The Palestinians' Real Problem is Aid

Much of the talk since the Palestinian people decided that Hamas best reflects their views has centered on the question of whether the US and the EU should continue to send aid to an organization pledged to destroy Israel, and on the humanitarian consequences of discontinuing that aid. Interesting questions, those, but largely irrelevant, for two reasons.

First, after much to-ing and fro-ing, the donor nations will continue the flow of money, if not directly to Hamas, then to 'the Palestinian people' through a variety of UN and other agencies. Indeed, the EU has already handed the UN a check for $78 million to see the Palestinians through their current cash crunch. Europeans would not be able to bear the television images of starving children, hospitals without medicine and other pictures of the sort that produced the progressive weakening of the restrictions on trade with Iraq. The Times had it right when it reported that EU foreign ministers are meeting 'to consider how to continue providing aid to Palestinians without endorsing what is regarded as a terrorist organization by the EU and the US'. Not whether to continue aid, but how to keep the money flowing.

Corruption, of course, also helped to turn the international sanctions against Iraq into a largely ineffective program, and there is no reason to believe that, with millions sloshing around every month, a wave of integrity will overtake the dispensers of aid to the Palestinians, or its recipients.

Second, the questions that are now consuming the time of EU and US policymakers are irrelevant because they ignore the more important one: why do the Palestinians continue to need massive infusions of charity?

Why do all those perfectly healthy men always have time to pour into the street, firing their Kalashnikovs into the air?

The answer is one we should have learnt after pouring billions into Africa and other badly governed nations: an assured continued flow of aid infantilizes and debilitates its recipients, and prevents the local economy from becoming self-sustaining. It diverts local politicians from the hard work of creating the institutions that make private-sector development possible, and instead sets them wandering from one world capital to another, begging bowl in hand.

Now, there is no denying that Israel's reactions to specific threats to its security often do collateral damage to the economies of Gaza and the West Bank, just as suicide and rocket attacks by Hamas damage tourism and other sectors of the Israeli economy. The closing of the Karni crossing on Gaza's eastern border with Israel has no doubt made it somewhere between difficult and impossible for Palestinian farmers to get their goods to market. But it seems obvious that the Palestinians can eliminate the problem by reining in the terrorists who threaten to attack the Karni facility.

Such difficulties can be overcome only if there is a sufficient incentive to do so.

According to a leaked version of a report being circulated to donor nations by the World Bank, unemployment among the Palestinians is about 20 per cent. But that counts among the productively employed the approximately 30 per cent of the workforce on the payroll of the Palestinian Authority, half of whom are armed security personnel, many employed to counter attacks by other Palestinians, many available for rent-a-mob duties when the BBC cameras are rolling.

The World Bank says that if Israel continues to withhold tax revenues, and if the donor nations cut back on aid, the Palestinian economy will shrink by 27 per cent in 2006, unemployment will climb to 40 per cent, and 67 per cent of the population will fall below the poverty line.