Palestinian economic growth in steady decline due to financial crisis

The Palestinian economic growth rate is witnessing a steady decline, due to a severe financial crisis faced by the Palestinian National Authority (PNA), Minister of Economy Jawad Najji told Xinhua in an interview on Friday. The economic growth rate in the first half of 2013 doesn't exceed more than 4.5 percent, compared with 9 percent in the past three years, Najji noted. The minister attributed the Palestinian hardship to "Israeli siege on the Gaza Strip, the ongoing obstacles imposed by Israel on West Bank trades, as well as slow international donations and aid." The PNA has been going through a fiscal crisis for several years, which increased its internal and external debts to 4.2 billion U.S. dollars. "We are facing serious challenges to overcome the growing crisis, as we have 1 billion dollar shortage in our budget," Najji told Xinhua. The minister added that poverty and unemployment rates are increasing, as thousands of young people annually join the labor force market, which puts increasing pressure on decision makers to create job opportunities. The PNA budget suffers of a structural defect, which can be obvious in the large gap between commercial expenditure and local income. The PNA also faces difficulties in paying civil servants monthly wages and dues. Najji considered the continuation of Israel's grip on crossings and terminals as well as on natural resources "a significant problem" for the Palestinian economy. The PNA minister of economy denied any official contacts on a ministerial level with Israel, adding "contacts with Israel are based on daily issues with the Israeli ministry of trade, or the civil administration, to facilitate the trade movement for the Palestinians in the West Bank." He also said that the PNA is looking forward to expand Palestinian exportations to the outside world, but complained that the hard Israeli measures "prevent us from doing so." During a meeting held on June 16, Israeli and Palestinian ministers of finance had agreed to resume economical talks between the two ministries, including the increase of exchanging trades which stopped more than a year ago. The renewal of the Israeli-Palestinian trade cooperation was made as U.S. Secretary of State John Kerry failed to get the two sides to resume peace negotiations, which had been stalled since 2010 due to differences over Israeli's settlement construction in the West Bank. "Kerry's effort to resume the peace talks is mainly based on the concept of economical peace, the thing that the Palestinians totally reject. We never accept this concept because we believe that the track of politics and the track of economy are parallel and never mixed," said Najji. However, Najji called on Kerry to exert more pressure on Israel to end its military occupation of the West Bank as well as dividing the territory into areas (A), (B) and (C). Najji revealed that 62 percent of the Palestinian lands of the West Bank are in area (C) under full Israeli security control. Najji stressed on the PNA's commitments to the Gaza Strip, which has been violently taken over by Islamic Hamas movement in June 2007. He revealed that 57 percent of its budget goes to the coastal enclave, which has been under the Israeli blockade since 2007.