World Bank unveils 3-year, $1.2 billion aid plan for self-ruling PLO areas

May 03, 1994|By New York Times News Service

WASHINGTON -- The World Bank unveiled a three-year, $1.2 billion program yesterday worked out with the Palestine Liberation Organization to lay an economic foundation quickly for Palestinian self-rule in the Gaza Strip and Jericho.

On Oct. 1, the United States organized a meeting of 40 donor countries, which pledged $2.4 billion to support the new Palestinian authority in the former Israeli-occupied areas.

Since then, the World Bank and economic experts from the PLO have been working on a program that would take these diverse and often vague pledges and forge them into a coherent, detailed plan for economic development: identifying the major needs, specifying how the money should be spent, eliminating duplication and setting clear priorities.

This program is expected to begin almost immediately after the planned signing in Cairo, Egypt, tomorrow of the full Israeli-PLO accord governing the transfer of Gaza and Jericho to Palestinian self-rule.

The first steps in the economic program will involve the laying of sewers and construction of waste-disposal facilities in Gaza and Jericho. Other projects -- for improving housing, roads, health centers, telecommunications and water -- will follow as soon as the engineering studies are completed.

"If the peace process has any hope of success, the Palestinians need to see improvements in their living conditions very quickly," said Caio Koch-Weser, the World Bank vice president for the Mideast and North Africa.

"The program and the funds behind it are for the immediate needs of the Palestinians and will help create a new physical and social infrastructure, provided political stability can be maintained," he said. "But unless there is a visible improvement in social and economic conditions, in an equitable way, the very foundations of peace will be undermined."

The World Bank plan, released yesterday, details how to spend halfthe $2.4 billion over the next three years, and the rest later. The plan will be carried out by the PLO's Economic Council for Development and Reconstruction, based in Jericho, in cooperation with the World Bank, Israel and the donor nations.

While these officials would not say so, the plan provides both a blueprint for Palestinian economic development and a straitjacket intended to prevent corruption or the creation of economic white elephants -- show projects that are not economically viable.

PLO Chairman Yasser Arafat would have preferred a looser arrangement, under which the PLO would have been given money directly from donors for it to spend as it saw fit, and would have allowed Palestinian ministries to make deals with individual countries for different projects.

But such an approach can invite payoffs, kickbacks and the sort of uncontrolled economic development that has plagued so many other nations in the Mideast and elsewhere in developing countries.

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