In This Issue 43813 1. World Bank Strategy for a Prosperous andViable Palestinian State /3 2. Palestinian Reform and Development PlanTrust Fund /4 3. West Bank and GazaTelecommunications Note /5 4. The Electric Utility Management Project /7 5. Third Emergency Services Support Project /10 6. Village and Neighborhood Development Project /11 7. World Bank Operations /12 8. West Bank and Gaza Portfolio /15 9. Economic Developments and Prospects /16 10. Gaza Commercial Crossings /19 11. Empowering Palestinian Children andYouthThrough Digital Media /21 12. New Publications /23 Though Digital Media March 2008 World Bank Strategy for a Prosperous andViable Palestinian State Contact Numbers West Bank Office Numbers: Country Director Infrastructure Development Switchboard 02- 2366500 A.David Craig Ibrahim Dajani Fax:02- 2366543 02- 2366506 idajani@worldbank.org Deputy to Country Director Financial Management Faris Hadad-Zervos Suhair Mosa 02- 2366549 02- 2366540 Economics & Private Sector Donor Coordination John Nasir NabilaAssaf jnasir@worldbank.org 02-2366535 Social development Public Information Mesky Brhane Mary Koussa 02-2366500 02-2366529 Water and Energy KhairyAl-Jamal 08-2823422 Gaza Office: 08- 2823422/2824746 Fax:08­ 2824296 International Finance Corporation: Investment Officer Youssef Habesch 02- 2366517 Fax:02- 2366521 Free Subscription mkoussa@worldbank.org Newsletter at Internet http://www.worldbank.org/ps Cover photo by: Nader Khoury WorldBankStrategyforaprosperous and viable Palestinian State 2008 is an important juncture for economic development and fiscal stability in theWest Bank & Gaza. Following the Ad Hoc Liaison Committee (AHLC),Annapolis, and Paris Pledging conferences in 2007, the stage is now set for the implementation of the Palestinian Reform and Development Plan (PRDP) for 2008-2010,envisioning the establishment of an economically sustainable Palestinian State.The vision described in the PRDP is ambitious,requiring simultaneous tripartite actions from the PalestinianAuthority (PA),Israel,and the international community. TheWorld Bank is committed to the fulfillment of this vision.To this end, and in close consultation with the PA, the World BankWest Bank and Gaza program has recently finalized its strategy proposal for 2008-2010,and will present it to the Board of Directors inWashington DC next month. The proposed strategy focuses on the PRDP's twin objectives of fiscal stability and development. On the fiscal track, a central component of the strategy is the establishment of a trust fund for PA budget support, aimed at disbursing over USD 100 million in donor funding in 2008.An additional USD 40 million per year ofWorld Bank resources will be allocated for budget support in 2008-2009. The strategy's development track builds on theWorld Bank's existing development projects, in which over USD 500 million have been invested since the mid-nineties,and adds new ones.The Bank proposes to continue supporting the water and wastewater sector, including the construction of the new wastewater treatment plant in Gaza, and to replicate the success of the Jenin solid waste disposal site in the Hebron area.These projects will be complimented with support for the expansion and upgrading of Palestinian electrical infrastructure. SocialprotectionanddevelopmentprogramsremaincentraltoWorldBankagenda, and the strategy proposes continued support for the Municipal Development and Lending Fund (MDLF),the launch of a village and neighborhood development program and continued support for social safety net payments. Support for economic and private sector development will be provided through a number of channels, including matching grants for Small and Medium Enterprises (SMEs) seeking new markets and product development, support for land administration reform, and the Bank's ongoing advocacy regarding movement and access restrictionsasanobstacletoPalestinianeconomicrecovery.Technicalassistanceand policy support will be provided in a number of areas,including trade facilitation, health financing, transport, housing, telecommunications regulation, and other components of public sector management. TheWorldBanklooksforwardtothefinalizationofthisstrategyandtoitsimplementation in close cooperation with the PalestinianAuthority. Country Director A.David Craig AZ A G D N A K N A B TSE W 3 Palestinian Reform and Development PlanTrust Fund The PA has presented a Palestinian Reform and The Bank will ensure coordination with the other donors Development Plan (PRDP 2008-2010) containing a 3- who are financing recurrent expenditure (including those year fiscal framework, on the basis of which donors have contributing directly to the STA or through PEGASE) committed substantial budget and development support at through the existing donor coordination structures,namely the Pledging Conference in Paris in December,2007. the Fiscal SectorWorking Group co-chaired by the MOF Equally important to the high level of donor commitment and IMF. is the quick translation of pledges into disbursements to support the PA.While this is best achieved through direct ParticipatingDonorswillbeaskedtosignanAdministration channeling of funds to the SingleTreasuryAccount (STA), Agreement with the Bank upon which Donors would the World Bank has created a mechanism to help pool transfer funds to a World Bank TF Account. In line with and accelerate transfer of funds to the PA, the Palestinian the Paris Declaration on Aid Effectiveness, the PRDP-TF Reform and Development Plan Trust Fund (PRDP-TF). willadoptthebestapproachtobudgetsupport and disburse Managed by the World Bank, the PRDP-TF aims to untied, un-earmarked donor funds to the PA's STA.The support the PA policy agenda as expressed in the PRDP PRDP-TF will aim to provide predictable support with by channeling budget support for its implementation over regular disbursements and to disburse its funds in a small the three year period of 2008 - 2010. The PRDP-TF number of more or less equal tranches (two to four) every was created to provide donors who are unable to provide year. budgetary support directly to the STA with a mechanism for channeling untied, un-earmarked budgetary support The PRDP-TF will rely on the PA's own fiduciary through a trust fund linked to the execution of the policy systems for public finance management, based on the agenda in the PRDP. The PRDP-TF complements IMF's assessment that the PA's cash control procedures other available mechanisms for support of PA recurrent have been restored to their pre-2006 levels, meaning that expenditures, particularly Pegase, and would be available the PA's Single Treasury Account (STA) is fit to receive for all donors who wish to provide untied, un-earmarked donor transfers.The PRDP-TF policy agenda will review budget support to the PA within the context of the PRDP progress of the PRDP public finance management reforms policy framework. The PRDP-TF is designed to pool underway under the leadership of the MOF with IMF different donor funds into one administrative mechanism support. Furthermore,the PA will comply with the Bank's that will reduce the transactions costs for the PA and standard reporting requirements for use of Bank-managed provide reliable disbursements on a regular basis. trust funds, including an annual audit of the amounts entering and leaving the master trust fund inWashington. The PRDP-TF would be linked to the implementation of key aspects of the PRDP (2008-2010) as they relate The Fund is expected to begin operations in March 2008 to budget execution within an overall macroeconomic with the signing of the first Administration Agreements framework. Key policy items will include expenditure followed by the first disbursement to the STA by the end containment (particularly wages, net lending and social of March. Based on current expressions of interest and transfers) and progressive strengthening of public finance commitments, the trust fund is expected to channel at management and country systems as described in the least USD 100 million in funding from donors in 2008, PRDP. The monitoring of the implementation of this and additional commitments from donors are welcome. policy agenda will be achieved through consultations with In addition, the World Bank is planning to allocate USD 2008 the PA and regular briefing/consultation meetings of local 40 million of its own resources in direct support to the PA char representatives of participating donors,the PA,and the IMF. budget in 2008,and possibly similar amount in 2009. M 4 Introducing Competition in the Palestinian Telecommunications Sector The recently published World Bank The sector legal framework is defined by Telecommuni- Telecommunications Sector Report, cations Law 3/1996 and by regulatory provisions under entitled "Introducing Competition in the the Oslo Agreement.1 The agreement affects the interim Palestinian Telecommunications Sector" relationship between Israeli and Palestinian companies, highlights key issues in the Palestinian attributing rights and obligations to Palestinian and Israeli telecommunications sector, and suggests operators in the territory of the West Bank and Gaza, possible recommendations for policy and and defining the role