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Expert Says Palestinians Don't Need Financial Aid

(San Francisco Chronicle) James Sterngold - * While the U.S. and other donors have pledged billions of dollars, a senior member of the Palestinians' new economic team says the flood of money is largely unnecessary at this time - and some of it may be counterproductive. "If you poured in a lot of financing at this time, it would not have a big impact. It would not be very effective," said George T. Abed, who retired earlier this year from a senior position at the International Monetary Fund, then was appointed governor of the Palestine Monetary Authority. "Governance is poor. It would be wasted." * Abed, 66, a UC Berkeley-trained economist, said although unemployment and poverty are rampant inside the territories, Palestinian banks are overflowing with deposits and many wealthy Palestinian entrepreneurs living overseas are eager to invest in the territories. The immediate challenge is building a modern system to handle the existing capital efficiently, not attracting more. * The Palestinians already receive the highest per-capita donor aid in the world, according to James Prince, a consultant to the Palestinian Investment Fund and co-author of a recent report, "The Economic Road Map: Beyond the Israeli-Palestinian Conflict." The funds, Prince said, have not done much beyond ensuring a minimum standard of living. "Many of the donor programs have not only been ineffective, they have harmed the economy," said Prince. "Cash is not the issue. What you need is investor confidence." * According to World Bank figures, the Palestinian per capita gross domestic product plummeted from $1,493 in 1999 to an estimated $904 this year. * The 22 Palestinian banks regulated by Abed's authority have a total of $4.3 billion in deposits, but only $1.8 billion in loans in the territories. Glenn Yago, director of capital studies at the Milken Institute in Santa Monica and co-author of the "Economic Road Map" report, estimates that overseas Palestinians may have as much as $60 billion in wealth, at least some of which could be funneled into the territories if the financial climate becomes attractive.
2005-09-05 00:00:00
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