Palestinian elections have been making the headlines for the past few days – with most stories focusing on the political consequences of the results. Not too many people at this point, however, are talking about the economic implications of this week’s elections – yet the economic fall-out can be just as crucial for the Palestinian economy and people as the political one.
For example, it looks like Netanyahu called for economic sanctions on Palestine today. While I do not see economic sanctions being put on Palestine in the near future by the rest of the world, what I can envision is Israel restricting commerce and the movement of goods. In one of my previous blog posts on the prospects for economic cooperation between Israel and Palestine I referenced work of a few of CIPE partners in the region, and all of them continuously make a point of how important are freedom of movement and access to the Israeli market for Palestinian firms. In this regard, I highly recommend you listen to this excellent talk on the economic development in Palestine by Hisham Awartani of Center for Private Sector Development (CPSD), Palestinian Businessmen Association.
Further, I wonder what will be the policy of the new government in regards to private sector development? Afterall, many news stories highlight the fact that it was partly the dissatisfaction with the economic conditions under the current regime that led people to vote for HAMAS:
The victory of Hamas is also a warning sign to the incumbent regional authorities. By casting their ballots for the resistance movement, most Palestinians voted not so much for the “Islamic development course” but against the policy of the current Palestinian regime: against poverty, unemployment, corruption, chaos in the sphere of security, and inability of the authorities to propel the peace process.
Obviously, the ruling government will have to address the economic issues, such as a 30% unemployment rate. But private sector job creation can’t be accomplished in the framework of commercial isolation, ineffective governance mechanisms, poor legislation, and barriers to trade. Creating an environment within which people will be able to put their entrepreneurial potential to work could just be the greatest task facing the new government. Comments from regional experts are welcome.
Published Date: January 27, 2006