“The Challenges and Opportunities of a New Chapter”
H.E. the Prime Minister of Palestine
to the Ad Hoc Liaison Committee
23 February 2021
Your Excellency, Minister Ine Eriksen, Minister of Foreign Affairs of Norway, Chair of the AHLC,
Your Excellency, Mr. Josep Borrell, EU High Representative and Vice President of the European Commission,
Excellencies, Ministers of Foreign Affairs and senior government and UN officials,
Representatives of International Organizations,
Before I begin, I would like to take this opportunity to express our gratitude to Norway for chairing and organizing this virtual meeting and to the EU for Co-hosting. My sincere appreciation to the World Bank, the UN and the Office of the Quartet for preparing their informative reports and to every member of this forum for your continued support to our state building agenda.
I would also like to welcome the new US representative to the AHLC. I look forward to working with the new US administration under President Biden.
Excellencies, Ladies and Gentlemen,
I speak to you at a critical time in our history.
This last year was a time of unprecedented challenge – for our global community and our nation. In 2020, Palestine faced a triple crisis - health, economic and political.
In the State of Palestine, we have worked with our partners to protect the lives and secure the livelihoods of our people from this triple crisis through targeted investment in health services and social protection. In total, over $310 million of COVID response was provided by international and national partners, with $52 million implemented through the Government of Palestine.
Still we paid a heavy human and economic price.
But, I want to speak today not just of our resilience in the face of a pandemic and work to recover from the economic crisis - but of our efforts to build the foundations of a better future.
2021 is a year of enormous opportunity for the State of Palestine – political renewal, health recovery, national unity, democratic renewal, and economic revival.
Peace Process and Not Peace Diplomacy
During our last meeting, we faced a very challenging and complex situation in Palestine; on the political level, Israeli annexation plans, backed then by Trump’s Administration, and the absence of political perspectives, combined with economic crisis, all exacerbated by the Covid-19 pandemic.
We overcame those challenges. And we thank the international community for its firm stands to preserve international law and multilateralism. And for renewing its commitment towards the Palestinian rights and for peace based on the two-State solution.
We welcome measures announced by the US Administration to reverse Trumps decisions i.e. to:
- Support to the two-State solution;
- No to unilateral actions, settlements or annexation;
- reopen US Consulate in East-Jerusalem;
- Reopen PLO Representative Office in Washington;
- Resume funding to UNRWA and the Palestinian Government.
We also welcome the recent Quartet meeting, and all the efforts lead by “Munich” group (France, Germany, Egypt and Jordan) to build confidence. And for the role of all those who contributed to internal reconciliation, a national imperative and prerequisite to holding the upcoming elections.
We hope, at this important juncture, to move from peace diplomacy to peace process.
While we remain committed to peace based on the two-State solution to achieve the legitimate national rights of our people to live in their independent sovereign contiguous State of Palestine on 1967 borders with East-Jerusalem as its capital. And a just solution to the refugees’ question based on UNGA Res 194.
The reality on the ground after 30 years of peace process, is a systematic destruction of the Palestinian State and the two-State solution;
Israel is intensifying its illegal policies and measures notably by:
- Intensifying its colonial enterprise. Today there are 750,000 colonial settlers in the West Bank, including East Jerusalem (Israel’s objective is to reach 1 million). Knowing that the number of settlers was 120,000 at the beginning of the Oslo agreement.
- Isolating Jerusalem and imposing the blockade on Gaza.
- Destroying Palestinian homes and structures.
- Annexation wall, Checkpoints …..etc.
Maintaining the current situation of deteriorating status-quo is a non-option.
There is a need for a serious paradigm shift.
We look forward to the resumption of a genuine peace process under multilateral umbrella and through an international conference based on international law and relevant United Nations resolutions to end occupation within a clear time frame.
Until reaching a solution for final status issues; Jerusalem, Borders, settlements, Refugees, Water, Israel has committed itself to respect the signed agreements which deal with territorial, political, access and movement, and economic issues. Respecting signed agreements include:
- Incremental Israeli army withdrawal from areas C and B (noting that classifications of areas A, B and C was to end in 1999);
- Refraining from all action that alter the final status issues which means no settlements building;
- Freedom of access and movement, including the safe passage between Gaza and West Bank;
- Reopening Jerusalem institutions and allow for free elections in East Jerusalem;
- The release of political prisoners according to 2014 understandings;
- Palestinian Customs offices presence at Allenby Bridge… among other issues.