of the Palestinian government in regulatory reform. The report was prepared the sector. The PalTel group, which includes companies in close consultation and cooperation with in all main sectors of the telecommunications and allstakeholders,takingintoaccountdisparate information technology (IT) market, is the dominant points of view. Its recommendations are in operator. Unauthorized competition exists in the mobile line with visions and policy directions of market,where Israeli operators,authorized under the Oslo the Palestinian Authority, with the goal of Agreement to offer services to the settlers, cover a large benefiting Palestinian people by reducing part of the territory of the West Bank. PalTel's market prices and improving quality and reliability dominance, and the problems related to unauthorized of services.The report endorses and supports competition, could be mitigated by the entry of a second Palestine's own policy of introduction of mobileoperator.TheMinistryofInformationTechnologies competition, as formulated by MTIT.The and Telecommunications (MTIT) has awarded a mobile policies of favoring competition in this license to Wataniya. There is in principal an agreement industry have proven effective across the at Ministerial level on the release of the frequencies for world, including in post war, distressed and Wataniya. However at the time of this note's publication low income environments. they have not yet been released. The entry of competitive mobile and data operators would strengthen considerably The Palestinian telecommunications the market and improve its key indicators. The data market sector is characterized by the presence of a segment is also characterized by a combination market private regulated monopoly, unauthorized dominance and unauthorized competition, but MTIT is competition, and overall weak governance in the process of awarding data licenses. Overall regulatory and regulation. Increasing competition and capacity is weak, governance and accounting standards efficiency in the telecommunications sector have room for improvement. will have far reaching effects throughout on the Palestinian economy. It will reduce the The complex nature of the regulatory relationship cost of doing business in all sectors and help between the PA and GOI has given rise to several areas raise government tax revenues. In addition, of concern. In addition to the unauthorized competition by developing the capacity to regulate in mobile and data, the Palestinian Authority (PA) raises the largest monopoly in WBG and spur the following main issues: (a) Palestinian operators are competition in the telecommunications compelled to route international communications through market, the PA will develop its ability to a licensed Israeli operator; which increases costs (b) the provide a better regulatory environment for lack of a direct long-distance connection linking theWest the entire economy. Bank with the Gaza strip; and (c) difficulties in obtaining permitsfromtheIsraeliauthoritiestobuildinfrastructurein large parts of the country. The note illustrates the different AZ A G viewpoints on these contentious issues, assesses the actual D N A nature of the constraints,and offers possible solutions. K N A B 1 "OsloAgreement,AnnexIII,ProtocolonIsraeli-PalestinianCooperationinEconomic TSE and Development Programs" and "The Israeli-Palestinian Interim Agreement on the W West Bank and the Gaza Strip ("Oslo 2"-- 9/28/95), Annex III, art 36) 5 In terms of policy recommendations, createhardboundariestopreventcompleteaccesstothe the following five actions are Palestinian market by Israel operators not licensed by recommended: MTIT. While operators not licensed by MTIT should refrain from marketing directly their services in the (a) Introduce full competition through Israel Palestinianterritories,nevertheless, itisrecommended speeding the release of the frequencies for the to pursue market-based practical arrangements to secondlicensedmobileoperatorandallocating ensure a fair and level playing field among all operators frequencies for new wireless operators and in the West Bank and Gaza territory, such as revenue MTIT tackling Paltel's monopoly position. sharing arrangements with the licensed operators to Internationally, full competition has been formalize any spill-over entry and compensate for paid proven to be the best policy to stimulate license fees. market growth and reduce prices. This is also the case in low-income and highly distressed (c) Strengthen MTIT's institutional, regulatory and (civil war, post conflict) environments. To enforcementcapacityandcreatearegulatoryunitwithin enable effective competition, the following MTIT, which will be transferred to an independent measures are crucial: telecommunications regulatory authority at a future date. New regulations are under preparation and (i) Enabling effective competition in the mobile MTIT has published draft interconnection guidelines. sector, by Israel releasing frequencies for MTIT is working on a new telecommunications Wataniya law which aims to introduce a telecommunications (ii) Implementing the policy announced by regulatory authority. MTIT is exploring ways to MTIT to introduce competition in the data create a regulatory unit within the MTIT to regulate sector by issuing new competitive licenses. the sector as needed until the telecommunications (iii)Regulating and monitoring anticompetitive regulatory authority is established. Serious capacity behavior and the concentration of monopoly building is needed for establishing and operating such power in PalTel; a unit. MTIT needs additional resources to tackle the (iv) Addressing and agreeing on distribution of regulatory priorities that any ministry faces during frequencies crucial for the attribution of the introduction of competition, including other wireless data licenses (e.g.,Wi-Max). aspects of interconnection regulation (e.g., dispute resolution; interconnection costing); enforcement; (b) Promote technical cooperation between licensing; spectrum management and monitoring; Israeli and Palestinian technical teams, to number portability. There is also a need to train mitigate the existing issues. The existing regulatory experts. A top priority is the introduction conflict hurt the work of the JointTechnical of a body of competition law and regulation, and the Committee (JTC) and the implementation presence of regulatory tools to monitor and sanction of the provisions under the anticompetitive behavior. telecommunications sections of the Oslo Agreement. (d) Improve tax collection and governance. Effective The structured negotiations competitionbetweentelecommunicationsoperatorscan mechanism of the JTC provide strong and reliable short-term and long-term (which deals with mutual fiscal gains. A more transparent system for generating coordination of frequencies and collecting tax revenues is needed. Improvements use, interference problems, in tax collection, as well as an agreement on how to diverse international issues, tax the revenues generated by Israeli operators serving and other sensitive subjects Arab customers in theWest Bank,is desirable. of mutual importance), photo by: Nader Khouryshould be supported and (e) Increase the overall transparency and improve the encouraged. Issues include governance of the sector. This includes: determining allowing Palestinian telecommunications theexactlegalstatusofthevarioussubsidiariesofPalTel firms smoothly import equipment and group;clarifying the priority between rights under the emplace necessary infrastructure in all areas licenses and government guidelines and implementing 2008 in theWest Bank & Gaza, including Area C. industrial cost accounting. char Given the demographics and the geography M of the area covered,it is practically difficult to 6 The Electric Utility Management Project inWest Bank & Gaza Strip ­An EnvironmentalAssessment The Electric Utility Management Project (EUMP), assessment and management of environmental and social funded by theWorld Bank and European Investment Bank concerns for the project. Specifically, the Environmental (EIB),the government of Norway,AFD,and SIDA aims at Assessment is targeted at delineating the impacts resulting improving the efficiency and quality of electricity supply in from the proposed system configurations,and formulating the Palestinian areas.The project will support investments an environmental management plan (EMP), suggesting in the physical structures,by financing critical investments alternatives, and mitigation measures for minimizing in rehabilitation and extensions of the transmission and adverse environmental and social impacts during project distribution system in the West Bank and Gaza Strip. In implementation and operation. The environmental addition, the project will assist in the implementation assessment is referenced in the credit agreement as a of sector reforms and capacity building and institutional mandatory instrument that will ensure compliance with strengthening of the Palestinian Energy Authority (PEA), donors'safeguards policies as well as facilitate obtaining of replacing the very fragmented electricity sector with environment permits and additional