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PATHWAY TOWARD
A PLAESTINIAN VISION FOR 2005 AND BEYOND
A Progress Report on the
Palestinian Strategic Development Plan
TABLE OF CONTENTS
I.Introduction
II. The Foundation for Development
III. Strategic Framework for the Vision
IV. Preparing the Palestinian Strategic Development Plan (PSDP).
V. Continuing the Pathway T oward Defining and Achieving the Vision.
I. INTRODUCTION
For nearly a decade, the Palestinian people in the West Bank and Gaza (WBG) together with those in the Diaspora, represented by their leadership in the PLO and the Palestinian Authority (PA) have followed a pathway toward defining and effecting a vision for the future with the help of the donors and other partners. That vision now can be expressed in the following broad-based goal:
To develop a society that provides for the well being of the Palestinian people through sustainable growth within the context of a democratic society built on foundations of equitable social and economic opportunities in the context of an independent, free, sovereign and modern entity in peace with its neighbors.
Arriving at this overall goal has involved, among other activities, the formulation of both plans within and across sectors. These plans have been used to guide the PA, the private sector, and civil society in meeting the challenges of Palestinian development.
While the main premise of the above mentioned goal and vision remains valid and accurate in the overall sense, the special case of the Palestinian society and economy, however, necessitates a more detailed and clearly defined development targets that, once implemented, will eventually lead to the realization of this vision. Stated differently, the dynamic and changing situation on the ground requires a clearly defined vision for the Palestinian future. Given the movement from an interim arrangement toward final status, it is imperative that the PA, together with the private sector and Palestinian civil society, strive toward more articulated vision and strategy that take into account such a situation.
Based on this logic, the objective of this docwnent is twofold:
The logic behind the need for this vision is a straightforward and simple one. On the verge of the announcement of the independent Palestinian state, and the conclusion of the permanent status negotiations, this nascent state will be faced with both daunting economic challenges and enormous economic opportunities. The challenges are related to the legacy of the occupation years, the very restrictive environment that prevailed during the interim period, and the challenges related to the implications of the final status settlement. The opportunities are related to the indigenous potential that is unique to the location of the new state, its human capital, as well as the strong international political and economic support it is expected to enjoy. That is where economic policy and development strategy of the new born state gains its importance so as to deal prudently with these challenges, and to take advantage of the existing opportunities in order to realize its full potential.
The medium term strategic development vision for the future state of Palestine in a situation of permanent peace, therefore, will consist of three components. These components, which intend to address three different aspects of the vision that will be discussed in the span of this document, can also be looked at as the overall objectives of the future strategic development plan.
(1) the continuation of the past and present efforts to rehabilitate and reconstruct the Palestinian economy and the Palestinian society. This aspect of the future vision and development plan will deal with the current ongoing efforts to provide the Palestinian population with adequate physical and social infrastructure services; reform and modernization of the public sector; establishment of democratic traditions and role of law; implementing a massive program of rehabilitation, training, and education with special attention to those most traumatized and affected by the years of occupation and struggle; and continuation of policy measures intended to create enabling investment environment in Palestine. The intention here is to build on what already has been achieved in the past few years, and to continue the efforts aimed at correcting the distortions created by the long years of the Israeli occupation.
(2) addressing the challenges that will emerge as a result of the successful conclusion of the final states negotiations and the establishment of a comprehensive, just and lasting peace in the Middle East. These challenges pertain to: (1) the expected return ofhundreds of thousands of displaced Palestinians that left the West Bank and Gaza after 1967 war, and their smooth and productive absorption along with their families back in the Palestinian society; (2) the expected return of more Palestinian land in the West Bank and Gaza Strip and the need to redevelop these areas so as to enhance the resource base of the Palestinian economy; (3) the development of the expanded Palestinian water resources to maximize and optimize its use for consumption and productive purposes; ( 4) the construction of a free, easy, and efficient passage between the west Bank and Gaza Strip so as to reintegrate the two parts of Palestine and create a better economic opportunities and societal harmony; and ( 5) the construction of basic infrastructure to facilitate the free access to the regional and world economy and improve the chances of the Palestinian economy in regional and world trade.
