Palestinian Budget Shortfall

Despite the flurry of news stories about economic growth in the West Bank, and an IMF report supporting that claim, the Palestinian Authority still faces a $400 million shortfall in the 2009 budget, according to Norwegian Prime Minister Jens Stoltenberg.

"We note that there has been increased funding coming to the Palestinians, that's on a positive note," Stoltenberg told reporters at the United Nations.

"But on the negative side there is still a shortfall of $400 million in the Palestinian budget which needs to be addressed," he added. Stoltenberg heads the Ad-Hoc Liaison Committee that tracks aid to the Palestinians.

United Nations Secretary-General Ban Ki-moon supported Palestinian efforts to complete the building of state institutions in two years, and pledged the full assistance of the United Nations towards this goal. For donors, a UN press release said, this means continued support to the Palestinian Authority, including budget support.

Secretary-General Ban may have been referring to Palestinian Prime Minister Salam Fayyad's plan for statehood, which included building pre-state institutions. His plan, however, also included ending the Palestinian economy’s dependence on Israel and foreign aid.

The challenge is that the two are linked. Israeli control of the economy increases Palestinian dependency on aid. Critics allege that international donors in effect subsidize the occupation.

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