financing approvals well-functioning electrical utilities in all areas of theWest for this project. Bank. The environmental assessment discussed the various The transmission component of the project entails the possible impacts of the project on different parts of the replacement of the existing connection points with the environment (soils and groundwater, air, fauna and flora) Israeli Electricity Company (IEC) with four new bulk as well as socio-economic impacts. Besides setting the 161/33/22 kilovolt substations and related 161 kilovolt baseline conditions at the different sites, determining all connection lines in the north, center, and south of the possible impacts, it also defined the mitigation actions West Bank including installation of necessary facilities required to minimize the impacts during the engineering (NCC/SCADA) to balance the power supply throughout construction of different components of the project as the network.The proposed sites for the substations are in will as a monitoring plan for the implementation of the the Jenin, Nablus, Jerusalem, and Hebron governorates. environmental management plan. Additional developments will include the rehabilitation,extension,and reconfiguration of the sub 33 KV distribution system and installation of pre-paid meters throughout West Bank and Gaza. Aspartoftheprojectpreparation,Norconsult AS has been engaged by the PEA to conduct the feasibility study of the interconnection of the electrical networks of "Egypt-Gaza Strip"and"Jordan-West Bank".Whereas the overall aim of the interconnection study is to establish least cost options for establishing AZ an independent electrical network and A G D thereby increase the energy security in the N A K Palestinian areas, the environmental study N A B will form a framework for identification, TSE W 7 The major positive impact of the project is the supply of energy and the consequent potential for induced development. Realization of the project will significantly increase the security, efficiency, and reliability of energy supply.The study concluded that some negative impacts will likely affect the environment,especially in the construction phase,however,those impacts are localized and of low to medium significance.The most significant impacts are related to proximity to existing built-up areas, small loss of agricultural lands, and a potential reduction of vegetation and habitat for birds and grazing of livestock. Those impacts are minimized by a sensible site selection for the proposed substations.The substation sites that appear the most advantageous from an environmental and social perspective are the Nablus (1), JDECO 2 and 3,and HEPCO 1 sites (see attached map for sites locations).At Jenin,there was only one option which was considered to be sensible by the study. Subsequent impacts from construction of new transmission lines might possibly have some environmental impacts on remnant patches of forests,olive grooves and orchards etc.The EMP includes mitigation measures to minimize any negative impact. An environmental management plan (EMP) has been proposed, which comprises a range of general and specific recommendations,which collectively act as the basis for environmental management,impact mitigation and control during the construction and operation of the project.Thus,the EMP identifies the principles, responsibilities, activities, and some methodologies that contractors shall adopt to effectively manage environmental impacts during the construction phase of the project and that PEA shall adopt during the operation phase.The EMP has been formulated with full consultation with responsible PA authorities,including the Palestinian EnergyAuthority (PEA), the Environmental Quality Authority (EQA), and other PNA ministries. Public consultations took place to promote appropriate ownership of the EMP. As part of the disclosure policies, the EMP is disclosed to the public at PEA website (http://pea-pal.tripod.com) and can also be acquired from PEA offices. 2008 char M 8 161/33 KV Proposed Station Separation Wall West Bank Boundary Border-Line Jenin Road Network Built-up Area A Area B Tubas Israeli Settlements Tulkarm Nature Reserve Qalqiliya Nablus Salfit Ramallah Jericho Jerusalem Bethlehem Sea Dead AZ A G Hebron D N A K N A B TSE W 9 Third Emergency Services Support Project (ESSP 3) With the aim of supporting the Palestinian Authority in years through ESSP 1,ESSP 2 and the ESSP MDTF. Over mitigating the deterioration of essential public services the 2002 to 2007 period these mechanisms have disbursed in education, health and social services, the World Bank's over USD 220 million for the non-salary recurrent Board of Executive Directors approved on December 13, expenditures.Implementation arrangements have included 2007, the launching of the Third Emergency Services design elements to compensate for institutional weaknesses Support Project (ESSP 3). in the participating agencies, while maintaining rigorous fiduciary and implementation procedures acceptable to the The ESSP 3, financed through a US$10 million grant World Bank. from the Trust Fund for Gaza and West Bank managed by the World Bank, is an integral part of the PA's The ESSP 3 project consists of four components. emergency program in the social sectors. It accompanies Component 1 will finance the non-salary operating costs the ongoing Bank administered ESSP Multi-Donor Trust for education services, costs of general examinations and Fund (MDTF); both mainly finance non-salary recurrent support to higher education institutions. Component expenditures. These companion operations will help 2 will finance the non-salary operating costs for health maintain essential social services operational during the services including non-medical recurrent expenditures, protractedcrisisthattheWestBankandGazaisundergoing. and treatment in private and non-governmental clinics. The design of ESSP 3 will allow faster disbursement than Component 3 will finance the non-salary operating has been possible under previous ESSP phases as the bulk costs for the Ministry of Social Affairs, and its shelters, of disbursements will be against recurrent expenditures, rehabilitation and treatment centers.The final component not subject to Bank procurement guidelines.The ESSP3 will support project management and monitoring,namely complements the new PRDP-Trust Fund by providing the Project Coordinating Unit in the Ministry of Finance a quick disbursing mechanism for the social sectors in and its incremental operating and audit costs. order to ensure continued and uninterrupted provision of essential social services. The outputs of the project will be of significant importance to the social welfare of the Palestinian people.In line with The PA's emergency program in social services was its primary objective, the project will help maintain a launched with the help of theWorld Bank in 2002 with the network of public social services available to all Palestinians aim to provide a means of rapidly channeling donor funds and in particular the poor and most vulnerable as they are to priority social services in a coordinated manner.The particularly dependent on public education and health Bank and donors have provided support for the past five systems. Its support for social care services is of special importance ­ it directly addresses the needs of individuals who often are most at risk ­ abandoned children and youth, the unskilled, the elderly and refugees from precarious family situations. In this, the series of ESSP projects have already garnered much appreciation among the Palestinian population,and this project builds on,and is an important extension of,those experiences. Beyond its direct effects on the target population, it generates other tangible outcomes that are beneficial to the broader economy. It will continue to create an enabling environment that draws in donor resources and helps focus those resources on areas that are essential for maintaining the Palestinian social networks and civil society. At the same time,serving as a catalyst for donor funds,it becomes an important instrument for the PA to channel such funds quickly for the social services to meet emergency needs, including ones that can be expected to have a large impact 2008 on the general well-being of the population and, just as arch importantly, on maintaining, and possibly enhancing, M human capital development for future growth. 