(3) addressing the challenges of reintegrating Palestine back in the regional and world economy, and the design and implementation of economic policies and economic management that will lead to this goal. The intention here is to build a competitive advantage of the Palestinian economy so as to benefit form the immense opportunities created by the twenty first century revolution in communication and technology, and to increase the share of Palestine in the world trade and its share of foreign direct investment in today's vastly globalized world economy.
The above mentioned three main elements of the future vision for developing Palestine in the next five years and beyond is based on the following assumptions:
It is to be noted that the development vision presented in this document is not intended to prejudge the final status agreement between the PLO and Israel, and in case of any contradiction between the strategic development plan and the agreement, the plan will be modified accordingly.
III. THE FOUNDATlON FOR DEVELOPMENT
The extraordinary array of resources on which to build the foundation for Palestinian development will be a key to its success. The first and foremost of these is represented in the Palestinian people, who are dedicated to education and to learning, rich in entrepreneurial experience, steadfast in their concern for community and society as a whole, and dedicated to efforts aimed toward sustainable development The extraordinary cultural heritage that abounds in the region, including ancient historical areas and sacred religious sites representing three of the major world religions (Christianity, Islam and Judaism) represents a significant resource. Natural resources, while few, include stone quarries, fisheries and the Gaza Coastal area in general ( a potential tourist area), as well as fertile agricultural land with both existing and potential exports, such as olives and olive oil, flowers, grapes, and other high value export crops. Finally, the strategic location of the area cannot be overlooked, nor its historic advantage as a major trade route to and from markets in the Arabian Peninsula and the East. This is coupled with the role of Palestinians in and support received from the Arab world and Palestinians and other Arabs in the Diaspora, including particularly in the United States, Canada, and European countries. Finally,more recently Palestinians have negotiated favorable terms of trade with key partners, including the European Union, the United States, Canada, and China and continue to enjoy generous support from Arab and international donors.
Nonetheless, the unique political reality that faces Palestinians in their efforts toward sustainable development has mitigated the effective use of these resources. The Palestinian economy is of relatively limited size, with real GDP and GNP in 1999 reaching approximately US$ 4.7 andUS$ 5.7 billion, respectively, and a total population of about 3 million at the beginning of 2000. Real per capita GDP and GNP, respectively, hover around US$ 1,550 and USS 1,890. The participation in the labor market is quite low, with less than 50 percent of the working age population in the labor market, and less than 40 percent in Gaza. Indeed, in 1998 more than one-third of the population in Gaza and nearly 15 percent of the population in the West Bank lives in poverty - defined as $2 per day per person. The PA currently controls only a fragmented and limited portion of the Palestinian land and water resources, limiting internal and external trade, access to services, and rational and comprehensive development of infrastructure. On the positive side, the average illiteracy rate is just 15 percent -low by regional standards - and there are no differences in literacy between young men and young women. The Palestinian people are relatively healthier than most in the region, with a higher life expectancy and lower infant mortality than most countries in the region.
The challenges that face our society in pursuing our vision are considerable, with a still-fragile and relatively small economy, a rapidly growing population, and unique constraints that impede sustainable development. Nonetheless, we have a unique opportunity to build a model in the region for economic and social development, to strengthen public and private sector institutions, and to create a climate that ensures efficient and transparent governance.
III. STRATEGIC FRAMEWORK FOR THE VISION
In the process of collectively defining a vision for a sustainable future for Palestinians, myriad complex: issues need to be addressed, policies formulated, and difficult tfade,. offs made in resource allocation. Discussion of these issues among Palestinian civil society predates the PA and these discussions have informed the deliberations since 1994 involving the PA, the private sector, and NGOs. What is our current thinking with respect to critical public policy areas on which a vision statement -and the PSDP -will be built? The areas used as examples in this abbreviated document are: institutional development, economic development, environmentl management and social policy.
