Shortage in aid grants threaten a Palestinian state

The United Nations and the International Monetary Fund (IMF) issued wo separate reports on Wednesday September 14, 2011 ) stating that the shortage in aid grants and absolute commercial restrictions imposed by Israel as well as a diplomatic impasse are threatening factors which may foil Palestinian efforts to build viable economic institutions capable of running an independent state as there are more dangers on the road both economically and politically which may foil the achievements made so far over the past couple of years in the field of building a state. The UN special coordinator for the peace process in the Middle East Robert Sari said he had doubts regarding separating what has actually been realized by the Palestinian authority and the outcome of the political process, pointing out that indeed there is nothing to be done under prolonged occupation and failure to settle the ultimate status and lack of any progress regarding the two-states solution and continuous Palestinian divisionism. According to the IMF, the Palestinian economy is suffering a sharp decline in aid grants with a total volume of funds paid over the last eight months in 2011 reaching only 400 million US dollars which is less by 300 million dollars than expected and he that the shortage in aid grants constitutes serious risks to Palestinian authority’s capabilities to build a state especially in view of the fact that they do still rely upon aid grants to a large extent. The IMF aid that the overall economy has become doubtful under an annual growth rate of 4% only during the 1Q in 2011 dropping by 8% from 2010. He added that in order to maintain the pace of growth and to restore the balance and expedite the construction of a state, it would be vital that the Israeli government ends all economic restrictions as soon as possible. The UN highlighted problems ensuing from the Israeli restrictions on imports and exports as well as movement of Palestinians inside the West Bank and a complete banning of Gaza inhabitants from entry to Israel.