10 The Village and Neighborhood Development Project A pioneering Community Development Project in WB&G Clustered in a three bedroom apartment, in the premises of a women's NGO in Al-Zaitoon neighborhood of Gaza,around fifty women were working busily.Some were making couscous and pastries;others were creating ceramic artifacts,while the rest in a third room were embroidering."Part of the products are sold and distributed to needy families in the neighborhood; that is how the work is sustained," the head of the NGO commented. One of the women shyly explained how the Integrated Community Development Project gave her a golden opportunity to earn a living through its job creation program under conditions of conflict induced poverty and unemployment.Justasimportant,sheaddedthattheprogramgaveheranopportunity to establish new friendships,helping her cope with the stress and isolation. photo by: Nader Khoury The World Bank has funded several community development projects in the West Bank and Gaza where community empowerment and inclusion of marginalized groups have been far reaching goals.Building on lessons learned from these projects (ICDP,PNGO,CDPI&II,etc),the Bank is supporting a pioneering new community driven development project, the Village and Neighborhood Development Project (VNDP) where poor marginalized communities will be in the driver's seat to lead their own development process. With USD $10 million divided between the West Bank and Gaza, theVNDP has been carefully designed to cater to that objective.The project will support small communities in planning local initiatives,and prioritizing needs through an inclusive and participatory process. It will also provide small grants to support joint activities among several village councils for subprojects that are part of the local plan within their regions.This will provide incentives for small communities to work together and eventually amalgamate and become a municipality.In the process,these communities will "learn-by­doing," the skills of community planning, benefits of collaboration with other communities for common needs, mobilizing resources for development and improving local level coordination. A locally elected leader attending one of the project's workshops eloquently expressed the value of the VNDP in enhancing social cohesion, "In the current political circumstances with the deep divide in Palestinian politics,this project will help bring people closer together, encourage dialogue among communities, and exemplify the fact that communities can achieve common goals with a real democratic participatory process".The team conducted extensive workshops in both Gaza and theWest Bank to reach out and incorporate into the project design the ideas,needs,and concerns of local communities.The project will be implemented at the local level with oversight from the Ministry of Local Government and Technical Assistance to communities AZ A provided by specialized consultants/NGOs. Clearly as in the case of implementing G D community development projects, implementation ofVNDP is a difficult task, the N A K goals, however, are noble.The Bank team, together with their counterparts in the N A B MoLG,are determined to make it a success. TSE W 11 TheWorld Bank's Operations inWest Bank and Gaza March 2008 On-going Bank Group Operations Project Name & Details Description SolidWaste and Environmental The overall objective of the project will be to implement an environmentally sound solid Management Project (SWEMP). waste management system for Jenin District. This objective would be pursued through the World Bank:US$9.5 million constructionofacontrolledsanitarylandfillinJeninDistrict(ZahratAl-Finjan);rehabilitation/ Approval Date:October 10,2000. closure of uncontrolled dumps; improvement in solid waste management (SWN) services Closing Date:30 June 2008 in the district through the supply of equipment and the strengthening of management and TaskTeam Leader:Andrew Mokakha operationcapacities'buildinginstitutionalcapacityinthenewlycreatedJointServicesCouncil (JSC)forregionalSWMservices;andstrengtheningtheinstitutionalandmonitoringcapacity of Environmental Quality Authority (EQA). The Project is managed by the Joint Services Council for Solid Waste Management (JSU).The EC is financing the supply of collection vehicles and transfer stations relation set-ups. EmergencyWater Project (EWP). The main objective of the project is to support investments that would help alleviate the World Bank:US$12.5 million chronic shortages of safe water supplies;reduce water costs and health risks;and conserve Approval Date:July 29,2003 scarce water resources by reducing system losses. The Project includes the following Closing Date:September 30,2008 components: (a) Rehabilitation and improvement of Water Supply Transmission and TaskTeam Leader:SanaAl Nimer Distribution System;and (b)TechnicalAssistance and Capacity Building provided to the PalestinianWaterAuthority. Social Safety Net The project was formally restructured in May 2007. The new project development Reform Project (SSNRP). objective is to to mitigate the impact of the continued socio-economic crisis on a World Bank:US$10.0 million subset of the poorest and most vulnerable households. An additional is to strengthen Approval Date: July 19,2004 the institutional capacity of Ministry of Social Affairs to manage cash transfer programs. Closing Date:December 31,2008 The primary objective would be achieved by implementing a pilot incentive-based TaskTeam Leader:Eileen Murray cash transfer mechanism with improved targeting modalities that would contribute to improving the living conditions of the beneficiaries. The Project also aims to strengthen the institutional capacity of PA agencies involved in the implementation of the proposed project,in particular in Ministry of SocialAffairs. The Integrated Community The Project seeks to improve the quality and availability of basic social and economic Development Project (ICDP). services in poor and marginalized communities ofWest Bank and Gaza.It succeeds previous World Bank:US$10 million plus US$5 community development operations financed through the Bank under Community million additional financing approved inDevelopment Projects I & II.The project finances the rehabilitation of roads, water supply December 2006. and sanitation systems,schools,clinics,thereby preserving and extending the capital stock of Approval Date:May 23,2002. villages and small municipalities.Under the original financing,agricultural activities were also Closing Date:March 31,2008. financed,including the rehabilitation of wells,roads,and terraces.The project is also piloting TaskTeam Leader:Meskerem Brhane new Information and CommunicationTechnology (ICT) initiatives by funding the creation of MultipurposeTele-centers, thereby improving access to information and training for the poor and marginalized.The Additional financing of US$5 million does not entail changes to the ICDP Development Objective, but gives higher focus on strengthening community participation in the identification and implementation of microprojects,through community- grants procurement. North Gaza Emergency Sewage The North Gaza Emergency SewageTreatment project is the fourth in a series of Bank- Treatment Project. funded water and sanitation projects since 1994.The Project consist of two parts Part World Bank:US$7.8 million A is addressing the immediate and impending health, environmental and safety hazards Approval Date:September 9,2004 to the communities near the poorly-treated and rapidly growing sewage lake in the Beit Closing Date:June 30,2010 Lahia area of North Gaza.And Part B - a long-term solution for the adequate treatment TaskTeam Leader:SanaAl Nimer. and disposal of wastewater in North Gaza, which entails the construction of a new 2008 wastewater treatment plant expected to be financed by various donors.Approximately char 300,000 people living in North Gaza will benefit from this project.The project overall estimated cost is about US$ 63 million. M 12 On-going Bank Group Operations Project Name & Details Description Gaza II EmergencyWater This Project is a follow-up to the previous GWSSP. The development objectives of this World Bank:US$20 million Project are: (a) to develop a sustainable institutional structure of the water and wastewater Approval Date: June 7,2005 sector in Gaza by supporting the functional establishment of a Coastal MunicipalitiesWater Closing Date:Jan 1,2009 Utility,as well as by enhancing and deepening the involvement of the private sector through TaskTeam Leader:KhairyAl-Jamal a three-year management contract; (b) to continue improving the water and sanitation services by rehabilitation,upgrading and expansion of existing systems and facilities;and (c) to strengthen the regulatory and institutional capacity of the PalestinianWaterAuthority.The whole population of Gaza (around 1.5 million people) are benefiting from the project. Tertiary Education Project The project development objectives are: 1) to improve the regulatory environment for World Bank:US$10 million tertiary education management, relevance and quality assurance; 2) increase internal Approval Date:April 26,2005 and external efficiency of the tertiary education system, as a first step towards seeking Closing Date:December 31,2009 sustainability; and 3) to create incentives and provide the basis for improvements in TaskTeam Leader:Adriana Jaramillo efficiency, quality and relevance of tertiary education institutions in order to meet the socioeconomic needs of the Palestinian population. The project provides technical assistance on defining policies consistent with increasing the financial sustainability of the sector and improving the capacity to respond to labor market needs.It also provides incentive mechanisms to improve quality and relevance of the programs offered. On a competitive basis,institutions will apply for quality and management grants,administered by a Fund mechanism.In addition the project will