We call on the international community to:
- Reengage, as early as possible, to achieve a just and comprehensive peace based on the land for peace principle, the two-State solution according to the internationally agreed parameters, the signed agreements and Arab Peace Initiative.
- Take concrete actions to stop all illegal Israeli measures in occupied Palestine. And to ensure Israel’s accountability for its violations to international law and our people’s rights.
As a nation, we are moving towards achieving Palestinian unity and reconciliation. The most obvious manifestation of this new national solidarity is the upcoming general elections, which will strengthen the Palestinian political participation of our people across our land with the hope it will lead to a unified National Government.
We want to be a beacon of democracy in our region. Over half of our people will be eligible to vote for the first time. I am proud to announce that, just weeks after dates were announced for the elections for the Palestinian Legislative Council and the Presidency and the re-formation of the Palestinian National Council, 93% of our people have already registered to vote.
Free and fair elections need to be underpinned by fundamental freedoms – freedom of speech and political association, freedom to campaign for what we believe in and freedom to conduct the election to international standards. President Mahmoud Abbas has just confirmed this fundamental freedoms through a Presidential decree to guarantee a free and fair election process for our people. We ask that our international partners work with us to protect the democratic rights of all Palestinians – in the West Bank, including East Jerusalem, and Gaza - to fully participate in these elections.
Facing the Challenge of the COVID-19 Crisis
Throughout the pandemic, we have prioritised providing health care and social protection to our people. While over 190,000 of our people have fallen sick, our death rate has remained relatively low. We expanded our social support to 126,000 families, 40,000 workers who lost their jobs as a result of COVID-19 and added 30,000 new poor families to our social protection scheme. In the midst of the pandemic, we invested in our capability to maintain delivery of critical services. We now have a pandemic and emergency response framework that ensures our people are safeguarded even in a crisis, based on the lessons and successes of the past year.
While we were able to keep our mortality rate from COVID low, the pandemic has had serious economic impact. The economy shrank by 11.5% over 2020, one of the biggest annual contractions since the establishment of the Palestinian Authority.
We have taken tough action to control spending and raise more revenues to bring the budget deficit down. But the economic consequences of COVID hit our revenues hard at the same time, as our needs increased.
Our annual budget deficit has doubled in two years and after grants, now stands at $1.2 billion. While it remains much lower than many other countries (around 7% of GDP) and our public debt is relatively low, we are not like other countries. We cannot finance our deficit by borrowing from international markets or by printing money. This means that we lack the economic shock absorbers that have helped other countries deal with the economic consequences of COVID-19. Further domestic borrowing, including through arrears, risks choking off the investment crucial to our future economic growth.
As you know, more than three-quarters of our tax revenues are not under our control. Our VAT continues to be manipulated by Israel and used to blackmail the Palestinian government. We ask you to work with us in partnership – to build our capacity to raise our own revenues, to ensure an automatic and stable transfer of clearance revenues and to put in place the structural reforms needed to tackle bleeding issues, such as utilities and health referrals, that divert funds from vital public services. These measures are essential, not only to the reliable provision of vital public services but in securing our economic recovery from the pandemic.
Our Response to the COVID-19 Crisis
As we faced the consequences of COVID-19, we have had to take tough decisions. We had to introduce an Emergency Budget. Whilst public spending rose across the world, we were forced to reduce spending in Palestine because of our limited scope to finance budget deficits. We have done this by streamlining our public administration and strengthening our revenue administration. We have merged or dismantled 30 institutions to strip out bureaucracy and waste and bring Government closer to its our people. We are implementing a new Revenue Strategy to make sure everybody pays their fair share of tax.
Emerging from the COVID-19 Crisis
While employmet rate, particulerly in the West Bank, remained fairly unchanged (around 19%), the economic crisis has created significant hardship for our people. Household incomes were badly affected, with 77% of income earners reporting wage loss at the start of the pandemic. Some of the worst hit were those working in sectors such as hospitality, tourism, and construction. During this pandemic year, we provided 100,000 additional families with cash support to prevent destitution. And 50% of those who benefited from emergency financial support were women.
In response to the crisis, the Palestinian Government is introducing a package of measures to alleviate poverty, sustain small businesses, and protect jobs.
The Government and Palestinian Monetary Authority have already established a $250 million fund to provide critically needed support to small and medium sized businesses to keep them afloat and safeguard their employees through the crisis. Together with 4 European Investment Banks, we have mobilized a further €410 million package of support. Through these two mechanisms, the businesses that drive our economy can access discounted loans and loan guarantees.
