The Palestinian Economy

1/ One must appreciate Palestine has been forcibly split into at least two discontiguous parts, the West Bank and East Jerusalem (3.2M population) and Gaza strip (2M), with Israel annexing and occupying the space between (and some) since 1948.
2/ Since the 1990s the West Bank, the largest of the areas, has been further divided into 3 distinct areas A, B and C.

1/ Two questions for Gulf economies are increasingly important:
a) why do they lack innovation?
b) why do they struggle to create jobs for citizens?

A few overarching and persistent reasons... 2/ For decades, Gulf states facilitated what is called REGULATORY CAPTURE, i.e. when a political entity, policymaker or regulator is co-opted to serve the commercial, ideological, or political interests of a minor constituency, in this case, the "Tijjar", or merchant class.

1/ Egypt : Addicted to Aid?

For a country that has borrowed more than $75 Billion from the IMF and neighbours in just in the last decade, it’s surprising Egypt decided that building a new presidential palace was a national priority. 2/ Egypt is becoming a bottomless pit:

2012 — $10 Billion from Qatar
2013-15 — $23 Billion, Kuwait, KSA, UAE
2016-22 — $23 Billion, IMF
2022 — $22 Billion, KSA, Qatar, UAE

… $75+ Billion and counting, this is unsustainable and like an unruly child, rewards bad behaviour.

1/ Opportunity of the century for the GCC?

The US/European pivot to rebuild supply chains OUTSIDE of China poses a unique economic and geopolitical opportunity for Gulf states to develop a lasting post-hydrocarbon future. 2/ Biden's recent visit to Asia and the US move to start "friend-shoring" coincided with plans for Apple to start moving some manufacturing to Vietnam for the first time, despite China accounting for 25% of its revenues.

1/ The Middle East's least appreciated structural risk?

14 of the world’s top 20 water-scarce countries are situated in the MENA region. 2/ MENA region has 6% of the world’s population, but less than 1% of global water resources.

THREAD:

1/ Why UBI is #Kuwait’s best hope to survive the next 20 years. 2/ Kuwait's economy is dominated by the state which in turn generates almost all its revenues from oil. Furthermore, private sector activity today is in effect completely dependent the public sector.

Lots of discussion around Gulf states breaking their $ pegs. Pegs have kept Gulf currencies stronger than if they had freely floating exchange rates, so what are they protecting?

1/17 Firstly Gulf states aren't all in the same boat. Oman and Bahrain are the weakest in terms of fiscal position and foreign reserves. They also have $ pegs, whilst Kuwait is the only Gulf state that pegs to a basket of currencies (though $ has the largest weight).

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