provide technical assistance to improve the management of the current student loans program managed by the MOEHE, and will set the basis for expansion of the financial resources available for funding the student aid programs.The EC is providing co-financing in the amount of 6 million. Land Administration Project The objective of this project is to assess/learn the extent of commitment and readiness of the World Bank:US$3 million PA to reforming land administration by introducing policy, legal and institutional changes Government of Finland:US$3.1 million to achieve efficient procedures for the issuance of land titles and registration of property equivalent transactions, and transparent processes for the management and disposal of public land.The Approval Date: January 26,2005 project is the first phase of a more comprehensive long-term LandAdministration Program, Closing Date:December 31,2008 which aims at enhancing economic growth by improving land tenure security and facilitating TaskTeam Leader:Ibrahim Dajani the development of efficient land and property markets in rural and urban areas through the development of an efficient system of land titling and registration based on clear,transparent and coherent policies and laws and supported by an appropriate institutional structure. Third Palestinian NGO Project The objective of the project is to provide social services to those who are poor,vulnerable World Bank:US$10 million or affected by the deteriorating socioeconomic conditions by establishing an effective AFD:6 million mechanism to improve the quality and sustainability of NGO social service delivery. Approval Date: December 19,2006 The first two PNGO projects successfully built up Palestinian NGO capacity to carry Closing date:Dec.31,2009 out social service delivery activities.Now,there is a need to consolidate and sustain this TaskTeam Leader:Meskerem Brhane capacity by moving the driving force for further NGO development firmly into the hands of the Palestinian NGOs.To this end, PNGOIII will support the transformation of the Project Management Organization (PMO), the implementing unit within the Welfare Association of the previous projects, into the NGO Development Center (NDC), an institution dedicated to grant-making and sector development.At the same time, the project will provide funding to develop and sustain specific NGO-sponsored social service delivery activities. AZ A G D N A K N A B TSE W 13 On-going Bank Group Operations Project Name & Details Description Second Emergency Municipal Services Aprolongedperiodofeconomiccontractionhashadseriousconsequencesformunicipal and Rehabilitation Project revenues and the ability of local governments to continue providing basic services. This World Bank:US$10 million has translated into sharply increased health,safety,and sanitation risks for the Palestinian The Netherlands: 5 million population resulting from mounting solid waste, and deteriorating streets, water and AFD:12 million wastewater networks, particularly in heavily populated urban areas.The objectives of Approval Date: December 19,2006 EMSRP II are to (a) provide funding for infrastructure rehabilitation and maintenance Closing date:June 30,2009 to help mitigate further deterioration in the delivery of essential municipal services, TaskTeam Leader:Steve Karam and (b) create temporary job opportunities at the local level through the launching of labor-intensive employment generation schemes. In addition, through the Municipal Development Lending Fund (MDLF), the Project would pilot innovative initiatives to improve municipal service cost recovery (through the introduction of pre-paid electric metering systems) and leverage partnerships with local NGOs to deliver services more effectively. The total cost of the project is currently estimated at US$40.2 million with financing of US$10 million from the Trust Fund for Gaza and West Bank (TFGWB), and further commitments from Netherlands and Agence Française de Développement. On-going discussions for funding with KFW and Sweden are likely to cover the balance with commitments expected by October 2007. Avian Influenza Prevention and West Bank and Gaza has been considered at high risk for AI due to the large number Control Project of migratory birds crossing the territories and the high risk of spreading the infection World Bank:US$10 million among domestic poultry. In April, FAO/WHO confirmed AI H5N1 presence in 8 Global Fund forAvian Influenza:US$3 locations in Gaza and preventive culling was concluded in the infected areas. The project million aims to strengthen the public and veterinary heath sectors to respond to possible future Approval Date: September 7,2006 outbreaks.The overall responsibility for overseeing and coordinating institutional and Closing date:Jan.31,2009 implementation arrangements is vested with the National Emergency Committee for TaskTeam Leader:LucieTran Avian Influenza Control (NCAIC) which is chaired by the Minister of Health, while funds from the Global Trust Fund (US$3 million) are being implemented by UNDP, focusing on quick implementation of the most urgent activities. Emergency Services Support Program The development objective of the Emergency Services Support Program is to mitigate III the deterioration of service delivery brought about by the inability of the Palestinian World Bank: US$10 million Authority to meet its non-salary recurrent costs. The ESSP finances the non-salary Approval Date: December 13,2007 expenditures of the key social ministries and based on the PA's recurrent expenditure Closing Date: December 31,09 program for these ministries. TaskTeam Leader: Eileen Murray Multi-DonorTrust Fund Name of Fund Description Emergency Services Support Program- The development objective of the Emergency Services Support Program is to mitigate (UnderTemporary International the deterioration of service delivery brought about by the inability of the Palestinian Mechanism ­ window 1) Authority to meet its non-salary recurrent costs. The ESSP finances the non-salary expenditures of the key social ministries and based on the PA's recurrent expenditure Multi DonorTrust Fund:US$65 million program for these ministries. Approval Date:August 2006 Closing Date:June 30,2008 The ESSP budget is based on the PA's annual recurrent expenditure program.Eligibility TaskTeam Leader:Eileen Murray of expenditures is assessed by the Bank, taking into account the emergency nature of the project and the Bank's procurement and fiduciary requirements. Financing of expenditures in other sectors may become possible if donors are willing to provide the necessary financing. The Bank will be approaching donors for replenishing this multi donors trust fund as most funds are now committed under this phase. 2008 char M 14 West Bank and Gaza Portfolio February 2008 Trust Fund for Gaza and theWest Bank Co-financing Committed Disbursed Undisbursed Disbursed Committed Disbursed Undisbursed Disbursed CURRENT PROJECTS US$ Million Percent US$ Million Percent * 01SolidWaste and Environmental Management Project 9.5 8.8 0.7 93% 02 Integrated Community Development Project 15.0 12.4 2.6 82% 04 EmergencyWater Project 12.5 10.8 1.7 87% 04 Social Safety Net Project 10.0 2.7 7.3 27% 05 North Gaza Emergency SewageTreatment Project 7.8 6.8 1.0 87% 18.1 0.0 18.1 0% 05 LandAdministration Project 3.0 1.7 1.3 57% 1.5 0.9 0.5 63% 05Tertiary Education Project 10.0 3.0 7.0 30% 3.6 1.2 2.4 35% 05 Gaza II EmergencyWater Project 20.0 13.9 6.1 70% 07Avian Influenza Project 10.0 1.2 8.8 12% 07 Palestinian NGO Project III 10.0 2.0 10.0 20% 07 Emergency Municipal Services Rehabilitation Project II 10.0 2.7 10.0 27% Total 117.8 65.9 51.9 56% 23.2 2.2 21.0 9% DONOR FUNDEDTRUST FUNDS Local Government Capacity Building 2.5 1.8 0.7 71% Emergency Services Support Program 67.9 44.9 23.0 66% Total 70.3 46.6 23.7 66% COMPLETED PROJECTS 00 Electricity Sector Management Project 15.0 14.8 0.2 99% 03 Emergency Services Support Project II 40.0 40.0 0.0 100% 71.6 71.6 0.0 100% 97 Palestinian Expatriate Professional Program 2.3 2.3 0.0 100% 0.3 0.3 0.0 100% 02 Emergency Services Support Project 20.0 20.0 0.0 100% 29.2 29.2 0.0 100% 04 Public Financial Management Reform SAO 20.0 20.0 0.0 100% 97 Legal Development Program 2.8 2.5 0.0 89% 96 Municipal Infrastructure and Development Project 40.0 40.0 0.0 100% 5.4 5.4 0.0 100% 97 Microenterprise Project 2.2 2.2 0.0 100% 95 Emergency Rehabilitation Project 30.0 30.0 0.0 100% 63.9 63.9 0.0 100% 97 MIGA Fund 10.0 10.0 0.0 100% 96 Emergency Rehabilitation Project II 20.0 20.0 0.0 100% 3.5 3.5 -0.0 100% 97 Community Development Project 10.0 10.0 0.0 100% 2.8 2.8 01 Emergency Response Program 12.0 12.0 0.0 100% 95 Education and Health Rehabilitation Project 20.0 20.0 0.0 100% 29.1 29.1 0.0 100% 99 Community Development Project II 8.0 8.0 0.0 100% 97 GazaWater and Sanitation Project 31.0 31.0 0.0 100% 98 Palestinian NGO Project 10.0 10.0 0.0 100% 4.6 4.6 0.0 100% 99 Bethlehem 2000 25.0 25.0 0.0 100% 3.6 3.6 0.0 100% 97 Palestinian Housing Project 17.4 17.4 0.0 100% 98 Gaza Industrial Estate 7.2 6.9 0.0 96% 99 SouthernAreaWater and Sanitation Project 21.0 21.0 0.0 100% 00 Health System Development Project 7.9 7.9 0.0 100% 01 EducationAction