Monopolies and the PNA

Nasr discusses the creation of monopolies in Palestine with a critical eye on much of the literature condemning the Palestinian authority for allowing the emergence of monopolies. Nasr argues that an analysis that sees monopolies as a sign of a corrupted Palestinian Authority, is a simplistic one and that in order to understand the emergence of monopolies it is necessary to look at the Paris Protocol and to see the strong limitations imposed by it. According to Nasr, monopolies in Palestine were created to attract foreign and local investment and that the creation of monopolies allowed the development of the Palestinian business community. At the time of the signing of the Oslo Agreement, Palestine had an economy based on small family owned firms and a private sector weak and fragmented. Most of the foreign aid was bound to specific programmes for job creation and education, for the definition of which the PA didn’t have much freedom, while the perception of instability discouraged private investors. Meanwhile with the signing of the Tunisi agreement, the PLO had committed itself to the creation of an open, export-oriented, private sector led market economy. The problem hence was on one hand to restore the economy that was impacted by the restrictions on the economic relationships between Palestine and Israel and convince the private sector to invest in Palestine. As foreign investors where investing in low risk ventures, the PA started granting monopolies in key sectors in order to attract private investors in infrastructures projects, such as telecommunication and energy, it monopolized the imports of strategic products and went into partnership with private firms. The PA was an active supporter of some monopolies and defended its strategy by claiming that on the one hand they were only granted for big infrastructure projects and on the other that considering the size of Palestine it is reasonable to only have one company for each sector. Nasr claims that the strategy followed by the PA enabled the Palestinian economy to have a flexibility that would have been hardly reached otherwise and a margin of autonomy in the allocation of investments in developing infrastructures in Palestine.