RAMALLAH, West Bank — On the eve of a meeting of international donors to the Palestinian Authority, Palestinians say Israel is working against U.S. efforts to promote investment and create jobs by holding up a $650 million project to create a new cell-phone company.
Israel agreed in principle last year to allow Wataniya Mobile to become the second Palestinian mobile-phone provider.
But Israel’s Communications Ministry has yet to release cellular frequencies for the new network and has blamed the delay on security concerns, Palestinian officials said yesterday.
“We think [the delay] is political,” said Suleiman Zuheiry, the Palestinian Authority deputy minister of telecommunications and information technologies. “All the time, they’re telling us that it’s a military issue, and the military is using these bands in the Gaza Strip and Southern Lebanon.”
Secretary of State Condoleezza Rice is in London today to meet with officials from the United Nations, Europe, Russia and other donors on future aid and investment in the Palestinian territories. Miss Rice next flies to the Middle East in an attempt to re-energize stalled peace negotiations.
Wataniya Mobile officials estimate the phone network would draw about $650 million in foreign investment to the West Bank and create as many as 2,500 jobs in the first two years.
What’s more, liberalizing the market is expected to reduce telephone rates significantly.
Mr. Zuheiry said the Palestinian Authority has raised the cellular problems with Israeli Prime Minister Ehud Olmert and Miss Rice.
Israeli communications ministry spokesman Yechiel Shabi declined to comment on the Palestinian accusations of foot-dragging in negotiations over the phone deal.
British Prime Minister Gordon Brown appealed yesterday for more private investment in the West Bank and the Gaza Strip, the Associated Press reported.
Today’s conference in London includes donors that have pledged $7.4 billion to the Palestinians.
Later this month, the Palestinian Authority is planning to hold an investors conference in the West Bank city of Bethlehem to encourage financing for $1.9 billion worth of private-sector projects.
The case of Wataniya, however, sets a bad precedent for foreign investors, Mr. Zuheiry said.
“Anyone who is thinking about investing in Palestine, I think is getting a very bad impression,” he said. “On the other hand, if we can get something before Bethlehem, it will be the other way around. It will be a good success story.”
In a report released earlier this week, the World Bank estimated that the Palestinian economy was stagnant last year with zero growth.
At the same time, the World Bank projected growth of 3 percent for 2008 in the Palestinian territories. When taking into account population growth, per capita income would still decline.
Allies of the U.S. and Israel hope to turn the West Bank into a model of economic prosperity, compared with the impoverished Gaza Strip, which is ruled by the militant group Hamas and cut off by an Israeli blockade.
But Palestinian efforts to attract investors are running up against Israeli efforts to maintain the highest level of security in the West Bank by continuing to man roadblocks that stop traffic.
Several weeks ago, Palestinians announced a plan to promote construction projects in the West Bank, with $980 million in investment.
Having thrived during years of years of economic blight, telecommunications is another key industry in the West Bank and Gaza.
The PalTel Group — the largest single private company in the territories — estimates that its businesses account for 12 percent of overall Palestinian gross domestic product. Revenue of PalTel’s mobile phone monopoly, Jawaal, have posted double-digit growth over the past four years.
However, the market needs to be liberalized, and in an effort to stir more competition, a recent World Bank report called on Israel to “speed the release of frequencies.”
The Qatari telephone company Q-TEL owns the controlling stake in the Palestinian cellular upstart Wataniya.
At the company headquarters in Ramallah, several dozen employees are working on marketing schemes and bushiness development, but the company is in standby mode until getting the green light from Israel.
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