Project 7.0 6.9 0.0 99% 03 Emergency Municipal Services Rehabilitation Project 20.0 20.0 0.0 100% 01 Palestinian NGO II Project 8.0 8.0 0.0 100% 11.6 10.2 1.4 88% 00 Municipal Infrastructure and Development Project II 7.5 7.3 0.0 97% Total Completed 414.2 413.2 0.2 100% 225.7 224.3 1.4 99% TOTAL (Current & Completed) 532.0 479.0 53.0 90% 319.2 273.1 46.1 86% CLOSED DONOR FUNDEDTRUST FUNDS The Holst Fund 285.7 285.7 0.0 100% TechnicalAssistanceTrust Fund 23.6 23.6 0.0 100% PEACE Facility 25.0 25.0 -0.0 100% Public Financial Management ReformTrust Fund 273.4 273.4 0.0 100% AZ A TOTAL DONOR FUNDEDTRUST FUNDS 607.7 607.7 -0.0 100% G D N GRANDTOTAL 532.0 479.0 53.0 90% 926.8 880.8 46.0 95% A K N * For some cofinancing, investment income is added to the principal and disbursed, causing disbursements to go above 100% A B ** Closed TSE 2/ Year approved by World Bank Board of Executive Directors W 15 Economic Developments and Prospects 1. Following the Oslo accords in the early nineties, it 3. A combination of borrowing, remittances and was expected that the Palestinian economy would increased aid that flowed around the PA has propped enter a period of sustained and rapid growth. up GDP in the past two years and has allowed both While performance was not as strong as hoped, there public and private consumption to remain strong. A was steady growth and by 1999 real GDP had grown recent Palestinian Central Bureau of Statistics (PCBS) to $4,512 million. However, since the Intifada in survey estimates that despite the economic crisis, 2000, when Israel instituted a strict closure regime, householdconsumptiondroppedbyonly0.6%between the Palestinian Economy has been on a downward 2005 and 2006. But while consumption may have trend (Figure 1). GDP fell to $3,557 million at the remained robust, investment has fallen to precariously height of the violence and Israeli incursions in 2002 low levels resulting in a hollowing out of the Palestinian and then recovered slightly in 2004 and 2005. But, productive sectors. Public investment has nearly ceased with the continuing growth in settlements,continuing and in the last two years almost all government funds closures,and the cut off in direct aid after the election have been used to pay salaries and cover operating costs. of a Hamas government,GDP fell again in 2006. Private investment is also low. The IMF estimates that it fell by over 15% between 2005 and 2006 and there is 2. Real GDP in 2007 is expected to be about $3,901 no evidence that it has significantly increased in 2007. million, some 14 percent lower than its peak in A recent World Bank Investment Climate Assessment, 1999. Because of the rapid population growth during which found that less than a quarter of private sector the same period, per capita GDP is off nearly 40% firms made any investments in 2005/2006 and that the from its peak. The contributing effects of the closures equipment in manufacturing enterprises was on average and movement restrictions can not be overestimated. over 12 years old. The lack of investment in public Between,1995 and 2000,the Palestinian economy was infrastructure and private enterprises is hollowing out growing at an average rate of 8% per year. Had the the the Palestinian productive base,leading to increased positive trend of the late 1990's continued through aid dependency and pointing to bleak future prospects 2007 in the absence of restrictions,real GDP may have unless the trend is reversed. been more than double its current value (Figure 1). 4. Despite large inflows of aid, the shrinking economy has led to increasing poverty. Unemployment in Figure 1: Estimated Real GDP: Actual and With 8% Real WB&G stands at nearly 22 percent up from only Growth (USD million) 10 percent before the beginning of the Intifadah in 2000. Unemployment is highest in Gaza at 29 percent of the active work force. Under the current closure regime and the restrictions on imports and exports for commercial activity, this is likely to become much higher as the layoffs in the industrial sector become permanent.The unemployment rate in the West Bank 2008 is approximately 19 percent. The percentage of Gazans char who live in Deep Poverty has been steadily increasing, M Source:PCBS andWorld Bank staff calculations 16 rising from 21.6% in 1998 to nearly 35% in 2006. 2007.To compensate for this,PA employment increased With the continued economic decline in 2007 and the from 114,940 to 150,290, not including contractors implementation of even more strict closures on Gaza, and part-time workers (Figure 2). This, along with the current Deep Poverty rate is certainly higher. various increases in salaries, raised the wages by 80% between 1999 and 2007.Thus, government efforts to 5. Poverty levels starkly illustrate the level of aid alleviate the effects of the economic crisis have led to dependency in WB&G. The previously cited rates an unsustainable fiscal situation. reflect actual consumption. If remittances and food aid are excluded and poverty is based only on household Figure 2: PA Employment vs. Employment in Israel income, the poverty rate in Gaza rockets to almost 67%.The increase in poverty in theWest Bank has been lower but is still significant. 6. The situation in Gaza has widened the gap in economic well-being with the West Bank. The current closure policy since the Hamas takeover of Gaza has eroded its economic backbone in a manner that is difficult to reverse.According to the Palestinian Source:PCBS andWorld Bank staff calculations Federation of Industries,the restrictions have led to the suspension of 95% of Gaza's industrial operations (Table 8. The government budget, which was in surplus 1).They can access neither the inputs for production in 1999 when the economy was growing, is nor the crossings to export what they produce, expected to have a fiscal gap for recurrent and transforming Gaza into a consumer economy driven by capital expenditures of around $1.8 billion in public sector salaries and humanitarian assistance only. 2008. The PA has announced a Palestinian Reform The agriculture sector has also been badly hit. Nearly and Development Plan (PRDP) to increase revenues, 40,000 workers depend on the agriculture sector in reduce expenditures, and introduce sector reforms to Gaza. enhance efficiency. But even with these measures and Table 1: Industrial Decline in Gaza assuming resumed economic growth, the fiscal gap for June 2005 Week 1, End-20072 recurrent expenditures alone is projected to remain Pre-disengagement July 2007 high,at around $1.25 billion. Working Establishments1 3,900 780 195 9. In addition to PA reforms, the defining factors for Working Employees1 35,000 4,200 1,750 theWB&G economy remain settlement growth and Exports from Gaza 748 0 34 movement and access restrictions related to Israeli (truckloads)2 (recent shipments of strawberries and security concerns and settlement activity, which carnations) have fragmented the economy into disconnected Source: PalTrade Presentation, July 2007 and recent World Bank cantons. In theWest Bank,the number of checkpoints interviews with PFI. 1.Source:Original data from Industrial associations in Gaza reported to increased from 376 inAugust 2005 to 580 in early 2008. PalTrade There are currently 149 settlements in the West Bank, 2.Source:RecentWorldBankinterviewswiththePalestinianFederation including East Jerusalem,and roughly 100 outposts that of Industries lack even Israeli government approval.The Settlement population has risen to approximately 450,000, 63% 7. With one of the highest population growth rates more than during the Oslo Accord period in 1993. in the world- nearly 4 percent per annum- there Some 38% of the West Bank has been confiscated for is a persistent need to accommodate new workers current or future settlements, outposts, closed military in the labor force. To compensate for the shrinking areas, municipal boundaries, and settlement regional private sector and the loss of employment opportunities jurisdiction. Palestinians without special permits are in Israel,the PA has attempted to provide for the rapidly restricted from important agricultural areas in the AZ growing population by increasing social transfers and Jordan valley, and producers are cutoff from the East A G D becoming the employer of last resort. The number of Jerusalem market.Recently,the GoI has established five N A Palestinians working in Israel or its settlements fell from K crossing points along the Separation Barrier to transfer N A B 116,000 in 2000 to less than 64,000 in the first half of commercial goods between Israel and the West Bank. TSE W 17 The crossing points use a back-to-back cargo transfer delays and costs. Given this difficult environment, system similar to that for crossing into Gaza.With over the chances of WB&G to achieve most of the 95% of Palestinian trade being through or destined to Millennium Development Goals (MDGs) by 2015 Israel,these crossings in their current form are unlikely have become a major challenge (Box 1). to accommodate the current volume of traffic between Israel and the West Bank without creating additional Box 1: WB&G's Status vis-à-vis the Millennium Development Goals Eradicate extreme poverty and