(a) Institutional Development and Strengthening
Creating and strengthening public sector institutions and enhancing the relationship between the public and private sectors has been a primary focus of donor agencies and of the PA since its inception. For example, key laws passed by the Palestinian Legislative Council (PLC) that serve as a framework for development have included, for example, the Local Government Law, the Monetary Law, the Investment Law, the Non-governmental Organizations Law, and the Environmental Law. These are, of course, only initial steps in the process of establishing regulatory foundations; for several of these laws, there needs to be continued transparent development of regulations and regulatory agencies that are mandated to oversee compliance with these regulations and to ensure their equitable implementation.
Establishing a legal environment that ensures due process and encourages the upholding of the rule of law in general is critical at this time and certainly a foundation on which to build genuine, democratic governance structures and processes. It will also set the stage for development and implementation of democratic practices, including, but not limited to, electoral and policy development processes. Specific laws that are at various stages of preparation or review that will facilitate economic development include, for example, the Water Law, Planning and Building Act, the Education Law, and the Health Law.
Management strengthening is key in the areas of policy planning, phasing-in decentralized decision-making as appropriate, program and project evaluation, and rationalizing administrative and budgeting regulations and processes. An important tool for all of these will be data and information systems that are compatible within and across public institutions.
It should be noted here that the PA intention for institutional development and reform was clearly evident in the formation of the Higher National Committee for Institutional Development (HNCID) which was established by a presidential ,decree on August 11, 1999. HNCID, an inter-ministerial committee, was mandated to undertake a major stock taking of the Palestinian public sector and to come up with policy measures to reform and modernize the PA institutions.
(b) Economic Development: Making the Best Possible Use of Resources
The fundamental economic framework on which Palestinian development will be based needs to be designed; simply stated, there is a need to determine which type of economy is the most appropriate for our circumstances. This will undoubtedly not be a static decision; all economies evolve over time. However, we can benefit from the experience of other countries and the established body of literature with respect to balancing public and private sector roles in the economy, and concerning specifically public/private roles and Partnerships. The latter will entail addressing such thorny areas as
The legal and policy frameworks that will underlie these roles must be clear defined through a transparent process, and explicitly articulated. Importantly, the economic framework must ensure insofar as possible that there are no "unfunded mandates," that is, policies, programs and regulations that relate to both the public and private sectors must take into account the level of resources required to implement them.
The most pressing economic issue for Palestinian society is the need to dramatically expand the creation of jobs with living wages, in order to diminish both unemployment and underemployment, and to raise living standards for our people, particularly with a population significantly expanded by returnees. But job creation does not exist in a policy or societal vacuum. To make the maximum possible use of our human resources and to ensure that our people are contributing to both Palestinian and global development, we must develop policies that support the creation of productive, rewarding employment and capacity-building for our population to meet the needs of the changing global economy.
The management of science, technology and innovation is a linchpin of that process. Indeed, scientific research, technology and innovation will be a critical basis for sustainable economic and social development for Palestinian society . Palestinians have long been cognizant of the critical nature of this fact, as is evident in the number of universities, research centers, and percentage of science and technology graduates, the extent of technological innovation with limited resources, including in the areas of manufacturing computer software and information technology in general. What is lacking is an agreed-upon strategy to harness and build on these achievements. The public sector must:
Several economic sectors hold the potential for job creation: trade, tourism, construction and physical infrastructure, industry, and to a lesser extent agriculture.
Trade has historically been a significant aspect of the Palestinian economy. In the current context, a key potential for job creation lies in an export-oriented private sector: the size of the Palestinian economy necessitates such an approach, along with the experience of other developing countries which managed over the past three decades to achieve high rates of economic growth through the adoption of outward looking development strategies. The architecture of future external trade relationships will be an important part of the strategic development vision and will contribute importantly to its success and to the creation of trade-related jobs. Recognizing the necessity of integration with world markets, the PA and its Palestinian private sector partners will continue to utilize the their participation in international organizations to the extent possible and will strengthen our capacity to conform to international norms, conventions, trade standards.
