Could you give a brief description of UNCTAD's activities and
aims in the Palestinian Territories?
Raja Khalidi: UNCTAD has been working with the Palestinians since
1979 - we were one of the first organizations to examine the
underlying structural weaknesses of the Palestinian economy and
decide on coherent strategies to get it on a path to sustainable
development. In 1995, guided by the findings and recommendations of
the research and studies undertaken up to that period, UNCTAD set
up an integrated program of technical assistance activities.
This served as the framework for a series of advisory missions,
training sessions and workshops, in response to requests for
assistance from different ministries of the Palestinian Authority
(PA). The technical assistance program currently in place broadly
deals with trade policy, trade infrastructure, finance and
development, and enterprise and investment.
Our mission is to set up project teams, with the agreement and
approval of the PA and the ministries involved, to bolster
Palestinian institutional development and help create a positive
environment for the private sector through a range of technical
cooperation projects. Once we have imparted the expertise that we
have in these specific fields, the projects will become
Before the outbreak of the most recent Intifada, we were working on
three main projects: developing a customs initiative1, a public
debt management system, using UNCTAD's computerized Debt Management
and Financial Analysis System, and small- to medium-enterprise
(SME) support programs. We were also offering advisory services on
a number of subjects such as trade, dealing with the World Trade
Organization, and developing economic relations with Israel.
On the basis of this strategy, and the clear needs emerging from
the Palestinian territories, we were able to attract funding for
these UNCTAD programs. We are continuing to carry out targeted
research and analysis, especially in the trade, finance and related
Previous UNCTAD reports make unfavorable mention of the Paris
Protocol. Do you believe this protocol hindered the development of
the Palestinian economy from the outset?
We have always been critical of the Paris Protocol, right from its
conception in 1995. We produced reports stating that we saw
deficiencies in it, which we were concerned may prove
insurmountable to a developing economy2 - but this was a practical
concern rather than a political one.
Prior to 1995, UNCTAD had been very much under attack from Israel
and the US for carrying out research that they felt entered
negatively into the political framework. Given that our mandate at
that time was to investigate the impact of Israeli restrictions on
the growth of the economy in Palestine, it is hardly surprising
that they felt under attack. In fact, Yasser Arafat was given
permission to return to Palestine before UNCTAD was.
Are you working on these projects in cooperation with
Israel is a member of UNCTAD, as are all other members of the UN.
We have an annual review of the work programs we are running, where
we analyze the assistance we are providing. Israel takes part in
these debates and, since Oslo, has been a positive contributor,
with no criticisms of UNCTAD's work. However, Israel is not
directly involved with any of our projects and nor are any other
countries. We work directly with the Palestinians.
What is your prognosis for the future of your projects in the
Palestinian economy? Will you be forced to withdraw at any
All our projects, which were designed prior to the outbreak of the
second Intifada in 2000, were founded on the conviction that the
Palestinian economy is viable. Prior to 2000, we were bringing in,
and helping to implement, the most up-to-date systems available,
and we had all the components necessary to set a new example in the
region of a thriving and efficient economy.
When the Intifada broke out, we initially thought it would be over
within a couple of months. As it continued, we were unable to send
experts over to continue training, but e-mail and the internet
meant we were able to keep our training and advisory programs
going, even when we weren't actually able to be on the ground
ourselves. It would have been much harder to keep working over the
past two years without this technology.
The political horizon meant the completion of projects, such as the
customs program, for example, became pretty much unimaginable. The
rationale for our involvement there appeared to be in serious doubt
- were we developing systems for self-rule or to hand over to
Emergency needs began to take precedence for both the PA and the
donors. As UNCTAD programs work best in periods of stability and an
established political framework, our projects here essentially hit
rock bottom last year.
