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December 09, 2010


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Does this legal morass deter foreign businesses from locating in the West Bank, or is the area so dangerous that the legal troubles are more or less irrelevant?

Doug M.

It's not dangerous at all. No bombs, no shooting. You can walk around at night without fear, and there are none of the indicia of high crime or violence that are so obvious in much of Africa.

And there actually is some investment here. Several large banks, an international insurance company. A little bit of manufacturing.

But it's hard to export stuff out of the West Bank, and the domestic market is small -- there are 2.4 million Palestinians on the West Bank, but they're mostly pretty poor. There are still some investment possibilities anyway, but the legal mess makes them even less attractive.

Doug M.

Luke the S

There's also the high cost of internal transport and the matter of licensing when it comes to certain products. Dig down far enough, and you'll have lots of ugly stories from ag workers re watermelons and other stuff that needs a refrigerated truck.

Though on the one hand, they've hampered economic activity by building the wall (ending a lot of reticences/day labor), in the last decade, the Israelis have worked hard to improve access to public health such that the birthrate dropped from nearly nine (8.7) to just under 3 (2.7) (this is the triple play of transit to East Jerusalem, more female Palestinian nurses, and a generational shift from midwifery to hospital births for the majority of the populace).

A nice side effect is fewer people to throw rocks, even though Bethlehem still has about two thirds of its adult male populace unemployed.

Bernard Guerrero

What, dare I ask, does the tax system look like? Does anybody collect anything? From whom?

Luke the S

Well, Israel subsidizes the colonies, and if they're classed right, they can run tax free. There's also wild cat settlers, who don't have to pay anything, and are usually running on Adelson dollars.

The vast majority of the PA's budget is in a bank account in Switzerland, put together by international donors. Through 1994, Israel collected import/export taxes, as well as managing payroll taxes for the Palestinian dayworkers. That changed somewhat under Oslo (google "Protocol on Economic Relations") and ever since, the Israelis have sometimes threatened to strangle this state-building mechanism, like in 2006 after the Hamas takeover of Gaza.

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