hunger.The percentage of Gazans who live in Deep Poverty has been steadily increasing,rising from 21.6% in 1998 to nearly 35% in 2006.About 80% of the population relies on some form of UN humanitarian assistance.With the continued economic decline in 2007 and the strict closures on Gaza, the current Deep Poverty rate is certainly higher. The previously cited rates reflect actual consumption. If remittances and UN food aid are excluded and poverty is based only on household income,the poverty rate in Gaza rockets to almost 67%.The increase in poverty in theWest Bank has been lower but is still significant. Achieve universal primary education.Access to education is equitable with respect to gender,location (rural and urban) and refugee status. Government schools account for 70% of enrolments, while UNRWA has 24% and private schools 6.1%.Although access to schools is primarily constrained by physical conditions and movement restrictions, insufficient investment in upgrading has led to crowding and a deterioration in the learning environment.As schools have lost their revenue base from fees,they have also faced difficulties in securing basic school supplies and materials.With more children facing psychological trauma,the limited services for students with special needs has also become more evident.The inequity in resource allocation between theWest Bank and the Gaza Strip has also become acute. Promote gender equality and empower women.TheWB&G has achieved gender parity in primary,secondary and tertiary education,in contrast to much of MENA.Women's participation in the tertiary education sector,at 107.6,exceeds the MDG target,although these figures do not account for the large numbers of male students who seek education abroad. However, at 12.7%, women's labor force participation is among the lowest in the world. Similarly, women's decision making role in the public domain is limited. In 2005, women held 10% of the Director General positions and 5% of the Parliamentary seats. However, there appears to be improvement at the local government level (19% were elected to office inWB and 17% in Gaza). Reduce child mortality.The infant mortality rate decreased from 34 deaths per 1,000 live births in 1990 to 21 in 2005 and the under-five mortality rate decreased from 40 deaths per 1,000 live births in 1990 to 23 in 2005. This general reduction in infant and child mortality over a 15 year period reflects,inter alia,the resiliency of the Palestinian health sector in the face of continuous financial pressures and service delivery difficulties. By contrast, the average infant mortality rate for the MENA region as a whole was 43 deaths per 1,000 live births. Reduce maternal mortality.There were an estimated 70 maternal deaths per 100,000 live births in 1995. This ratio, in contrast to the declining trend in infant and child mortality rates, increased to 100 by 2005. The maternal mortality ratio in Jordan,by comparison,in 2005,was 41 maternal deaths per 100,000 live births. Combat HIV/AIDS, malaria, and other diseases.There are no reliable data on the prevalence and incidence levels of HIV/AIDS in theWB&G.A recent report indicated that 23 cases were reported in Gaza from 1990- 2002. Tuberculosis is still an important public health concern. In 2005, the estimated prevalence rate of tuberculosis was 36 cases per 100,000 individuals. In Egypt the prevalence level was 32 cases per 100,000 individuals in the same year. Ensure environmental sustainability.The conflict has led to environmental degradation due to scarcity of water, rapid population growth, the refugee situation, desertification and land degradation, and land confiscation. Green lands,forests,and biodiversity have dropped from 4.3% in 1998 to below 1.5% in 2004.Access to water and sanitation has risen from 79.6% in 1996 to around 93%. Access to sewage networks increased from 33.7% 2008 in 1996 to 52% in 2004. However, water quality is well below international minimums and most sewage is char untreated.Per capita domestic consumption is 78 lt/day in Gaza and 53 lt/day in theWest Bank,compared to theWHO target of 150 lt/day. M 18 Gaza Commercial Border Crossings The Industrial and Commercial Impacts Since June 2007,the Gaza Strip has been subjected to a near complete commercial closure,with the movement of goods being restricted for the most part to humanitarian goods and some commercially traded foodstuffs.While humanitarian aid is critical to the Gaza population, the entry of humanitarian goods is a crucial but insufficient condition for the survival of the Gaza economy. Gaza's main commercial crossing,Al-Montar/Karni, which just prior to the closure was averaging 486 trucks per day of imports and exports, has been closed and no commercial imports or exports have been allowed. Sufa and Kerem Shalom/KaremAbu Salem have become the alternative entry points for commercial foodstuffs and humanitarian aid.However,Sufa has only been used for imports of humanitarian goods,while the small quantities of exports which have been allowed have been limited through KaremAbu Salem. Between June 2007 and February 2008 only 132 truckloads of exports,mainly strawberries,potatoes,and cut flowers,had passed through KaremAbu Salem. On October 28,2007,Government of Israel announced the closure of Sufa terminal (although it is still has limited operations for aggregates) and in February 2008,exports through Kerem Shalom ceased. Levels of Exports through Gaza Crossings Levels of Imports through Gaza Crossings `07 `07. `07. `07. `07 `07 `07 `07. `07 `07. `08 `08. `07 `07. `07. `07. `07 `07 `07 `07. `07 `07. `08 `08. Jan. ebF `07.y Mar Apr Ma un.J ul.J `07.v `07.v Aug. Sep Oct. No Dec Jan. ebF Jan. ebF `07.y Mar Apr Ma un.J ul.J Aug. Sep Oct. No Dec Jan. ebF Source: Paltrade Despite the well documented deficiencies of the Karni terminal,Sufa and KaremAbu Salem are even more lacking in infrastructure and capacity to accommodate different types of goods, particularly aggregates, bulky materials, liquids and gases, and fresh produce. For example, in January 2008, strawberry exports were totally halted due to inadequate infrastructure at Karem Abu Salem, which damaged quality due to exposure to dust, dirt, and heat. KarmAbu Salem/ Kerem Shalom Crossing Coming at the heels of an already difficult period with frequentlydisruptedcommercialactivityduetointermittent AZ and repeated border closures,this near complete closure of A G D the Gaza Strip has delivered a severe blow to the productive N A K sectors of the economy in Gaza, and have had an impact N A B Source:OCHA 2007 TSE W 19 on theWest Bank as well.Gaza's main productive sectors are heavily export oriented,including agriculture,garments,and furniture, and the closure of the terminals against all export trade has forced these businesses to halt their operations en masse. Even those businesses operating in the domestic market have been crippled by the restrictions against imports of inputs for manufacturing operations and businesses.In combination,the inability to export product or import any inputs has led to an almost complete collapse of private sector production. This has transformed Gaza into a consumer economy driven primarily by public sector salaries and humanitarian assistance.During 2007,the furniture and garment sectors lost as potential export sales approximately $17 million and $24 million,respectively.The agriculture export sector,with more than 40,000 workers, has been particularly hard hit because it is entirely dependent on imports for fertilizers, pesticides, packaging materials and other inputs. In response to the current policy of restricting entry of all but humanitarian commodities and consumables, enterprises have closed and large amounts of human and financial capital have fled.According to business associations in Gaza, the restrictions have led to the suspension of 96% of Gaza's industrial operations,the lay-off of over 30,000 industrial workers , and approximately 100 enterprises have moved from Gaza within the last two years to West Bank, Jordan, and Egypt among others.2 This lost industrial and commercial base will have long-term impacts,and will be difficult to reverse even once the situation at the border crossings is resolved. Table 1: Industrial Decline in Gaza June 2005 Week 1, July November December Pre-disengagement 2007 2007 2007 January 2008 Working Establishments 3,900 780 250 195 150 Working Employees 35,000 4,200 2000 1,750 1500 2008 char 2 Original data from Industrial associations in Gaza reported to Paltrade and recent World Bank interviews with Palestinian Federation of Industries (PFI). M 20 Empowering Palestinian Children andYouth Through Digital Media "When we saw the incredibly powerful work the Contrast Project was doing with young people in the Al-Amari Refugee camp near Ramallah, we quickly put together a proposal to support it...we still can't believe we managed to win!". AZ A G D N A K N A B TSE W 21 This is how Lina Abdallah and Gregorio Bettiza, two personality... I wish that every young person could have such a young staff of theWorld Bank one based in the Jerusalem wonderful opportunity". office and the other in the Washington DC headquarters, enthusiastically describe