Area C of the West Bank and the Future of the Palestinian Economy
January 15, 2014Washington, DC

Watch the replay of the discussion that took place January 15, 2014 on the potential impact of the Palestinian "restricted land" Area C, at the World Bank headquarters. The event featured the Area C report author Orhan Niksik, Senior Fellow at the Council on Foreign Relations Heidi Crebo-Rediker, and was chaired by World Bank Chief Economist for the region, Shanta Devarajan.

More than half the land in the West Bank, much of it agricultural and resource rich, is inaccessible to Palestinians.  The first comprehensive study of the potential impact of this ‘restricted land’ sets the current loss to the Palestinian economy at about US$3.4 billion.  Area C constitutes 61 percent of the West Bank and is the only contiguous land connecting 227 smaller separate and heavily residential areas.  Furthermore, this is a very resource rich area. 

The 1993 Oslo Peace Accords stipulated that Area C be gradually transferred to the Palestinian Authority (PA) by 1997. This transfer has never taken place. With growth of approximately six percent annually needed to absorb new entrants to the labor market, let alone making a dent in the soaring rate of youth unemployment, urgent attention is needed to find ways to grow the economy and create jobs. A vital economy is essential for citizen well-being, social stability and building confidence to underpin the challenging political negotiations. However, the Palestinian economy, which currently relies on donor financed consumption and suffers from ongoing stagnation of the private sector, is unsustainable. The report estimates that if businesses and farms were permitted to develop in Area C, this would add as much as 35 percent to the Palestinian GDP.  Freeing economic activity in Area C would have a particularly high impact on the development of businesses in agriculture and Dead Sea minerals exploitation, stone mining and quarrying, construction, tourism, and telecommunications. Other sectors would be able to benefit from improvements in the quality and cost of infrastructure and increased demand for different goods and services.  The anticipated increase in economic activity would greatly improve the PA’s fiscal position. It is estimated that government revenues would increase by US$ 800 million, which would cut the fiscal deficit by half, hence reduce the need for donor support, and reduce unemployment and poverty rates.


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    Shanta Devarajan, Chair

    Shanta Devarajan, World Bank Chief Economist, Middle East and North Africa. Since joining the World Bank in 1991, he has been a Principal Economist and Research Manager for Public Economics in the Development Research Group, and the Chief Economist of the Human Development Network, the South Asia Region and Africa Region. He was the director of the World Development Report 2004, Making Services Work for Poor People. Before 1991, he was on the faculty of Harvard University’s John F. Kennedy School of Government. The author or co-author of over 100 publications, Mr. Devarajan’s research covers public economics, trade policy, natural resources and the environment, and general equilibrium modeling of developing countries. Born in Sri Lanka, Mr. Devarajan received his B.A. in mathematics from Princeton University and his Ph.D. in economics from the University of California, Berkeley.
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    Orhan Niksic, Speaker

    Orhan Niksic is a Senior Economist with the World Bank currently engaged as the Country Economist for West Bank and Gaza, based in Jerusalem. Prior to this engagement Orhan worked on Central Asia, primarily Kyrgyz Republic and before that on Bosnia and Herzegovina. Orhan joined the Bank in 2007 from Kosovo, where he worked for three years as a Senior Economic Advisor to the European Union Pillar of the UNMIK Mission on efforts to build the economic foundations for the future state. Prior to this he worked as an Economic Advisor in the Office of the High Representative in Bosnia and Herzegovina. Prior to venturing into economic development, Orhan was a financial analyst for Edison International in Los Angeles California working on risk management and electricity price forecasts. Orhan holds a BA in Economics and International Relations and an MS in Engineering Economic Systems and Operations Research both from Stanford University in California.
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    Heidi Crebo-Rediker, Discussant

    Heidi Crebo-Rediker is a senior fellow at the Council on Foreign Relations. She previously served as the State Department's first chief economist. Appointed to this assistant secretary–level position by Secretary Clinton as a centerpiece of her "Economic Statecraft" initiative, she provided advice and analysis to the secretary on foreign policy issues having a significant economic or financial component. Prior to this, Ms. Crebo-Rediker was the Chief of International Finance and Economics for the Senate Committee on Foreign Relations, following nearly two decades in Europe as a senior investment banker. In the Senate, she advised then Chairman John Kerry on a range of international and domestic economic and financial issues. Over her investment banking career, she managed businesses ranging from European debt capital markets, emerging markets debt capital markets, to sovereign, supranational and public sector banking. In this capacity, she managed public and private financings for governments, corporations and banks, and related advisory work. Upon returning to Washington D.C., she was the founding co-director of the Global Strategic Finance Initiative at the New America Foundation in Washington, DC. During her time in the Senate, she was the architect of the bi-partisan National Infrastructure Bank legislation (The BUILD Act) introduced in March 2011 and included in the President Obama's Jobs Act. Ms. Crebo-Rediker was named one of the "Top 25 Women in Business" by the Wall Street Journal Europe. She holds degrees from Dartmouth College and the London School of Economics.
Event Details
  • Date: Wednesday, January 15, 2014
  • Time: 12:30 - 2:00 pm EST/ 17:30 GMT
  • Location: World Bank Headquarters, J5-050