Together with our international partners, the Palestinian government will soon launch a nearly $50 million program to protect family livelihoods and stimulate economic revival. We will invest in a short-term job creation programme for public works in municipalities across the West Bank and Gaza.
We are loosening the pandemic’s grip on our people. I speak to you as we begin to roll out our vaccination program, which will allow our children to return to full-time education, our businesses to re-open and re-build, and our people to return to a more normal life.
But our COVID vaccination programme remains severely constrained by inequitable access to the global supply of vaccines. Currently, we have only limited doses, which will be used to vaccinate our essential health workers in the West Bank and Gaza. Securing additional doses will enable us to achieve our national goals of vaccinating 2 million people in the coming months. A rapidly completed national vaccination program is also an essential pre-requisite to enabling free and safe democratic elections.
We have done everything we can to cut waste and prioritise spending on health and social protection. But dealing with COVID-19 has taken resources away from other vital health programmes, such as maternal and child health. We still need your immediate help to get us through the current health crisis and support our programme of democratic renewal and national renewal.
A significant number of our people are refugees and depend on the support of UNRWA. I would like to take a moment here to focus on the challenges faced by UNRWA, which experienced a double-crisis of unprecedented magnitude in this pandemic. In addition to the increasingly dire needs of Palestinian refugees in Palestine and the region, the Agency announced its most drastic financial shortfall in its history in 2020. Without support from our international partners, those of our people whose lives and livelihoods are made possible through UNRWA will be pushed beyond recovery. I urge you to continue to support the rights of our refugees by supporting UNRWA in its vital work for our people in refugee camps in Palestine and the region.
Today, I set out a much more ambitious agenda. The key to solving the economic and fiscal crisis is not band-aids nor austerity – but governmental and economic renewal. Even as we came to grips with the impact of the pandemic on our people and nation, we have continued to lay the foundations for a government and economy for the 21st century.
We are relaunching the refreshed National Development Plan that lays out our national policies and priorities underpinned by a comprehensive set of sectoral and economic development strategies. It has taken 2 years to develop. It is a partnership between government, civil society, private sector, and international partners. I want to say a big thank you to all our local and international partners who have played a part.
The National Development Plan (including sector strategies and the cluster operational plans) provides a clear vision of how we will build back better, build back fairer, and build back greener. It provides a roadmap of investment to help the Palestinian people stand on our own feet. It sets out a comprehensive plan for economic recovery to create the foundations for future prosperity.
Moving Forward with Our New Development Paradigm – Cluster Development
Central to this is our new cluster development paradigm. We have unleashed the potential of the Palestinian economy by harnessing the comparative advantages of each of our regions. We will create the conditions for existing businesses to thrive and new businesses to emerge.
Our new clusters will support each of our regions to develop their existing strengths – such as tourism in Bethlehem or public administration and technology in Ramallah. Our targeted approach will mean customized packages of support are developed jointly with business, including the marine cluster in Gaza and industrial clusters in Hebron and Nablus, in addition to the capital cluster for Jerusalem. The Qalqilya agriculture cluster programme was successfully implemented in 2020.
Our new development paradigm will help spread the benefits of investment and job creation to level up those regions that have too often been left behind. Our new approach will ensure more even economic development and that all Palestinians have a stake in rising prosperity. Our vision for a more prosperous future will be a fairer future.
Laying the Foundations for the Digital Economy
Realising our vision depends on targeted investment to provide the physical and digital infrastructure needed for businesses to thrive – and the skills that will help our young people to realise their potential.
Decent infrastructure is a necessary condition for businesses to thrive. We are investing in infrastructure, especially energy, water, and waste water – and with a focus on Gaza. Whilst other countries invest in 5G, Gaza is limited to 2G. But our commitment to meet the needs of our economy for energy are matched by our commitment to a sustainable future for our planet. So we will invest in renewable technologies, especially solar energy. Our vision for a more prosperous future will be a greener future.
Transforming our economy into a digital economy is critical for fostering economic growth, creating job opportunities, and overcoming the restrictions imposed by the Israeli occupation on our full entry into the global economy. We have laid the foundations for a digital economy by putting in place the needed legal and regulatory framework, including an independent telecommunications regulator.
Challenges became opportunities in the midst of the pandemic. We quickly created the right environment to encourage students and workers to work from home. We have rolled out distance learning and introduced TV channels for education. COVID-19 highlighted the importance of digital payments so we prioritised the launch of an e-wallet service to free economic transactions, with a focus on those without easy access to bricks-and-mortar banks, like women, people with disabilities and those living in marginalized areas.