how the Youth Empowerment In the past two summers, the workshops organized as Through Digital Media Training, which they supported, part of the Contrast Project have been led primarily by won this year's round of the BankYouth Innovation Fund international adult trainers. This year however, thanks to for the Middle East and NorthAfrica region. the The ¨Youth Empowerment Through Digital Media Training¨ initiative,local youth (ages 16-22) will be trained Youth in refugee camps of the West Bank and Gaza during the school year in a new spring training workshop, suffer from high unemployment, lack of opportunity, as an after school activity. These older youth will then and physical and psychological challenges inflicted by the themselves become the main trainers in this summer's Israeli-Palestinian conflict and as a result of occupation workshop for children. Replacing international trainers and frequent Israeli military incursions. Some youth with local youth trainers will reduce costs and add an respond to these challenges by engaging in criminal or element of local ownership and sustainability while at the violent behavior, while others, suffering from despair or same time giving the opportunity to a wider spectrum of depression,become apathetic.There is an urgent need for young people to express themselves and further develop programs to engage refugee youth and children their skill sets.Mohammad Ghassan Aldasht,a 20 year old in creative projects in which they can channel from Um Al-Sharayet near Ramallah, commenting on their energies into constructive activities. the spring 2008 training program said, "Last summer we enjoyed the video storytelling workshop. Although time In the past two years, the Contrast Project, was so tight, but we produced a good short film...I look in collaboration with the Voices Beyond Walls forward to participating in the spring training to develop organization,hasbeensupportingsummerworkshops more experience in the field of filmmaking". He added for refugee children (ages 8-16) in photography and "As a Media and News student, film making is video through the Computer Clubhouse in the Al- relevant to my studies look and I look forward to Amari refugee camp near Ramallah.3 The goal is to developing academic and career experiences in use digital media as a tool for expression,empowerment, the field of media and film making". and advocacy for children and youth. This year's ¨Youth Empowerment Through Digital Media Training¨ project During the Spring 2008 program, 20-25 supported by the Bank´sYouth Innovation Fund is built on youth will be trained to develop professional the model of the Contrast Project.In terms of expression, experience in short film making and digital young people are encouraged to use creative media as expression with the help and support from therapeutic means of telling their stories and coping committed Palestinian professionals in the field of with hardships experienced. Children are empowered by digital storytelling.The sessions will consist of hands-on developing basic skill-sets in new media technology that training, enabling the trainees to create their own digital can serve as a foundation for future work or study, while photographs and short videos, so that they gain first-hand also exploring creative,proactive ways to deal with difficult experience and expertise in all the skills they will have to situations. Children's photographs and films become tools transmit during the Summer 2008 workshop to children. for advocacy and have been shown in the West Bank The Spring 2008 program will end with a showcase of and internationally, helping to amplify youth voices and youth projects produced during the spring workshop. We their messages.The workshops have been held during the will follow these young people as they express themselves children's summer vacations, when schools are closed and through photography and video while they progress they are most in need of positive activities. through the training and learn all the techniques of pre- production planning and storyboarding; production skills "It was a nice training program that enabled us to stand in including photography,video,sound,writing,interviewing, front of the cameras and express ourselves..." said Haneen and drama;and post-production editing. Abduldeen,a 14 year old girl from the Al-Amari Refugee Camp. Haneen was one of the participants in the video storytelling workshop in the summer of 2007, along with 8002hcraMHaya Salah, a 16 year old girl from Um Al-Sharayet, a Ramallah suburb,who recalls:"it was a wonderful experience 3 The Computer Clubhouse, which is hosted by the Youth Development Association, for me as a young woman to be able to produce video films.... is part of a world-wide network of the Intel Computer Clubhouse (ICCN) with more than 100 Computer Clubhouses around the world. It is an after school program although I don't think that last summer's experience necessarily managed by Boston Museum of Science and started through support of Intel shaped my career goals,it did hugely contribute to developing my Foundation and MIT Media Laboratory. For more information about the Contrast Project see http://www.contrastproject.org/ 22 Annual World Bank reports on key development topics World Development Report 2008: Agriculture for Development The world's demand for food is expected to double within the next 50 years,while the natural resources that sustain agriculture will become increasingly scarce, degraded, and vulnerable to the effects of climate change. In many poor countries, agriculture accounts for at least 40 percent of GDP and 80 percent of employment. At the same time, about 70 percent of the world's poor live in rural areas and most depend on agriculture for their livelihoods. World Development Report 2008 seeks to assess where, when, and how agriculture can be an effective instrument for economic development,especially development that favors the poor.It examines several broad questions: · How has agriculture changed in developing countries in the past 20 years?What are the important new challenges and opportunities for agriculture? · Which new sources of agricultural growth can be captured cost effectively in particular in poor countries with large agricultural sectors as inAfrica? · How can agricultural growth be made more effective for poverty reduction? · How can governments facilitate the transition of large populations out of agriculture, without simply transferring the burden of rural poverty to urban areas? · How can the natural resource endowment for agriculture be protected? How can agriculture's negative environmental effects be contained? This year's report marks the 30th year the World Bank has been publishing theWorld Development Report. AZ A G D N A K N A B TSE W 23 Middle East and NorthAfrica Working Paper Series The MENA Paper Series is designed to serve as an informal instrument to circulate ongoingresearchaswellastoprovideaforumfordiscussionandcomment.Theintended audience includes individuals as well as researcher institutions and economic policy- making organizations. The findings and conclusions are entirely those of the authors and should not be attributed to the World Bank. http://go.worldbank.org/54AZKPAIL0 Economics of`Policy-Induced' Fragmentation: The Costs of Closures Regime toWest Bank and Gaza (Paper No.50) Israeli security measures, which were increased in response to the Intifada in 2000, have imposed a major cost on the economy of the West Bank and Gaza, and are heavily undercutting its current and future developmental capacity.The closures regime - the multi- faceted system of restrictions on the movement of goods and people both within theWest Bank and Gaza and through Israel to the rest of the world - along with construction of the "Separation Barrier"have fragmented theWest Bank's and Gaza's economic space,and have further reduced their productive potential.The aim of this paper is to estimate the economic costs of the closures regime on the Palestinian economy. Job Creation in a High Growth Environment (Paper No.49) The MENA region is experiencing its strongest economic expansion in three decades.This paper addresses the labor market effects of the ongoing economic boom.While labor market outcomes were disappointing in the 1990s, the region has seen high rates of job creation and falling unemployment rates accompany output growth since 2000. Unlike in the past, the private sector has also generated most of the new jobs. Labor market conditions are not uniformly improving, however.The rapidly growing presence of educated women in the labor force is not sufficiently matched by employment opportunities. Moreover, labor productivity growth remains fairly low,which puts into question the quality and long term sustainability of jobs coming up in MENA. Since labor force growth is expected to remain high, pressures will be high for both job creation (to absorb labor supply) and output growth (to ensure productivity growth).MENA countries will need to continue moving forward on structural reforms in order to achieve the high and sustainable economic growth needed to couple high quantity of jobs with 2008 higher quality. char M 24