Tourism can be a significant foreign exchange earner for the Palestinian economy, as well as a powerful engine of employment. Currently, only one percent of Palestinian jobs are in the tourism sector. With proper nurturing. the tourism industry could employ about 10 percent of the available workforce within 5 - 1 0 years. In addition. the tourism industry generates secondary employment in other sectors, including for example, agro-industry; construction; equipment, furniture and furnishings manufacturing; financial services; and handicrafts. Moreover, over the past several years, donors have contributed importantly to the development of tourist sites and to strengthening the capacity of Palestinians to manage their tourism industry. To further develop the tourism sector , improved signage, training staff, improvement of public utilities where necessary , and expanding of hotel and encouragement of investment in related tourist facilities are needed.
Since 1994, construction and physical infrastructure development has contributed significantly to job creation in the Palestinian economy. Although this sector has been largely dependent on donor funding of capital costs, the economic benefits have abounded. Construction of housing, public and private sector offices, schools, health facilities, roads, wastewater and sewerage systems and other large and small-scale infrastructure projects have resulted in the creation of short- and long-term employment, improved living conditions, and improved access to education and health care. Future needs resulting from the implementation of the permenent peace agreement win include housing for returnees, expanded water resources and needs, safe passage. railroads, expanded harbor and airport. This will continue to be an important source of employment and economic growth for the foreseeable future, for although much has been accomplished since 1994, physical infrastructure needs still abound, including for example in low- and middl~income housing, regional and local road networks and road systems to external markets, and water and sanitation systems in both urban and rural areas.
Palestinian industry can be characterized as consisting primarily of relatively small, mostly family-owned businesses with a small capital base, high utility costs, and ease of entry . However, there are important factors that have contributed to development of Palestinian industry in the past, notwithstanding the barriers to such development. These factors, which will continue to play a key role in industrial development, and therefore in job creation and economic growth, include: innovative, modern management which results in, among other benefits, improved quality of products experience in managing productive enterprises abroad; creative use of limited resources, including inventive adaptation or development of technologies for use in the manufacturing process, and the entrepreneurial spirit inherent in Palestinian business community, characterized by extensive owner-involvement. In the past several years, four industrial estates (zones) have been established or are in the planning stages, and an industrial zone master plan has been developed. The types of fields in which Palestinians may have a competitive advantage include, for example, information technology and communications, microelectronics and micro electromechanical systems, biotechnology , and environmental-related technologies.
The close link between trade and industrial sectors will figure out prominently in the Palestinian strategic vision for the future. With the modern and competitive Palestinian industrial sector geared basically to the tastes and needs of consumers in the regional and international markets, an innovative development model to help realize this goal will be at the heart of the future strategy . The modernization of the existing industries, particularly garment and leather, along with building new high tech industries, will be emphasized. The vision here is to build an (UAE) Jabal Ali type of industrial trade based development model. This realization of this vision will be greatly facilitated and enhanced by the numerous free trade agreements signed between the PA and many countries around the world, but mainly Europe and North America. The benefits of these trade agreements will be realized once the present barriers imposed on the Palestinian trade in the interim period are lifted, and once the free and unfettered access to regional and international markets is established.
While the potential for job creation in the agriculture sector is rather limited, there are important strengths on which to build economic growth, including for example on-going experimentation with high value crops, diverse climatic conditions and fertile land, and a reasonable level of applied technology . Sustainable agricultura1 development has been of concern for some time, and investments have been made in experimentation with high value crops, drip agriculture, re-use of treated wastewater , science based agriculture, export oriented products, and intensive agriculture. All of these relate to both improved efficiency in agriculture and to protection and preservation of natural resources. Areas for expanded development include agro-industry , animal husbandry and organic agriculture.
