Palestinian economy ramps up for potential statehood

Palestinians attend a demonstration in Ramallah, West Bank, in support of the Palestinian bid for recognition of statehood at the United Nations.

BOB MOON: The much-awaited speech from Palestinian president Mahmoud Abbas is set tomorrow at the U.N. He'll plead with the member nations to recognize a State of Palestine. Israel and the U.S. oppose the move, insisting that the Palestinians first need to sit down at peace talks. But many predict Palestine will win U.N. recognition. Palestinian leaders say they're building the institutions needed for a full-fledged government and economy.

Are they ready? Daniel Estrin went to the West Bank city of Ramallah to find out.


DANIEL ESTRIN: You can learn a lot about the Palestinian economy today from this one phone call.

Phone rings

Hazem Eideh works for Safad, a Palestinian wholesaler of Microsoft and HP products. His printer cartridges and laptops arrive at the Israeli port on the Mediterranean coast. He's on the phone almost every day talking to the Israelis who run the port.

HAZEM EIDEH: Shalom. How are you?

They make small talk, they laugh, but Eideh says, every phone call is about dealing with delays.

EIDEH: I want to check about the two files that you sent me today.

The usual hold up? Israeli army checks -- to make sure his computer equipment can't be used to disrupt Israeli military communication systems. That can take weeks and even months. He says the army's regulations are always changing.

EIDEH: All our life is related to Israeli rules.

Israel controls imports and exports, a source of frustration for the Palestinians. But it hasn't stopped software and IT sectors in the West Bank from booming. It wasn't like this six years ago at the tail end of the Palestinian uprising. But when the U.S. trained the Palestinian security forces, things started to change.

Raed El Eyyan is a Palestinian businessman.

RAED EL EYYAN: You feel secure, you know that someone is protecting you there.

This new-found sense of law and order allows businesses to thrive. It convinced El Eyyan last year to launch his own company, an Internet service provider. Today he operates a 24-hour support center.

Nowadays around Ramallah, you'll see a bunch of shiny new ATM machines. Construction is booming. Cafes are packed. KFC just opened its first Palestinian branch. In the last few years, GDP has grown about 9 percent in the West Bank.

But the numbers are misleading, says Palestinian American businessman Sam Bahour. He says Israeli military checkpoints and roadblocks have turned a 20-minute drive to Bethlehem into a two-hour ordeal.

SAM BAHOUR: I eat more sandwiches on the road, I hit more potholes, I use more gas. For GDP that's great. And for my livelihood that's a disaster. For the ability for us to create an efficient economy, that's a disaster.

While Gaza's economy has been severely crippled for years, the World Bank says the Palestinian West Bank is ready for statehood. Not all the institutions are in place, but Palestinian leaders have built a monetary authority that acts like a central bank. There are new income tax laws. There are anti-corruption efforts to go after white-collar crimes.

At a downtown rally in favor of the UN bid, IT worker Murad Rumani said his people are ready for their own independent state.

MURAD RUMANI: We have a good government. We have a good infrastructure. We have a lot of things. More than Somalia, for example. And Somalia is a country. Why we don't have it?

It raises the question: What really makes a country a country anyways? The Palestinians don't control their imports and exports, or have their own currency. But in recent years they have equipped themselves with the trappings of a modern country. They have their own Internet domain name -- dot-ps. They stopped using the Israeli international dialing code, 972, and got one of their own -- 970.

Businessman Ibrahim Barham proudly gave me his business card.

IBRAHIM BARHAM: Some people when we travel in the world, what is this 970, so they are asking us. It's Palestine. So it's an address.

But a symbol is still just a symbol. Palestinian businessmen still want their political leaders to finally negotiate with Israel for a real independent state.

In Ramallah, I'm Daniel Estrin for Marketplace.

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