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Next Step : Building on Hope in West Bank : Construction is booming, but long-term growth depends on tenuous Mideast politics.


Odeh said that Palestinian business people have been preparing--gathering substantial capital from around the Arab world, Europe and the United States, registering their new companies, getting licenses and permits--in anticipation of a real boom later this year.

"Most of the building boom is the result of Palestinians abroad sending their capital home, and frankly we encourage the sons of Ramallah to send their money here even if it means putting up another office building rather than a factory," Odeh said.

"But a lot of these new offices will have a name on the door, new furniture inside, but their books will still be empty."

The Arab Bank, based in Jordan but Palestinian-owned, has nonetheless recently reopened five branches in the Palestinian territories and, Bishara said, is prepared to wait a number of years before it sees a profit.

Already, the bank's deposit base is growing at a pace that Bishara predicted will lead to its doubling within a year.

"Things are promising if the Declaration of Principles (between Israel and the PLO) is carried out," Bishara said. "In economic terms, the Palestinian Authority has the right ideas, it is asking the right questions and it is making the right initial moves. The main questions are political."

Samir Huleileh, the Palestinian Authority's director general of trade, agreed that the political uncertainty leads to increased economic risks for investors, but argued that the business environment is improving.

Huleileh ticked off the pluses quickly: Taxation is now in Palestinian hands, not that of the Israeli military; Arab banks are reopening long-closed branches, giving Palestinians greater access to foreign financing; new companies can register in a single day, compared to three or four weeks under Israeli authorities; import and export licenses can be obtained quickly, and $128 million in infrastructure projects have been approved by foreign donors.

"One good measure of the economic upturn ahead is that we have issued three times as many import licenses in 1994 as Israel did the year before," Huleileh said.

On the agenda for the first quarter of 1995, he said, are a new investment law, the harmonization of the often contradictory laws under which businesses operate and further regulations implementing the economic agreement Israel and the PLO signed in May.

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