But, we can be flexible, so we looked at the projects we were
already running here and how applicable they were to the current
situation. When the PA ultimately becomes the governing authority
here, it will have hundreds of millions of dollars of debt, while
it is still responsible for the significant amounts of imports
coming into the territories. The SMEs will also still be here and
their need to be equipped to cope in a variety of circumstances is
greater than ever - so we decided that UNCTAD's projects here
In addition to this, what we were carrying out were active reform
programs, long before the reform debate was put on the table. This
is now being quoted as an example of PA foresight and commitment to
reform. So, in a sense, our work has even become increasingly
relevant. The first phases of the customs and debt management
projects are also being reported by Salam Fayyad, the new finance
minister, as examples of preparations for the future.
We are now also looking at providing technical assistance for the
investment promotion agency in the territories, as UNCTAD has a
proven track record in this field. Given the difficulty that
currently exists in obtaining donor support, we feel it is
important that there is after-care for current investors to keep
them on track and make sure their investments remain viable.
All this essentially means we have been revisiting our pre-2000
ideas, giving them a relief and development angle to keep them
Are there any other projects that you have managed to revive in
Before 2000, we had started a strategic food commodities
procurement and food security program, which was aimed at helping
the PA to stabilize food supplies in the territories. We have now
widened this to look at training, access to international commodity
trading and new risk management strategies. We are also working
with the private sector to develop its capacities in dealing with
volatile international commodity markets.
One good example of this is our work with the Palestinian olive
harvest. Given the problems that had been occurring in this sector,
we decided to provide support to the producers and the marketing
sector. Again, all of this is aimed at giving a development
dimension to relief work.
What impact will the construction of the security wall have on your
projects, especially the customs program?
It has no direct impact on what we are doing - we are giving people
the sort of training they need to deal with that problem
themselves. Going back to the wall - although this may sound
controversial, it could actually be beneficial to the PA in the
long run, certainly in terms of customs structures. Imports and
exports will be passing through designated and controlled points,
which is an ideal situation in which to set up a separate customs
country. Customs borders are very different from physical borders,
but once they are established, the Palestinian territories will be
eligible to join the World Trade Organization, for example.
Obviously, the wall will initially impede trade given the current
circumstances, and the implementation of our customs systems is
dependent on reciprocity. The irony is that the Israeli Ministry of
Trade has been calling for the implementation of the same measures
as the Palestinians when it comes to trade. But, because of the
political situation, the matter is out of their hands.
Who have been the major donors to UNCTAD projects
Since 1999, we have been receiving money from UN Development
Program, the World Bank, the UK, Italy, the Netherlands and Norway.
They fund one-to three-year projects and so far, despite the
situation, we have had no problems with late or withheld payments.
Understandably, it is currently very difficult to attract new
funding. Programs need to be linked to the reform agenda and donors
are also increasingly cautious - not about transparency or
corruption, but about investing in anything that risks being either
destroyed or dissipated.
You sound remarkably upbeat about the prospects for the Palestinian
The PA's authority to govern is at its lowest-ever level. But I
believe it will strengthen now and we'll start to see
consolidation. In a sense, the fat has been burnt off and only the
best is left - the technicians, the dedicated, those who need this
place to succeed. The elements that were holding the PA back have
either left or are inactive. We had been dealing with Salam Fayyad
before he became minister of finance and he endorsed our management
project. We have a long working relationship with that ministry,
the Ministry of Economics and Trade and the Palestinian Central
Bureau of Statistics, all of which are now active in reform and
building the new government.
Of course, things could get much worse. I have been talking from
our technical point of view, rather than politically. My optimism
about future statehood is based on the two-state solution mentioned
in the Security Council resolution six months ago and the Quartet
plans. If these are put into practice, there will be work for
everyone. Otherwise, until there is some definite outcome, we plan
to keep things ticking over and working slowly to build up these
systems and programs.
1 The General Directorate of Customs and Excise relies on the
Israeli authorities for obtaining customs statistics and
information. Consequently, it is unable to adequately monitor
imports, especially those originating from Israel, with lost
customs revenue estimated at between US $166 million and US $275
million a year during the period from 1994 to 1996.
2 The Paris Protocol provides that Israel controls clearing
procedures for products imported through its ports and airports.
This has inflated transaction costs incurred by Palestinian
traders, which are generated by strict security measures at border
crossings and cumbersome customs and overland procedures.