(c) Environmental Management: Preserving, Protecting and Sharing Natural Resources
In order to protect and effectively utilize Palestinian natural resources and those we share with our neighbors, we need to improve our ability to respond to environmental emergencies-- including development of response plans and protocols; improve data and information systems; strengthen and sustain management and use of natural resources, including forestry, stone quarries; develop and promulgate conservation laws related to biodiversity and pollution, improve systems for the reduction of air and noise pollution, and reduce the impact of industrial and agricultural development on the environment. Institutional strengthening in the environmental areas includes preparing consensus-based, rational regional, rural and urban plan, capacity building for district and municipal government officials.
Water -- fundamental for individual and public health and economic development -is the scarcest of basic resources. Consequently, its use and management is politically complex in virtually all parts of the world, and certainly in the Palestinian context. It is imperative that over the immediate and long term the scarce water resources shared by all peoples in the Middle East be used judiciously, shared equitably, and maintained appropriately. Palestinian water share increase as a result of the 1995 agreement need to be accurately implemented. To this end, it is critical that there be improved efficiency and effectiveness in water use, including expansion of water conservation projects, reduced leakages, and improved recycling, and improved quality of service, including potability of water and sewage collection and treatment. Putting in place an appropriate regulatory environment for water use, including promulgation of a new Water Law and related monitoring and information 'systems, will contribute importantly to improved water resource management, and ultimately to improved availability of and access to water sources. Creating incentive mechanisms such as performance- based contracting of private firms has proven to be an effective approach to water distribution.
(d) Social Policy: The Palestinian People as a Fundamental Resource for Development
Difficult social issues must be considered, for they determine, to a large extent, the degree to which all Palestinians share the fruits of development. Some of those that need to be considered -which parallel those in virtually all societies - include for example
Two areas fundamental for both economic growth and development and for social stability are education and health. In education, its expected that the present 6.7 percent annual addition to school enrollment will increase with influx of Palestinian returnees after the signing of the permanent peace agreement. Therefore, a key objective over the next several years will be improving access, including maintaining net enrollment for grades 1-6, increasing enrollment for grades 7 -12, continue aggressive school building so as to keep class sizes low and end the double shifting, and providing educational and training opportunities for out-of-school youth. However, it is critical that the quality of education continues to improve, as measured by students.learning achievements and participation in post-secondary education. This is crucial if the Palestinian development vision to be realized. The introduction of ,science, technology , and math courses in the curriculum is of utmost importance in this regard. Finally, educational planning and services at all levels must take into account both future human resources needs as driven by both Palestinian economic changes and the global marketplace, and the special needs of those with physical or mental health disabilities.
In health, there is a need to continue building the public health and health service delivery systems, including health infrastructure at all levels (primary, secondary and tertiary care), addressing urgent educational needs of health care practitioners, and strengthening coordination and improving quality of services among public, NGO, private sector and UNRWA service delivery programs. Finally, expanding health insurance toward universal coverage and ensuring access to basic health care for all on a sustainable basis has been, and continues to be, a fundamental goal of the PA in the health sector. Improving efficiency in both education and health is critical, including in the areas of capital investments, and maintenance of schools and health facilities, contracting for services where appropriate, and reducing unnecessary or inappropriate medical care.
IV. PREPARING THE PALESTINIAN STRATEGIC DEVELOPMENT PLAN
The PSDP is designed to focus on the strategic allocation of resources within and across sectors, based on agreed-upon economic and social priorities. The PA, in its commitment to integrated, strategic planning toward sustainable development, intends to ensure that the PSDP is developed in the most thorough, participatory manner possible. This will include extensive involvement of PA agencies, district and municipal leaders, the private sector agents, and the civil society insofar as possible, using established techniques for participatory planning. This is the only way to ensure that this critical foundation document will reflect the needs of the Palestinian people,
utilize its resources in the most effective manner, and take into account the fundamental strategic considerations that will underlie the Palestinian planning process. The PSDP will provide strategic direction for five years and a preliminary program for the succeeding five years. Specifically, the PSDP will be a comprehensive document that includes:
While the PSDP will include gross estimates of the capital and recurrent costs of the plan for the first five years, the PSDP is not intended as a substitute for the PDP , which will continue to be updated annually and include specific project and budgetary information.