Digital advances enable open governance. Therefore, we are also rapidly growing e-government capabilities. For example, we are enabling electronic public procurement to maximize the efficiency and transparency of our government procurement processes – critical at a time of dropping government resources and growing (and important) public demand for public accountability.
Attracting Private Investment and Non-Commercial Development
I issue an open invitation to foreign investors to come to Palestine. We are open for business. The World Bank has recently acknowledged the steps we have already taken to reduce the cost of doing business and improve the business climate. Our recent legislative reforms have strengthened the rule of law. We are currently finalising work on three new laws – a telecoms law, a competition law, and a company law. These will transform the investment climate in Palestine by introducing a modern and transparent framework for business investment.
But not all development spending provides an instant return attractive to private investors. So we have established a development bank, the Bank of Istiqlal, to invest in areas crucial to development that commercial banks are not currently investing in.
The Palestinian government is also working with the EU Development Bank, the Islamic Development Bank, and the Palestinian Monetary Authority to create a number of mechanisms and up to $800 million package of support to provide loans to companies impacted by COVID-19 and to stimulate the economy by encouraging local and international investment.
Delivering the Skills Our Youth Need to Succeed
Our greatest resource is our young people. I am proud that Palestine has a well educated population – and our National Development Plan sets out our vision for putting education at the heart of all we do. We are evolving our education to meet the challenges and opportunities of the 21st century. In the height of the pandemic, we moved swiftly to train around 30,000 teachers to provide online education. And we will harness our investment in digital infrastructure to expand online education.
But too many of our young people are unemployed, without hope and at risk of becoming disaffected. Their creativity, talents, and knowledge are going to waste. We need to bridge the gap between the education they received at school or university – and the skills that will equip them for the workplace. Our technical and vocational education strategy sets out our plans to do this. Central to this is the establishment of a new national platform for technical and vocational education for our young people, at a new university to be opened in Nablus. This will aim to bridge the gap between the skills our young people have now and those they will need to have to do the jobs of the future.
We want to invest in the skills for the future. With its young, educated and connected population, Palestine could be a leading country for coding. We have a plan to train 6,200 new programmers so they are equipped for the global digital economy. And this is just the start.
Partnering with Us in this New Chapter
This is the new chapter the Palestinian people wish to write for themselves. A future as a democratic prosperous and inclusive state.
We are at the threshold of a renewed Palestinian unity, with elections demonstrating our strong democratic tradition. But to reinforce this national unity and support the “levelling up” – to ensure the even development - of our most disadvantaged regions, we will need a make a substantial investment to provide basic infrastructure in Gaza, restore vital public services, and harness the economic potential of each Governorate.
And yet, as I have set out, despite our best efforts to cut spending, Palestine lacks the resources to deliver this agenda on our own. We need to run a sustainable budget deficit. Our budget deficit is relatively low – but we cannot finance it by borrowing from international markets or by printing currency like other countries. Without your support, the financing gap in our plans could only be filled by domestic borrowing including building up arrears - which puts at risk our economic recovery.
Donor budget support has always been vital to maintaining vital services because of restrictions placed on our ability to develop the full economic potential of our economy. But donor budget support is down two thirds in a decade and down a quarter over the last year alone.
I am today asking you for $50 million to meet election costs to support our democratic renewal, $30 million for vaccines to support our recovery from COVID, and funding support to help us reduce our budget deficit - to protect vital services, facilitate economic renewal, and carry out the reunification of Gaza and the West Bank.
With your support, our short-term need to protect the lives and livelihoods of our people through the COVID-19 crisis will not squeeze out this vital investment we need to secure democratic renewal, national renewal, and economic renewal. With your support, we will not need to sacrifice the future simply to survive through the present crisis. With your support, the ambitious plans we have put in this year’s Budget to double investment spending can be realised. With your support, the measures planned by the Government of Palestine can result in economic recovery, up to a projected 8% growth in 2021.
I ask for your support – not as a hand-out to sustain the status quo – but as a hand-up to help us realise our potential and create a better unified democratic and prosperous future for all Palestinians.
I also thank you for the recent support shown by those at this meeting in response to the latest Israeli violations in the West Bank when Palestinian families in Humsa were made homeless by the Israeli demolition of their homes. To recovery and renew, our people must have protection and I look to you, our international partners, to help protect our people from these violations of international law.