (PA) was “capable of managing the economy of an independent nation” (see Int’l Monetary Fund, World Bank: PA ready for statehood, Chana Ya’ar, Arutz Sheva, April 7, 2011). Both of these world-class financial institutions had undertaken separate studies and both presented the same conclusion at a meeting in Brussels. The statement quoted above came out at a time when the PA was starting its unilateral push for UN-approved statehood, and because of the reputations of the IMF and the World Bank, the statement served as a strong, credible endorsement of the PA.
It was exactly what Arabs and their supporters wanted to hear.
This endorsement, however, surprised those of us who actually live in the Middle East because even inattentive amateurs here could see that the PA was completely incapable of managing any kind of sustainable economy. The evidence was everywhere: high unemployment, mind-boggling corruption, an unnaturally high reliance on financial help from others and budget shortfalls had persisted so long that they had created an unending economic plague for Ramallah. ‘Economic viability’ was a joke.
Three months later, Evelyn Gordon, writing in Commentary magazine (“The myth of the Palestinian Authority’s readiness for statehood”, July 5, 2011), spot-lighted the reports’ jaw-dropping pronouncement with a simple reference: ”one requirement for being a functioning state rather than a failed one,” she wrote, “is being able to pay the bills”—which, she pointed out, the PA has a persistent problem doing. The IMF and the World Bank didn’t see this?
Well, actually, they did see it. But they appear to have sugar-coated their findings. What they did was similar to a doctor looking at a patient on his death-bed, and telling the family, ‘this patient is capable of managing a healthy life’.
It’s worse than that: as Patrick Clawson and Michael Singh have pointed out (“Is the Palestinian Authority really ready for statehood”, Jerusalem Post, April 24, 2011), that optimistic IMF/World Bank statement depends entirely on two rather stunning assumptions, neither of which have any likelihood of becoming reality anytime soon. First, there must be sustained Israel-Palestinian cooperation. But instead of cooperation, the PA shows nothing but contempt for Israel: Abbas threatens to haul Israel ‘before international institutions’ (April 2012), local Arab TV broadcasts songs yearning for a world without Israel (February, 2012), the principal Palestinian religious leader, the Mufti Muhammad Hussein, declares that the killing of Jews by Muslims is an Islamic goal (January 2012), and, perhaps most telling, when a meeting between Abbas and Israeli official Shaul Mofaz was announced (June, 2012, to discuss peace), protests in Ramallah were so violent that the meeting was cancelled.
Cooperation? Don’t count on it.
The second stunning assumption is that Gaza returns to PA control. This is necessary if the PA is to create a viable state because Hamas in Gaza is ‘famous’ for its corruption; any state that includes Hamas would become a failed state. But the reality is that the PA is not worried about taking over Hamas; it worries about the opposite--if elections were held today among Arabs under PA control, Hamas could win and throw out the PA—as it had done in Gaza.
Don’t count on the PA taking over Gaza; worry instead that Hamas will take over the PA.
The IMF/World Bank assumptions require such extraordinary impossibilities to occur that they defy reality. They remind one of that doctor who, with a straight face, tells the family of a patient on his death-bed that the patient can indeed manage a healthy life-- provided two assumptions are met: he sits up to tie his shoes by himself, and he balances his check-book.
Neither one of those things is ever going to happen. No competent doctor would dare speak that way; and the same should be true for the economic case for PA statehood.
The true economic case for the PA is that it survives on a life-support system called ‘donations from foreigners’; they have no economic stability of their own and cannot survive as an independent nation—and the IMF and World Bank know that.
In fact, on July 2, 2012, the IMF itself denied a PA request for money (for ‘technical’ reasons)—and two days later, the Jerusalem Post reported that the PA faces not only another financial crisis, but the worst such crisis in its history; they have no money to pay their 160,000 employees and they cannot settle their obligations to private contractors. In the fifteen months since that glowing IMF/World Bank pronouncement, the PA’s financial situation has gotten worse, not better; every month, they seem to provide additional evidence they are one of the world’s worst financial basket cases. Today’s crisis threatens to collapse the PA.
The IMF/World Bank reports were not economic; they were political. But their politics are dangerous because their misrepresentations support the creation of a failed state that could destabilize more than just the Middle East.
There is also a second danger: HaShem, the G-d of Israel, watches everyone. He watches over his beloved Israel. He watches how nations and the powerful ‘vote’ on the question of Israel. He sees, who is for Israel? He listens, who bends reality to support Israel-haters?
The G-d of Israel watches. He records in His book of deeds. The verbal trickery of the powerful always has consequences; and in this case, the failure to be honest could create a disaster of Biblical proportions.
Do these organizations lie? Yes, they lie. Can lies destroy? Yes, they can.
Does the G-d of Israel watch? You tell me.