Since the first presentation of the framework for the PSDP in February 1999, there have been important accomplishments in the Palestinian planning process on which it will build. Several of these are highlighted below.
The PSDP will both build upon these planning achievements and others in the public and private sectors (including, for example, evaluation reports of existing programs and projects), and will in the future inform these and other policy development and planning processes. It is critical that throughout this process, the coordination that has been initiated between and among ministries, relevant NGOs, the private sector, district and municipal governments, and donors continue. The various venues that have been in place since the establishment of the PA ( e.g., No0 committees advising ministries, Sector Working Groups) and those that are more recent (e.g., the Macroeconomic Policy Committee and the Higher National Committee for Institutional Development) will be important sources of information and dialogue for the PSDP preparation process.
PSDP Planning and Coordination
Existing sectoral plans and CDF matrices have already yielded important information to inform the process of identifying development themes or issues that are common among two or more sectors; these include, for example,
V. CONTINUING ON THE PATHWAY TOWARD DEFINING AND ACHIEVING THE VISION
Within the coming months, we expect to have the overall structure of the vision and the PSDP defined, including preliminary identification of short-term investment and technical assistance options over a transitional period. Continued development of the PSDP will take place in stages over the next 12 months. By the end of2000, there win be available a draft PSDP that can be used as a basis for long-range planning and investment decisions across and within most sectors. Dissemination of the final document, incorporating our comprehensive Palestinian vision, is planned for June 2001. It cannot be overemphasized that the PDSP must, at this critical juncture of moving toward permanent status negotiations, take into account not only those issues inherent in sustainable development (e.g., economic factors, physical infrastructure, and social needs) but also issues that impact on sustainable development. Among these issues that are unique to Palestinian society are the anticipated influx of returnees, the establishment and operation of a safe passage between the West Bank and Gaza. and effective utilization of shared water resources. The dynamic nature of the negotiation process, and the compelling development needs of our people, necessitate our proceeding with preparation of the PSDP notwithstanding final solutions of these issues. It is assumed that this critical planning document will be an evolutionary one that can be revised to take into account changing political and economic realities.
In the meantime, we continue to refine our public policies with and across sectors, and to work with NGOs and the private sector to identify priority areas for our own resource allocation decisions and for potential donor investment. In the near future, the types of investment categories that are viewed as linked inextricably to our emerging vision, and that make the most effective use of our resources, are likely to include, for example:
Precise quantification of the investment needs in these areas is extraordinarily complex and made more so by the significant unknowns in the Palestinian context. For example, the social service and infrastructure needs of displaced persons who will eventually return home as a result of the peace agreement is an "unknown" that, although possibly requiring substantial economic investment, cannot be fully planned until a final agreement has been reached. The constriction needs include housing ( and related infrastructure) and additional schools and health facilities. Social support where necessary , and job creation win also be demands on both the public and private sectors. In addition, the degree of intensity of medium and long-range planning has varied by sector, and both inter- ,and intra-sectoral planning in many areas is in part contingent on political negotiations.
Describing an overall vision for a people is no small task. Articulating a consensus-based vision in the context of a specific, comprehensive plan requires steadfastness, time, a willingness make difficult trade-offs, and to proceed through a participatory process that is often burdensome but that renders the result invaluable. Our vision -that 'Can be provisionally expressed as moving toward development of a democratic society that balances sustainable economic growth with equitable social and economic opportunities-- is based on a solid foundation. The resources that comprise this found~tion for Palestinian development -- the Palestinian people, the extraordinary cultural heritage, significant natural resources, the strategic location of the area, and favorable terms of trade-are critical for economic and social development. 'Over the coming months and years we look forward to working with our donor partners to plan wise public 'sector ivestments, to make the most appropriate and effective use of our resources, and to create an enabling environment for private sector investment. This will contribute significantly to achieving our vision. which we feel confident is shared by all.
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