PALESTINIAN politicians have always had trouble bridging their policies with current realities. Now it appears that Palestinian economists suffer from the same malaise. Dr. George Abed, a former International Monetary Fund economist who is now executive director of the Palestine Welfare Association, a think tank in Geneva, has written ``The Palestinian Economy,'' on the problems of economic development under prolonged Israeli rule of the West Bank and Gaza economies. The study is being hailed by Palestinians as the blueprint for an independent Palestinian economy.
Dr. Abed says $25 billion needs to be raised over a 10-year period for physical and social infrastructure in the West Bank and Gaza, and to expand the industrial and agricultural bases of the economy. Of this amount, he hopes $7 billion would come from Arab countries, $6 billion from official bilateral assistance, $3 billion from international financial and development institutions, and $9 billion from private Palestinian and Arab businessmen. He asserts that the share of industry in gross domestic product in the West Bank and Gaza would have to rise from its current 7 percent to 25 percent, and per-capita gross national product from $1,200 to $3,500 by 2000.
Expecting to receive $7 billion from the Gulf states when they are currently running budget deficits is based on nothing more than wishful thinking. Yet the most unrealistic expectation is the $9 billion to be raised from rich Palestinians abroad. Israel mobilizes about $500-$550 million a year from Diaspora Jews. There are five to six times as many Jews as Palestinians, their fund-raising apparatus is extensive and fine tuned, and per capita they are considerably more wealthy. Yet Dr. Abed insists his people will be able to raise twice as much money per year.
His projections for industry to comprise 25 percent of the GDP must be viewed against the fact that no Arab economy has ever reached such a figure, nor does any Arab country outside of the Gulf states enjoy a GNP per capita of $3,500.
Abed concludes his study by stating: ``It is clear that Israel's occupation, even if it were to end soon, will leave the emerging Palestinian economy burdened by colossal handicaps.''
It is true that Israel carries out an economic policy in the territories which serves its own interests, restricts the imports of West Bank agricultural goods into Israel, does not subsidize Palestinian firms, nor channel enough developmental funds into the West Bank and Gaza infrastructure. Still, it is absurd to say that the two occupied territories would have flourished since 1967 if Israel had not integrated their economies with its own.
Where would Palestinian agriculture be today without the use of Israeli irrigation techniques? Where would the Hebron, Bethlehem, and Ramallah furniture and textiles firms be without subcontracting work from Israeli companies? How would the consumer and service sectors of the Palestinian economy have fared without 45 percent of the population being employed in Israel?
TWENTY-ONE years of Israeli rule of the West Bank and Gaza have resulted in two separate economies being meshed into one single unit. According to research done by professor Gideon Fishelson of the Department of Economics at Tel Aviv University, the Israeli economy is not nearly as sensitive to political changes as the West Bank and Gaza economies. The territories' population is 32.2 percent of Israel's, yet its GNP is only 9.4 percent and its work force is only 18.3 percent.
While a separation of the economies would result in damage to Israel by a decline of workers from the territories, it would be limited to 3 percent of GNP in the first year. Foreign workers would eventually fill the gap.
In contrast, it would be economic suicide for the Palestinians to cut themselves off from the Israeli economy. Separating without massive economic aid would generate an economic disaster. Gaza would experience a drop down to only 20 percent of the economic activity of 1986, and in the West Bank to 60 percent. Political unrest would certainly follow. According to Professor Fishelson, the Palestinian leadership is making a mistake by ignoring economic issues when examining their possible political scenarios. A trade-off must be made between political independence and economic benefits.
Palestinians have a right to demand free access to Israeli markets, equal pay for equal work, and an overall long-term economic policy for the West Bank and Gaza until a final political solution is reached. Continued Israeli military rule over the West Bank and Gaza is no answer to the Palestinian-Israeli conflict. Yet neither is unrealistic economic analysis.