Wataniya palestine mobile firm gets US money earmarked for loan guarantees

From Reuters, and also published by the Daily Star and Gulf News

“U.S. aid in the form of loan guarantees meant for Palestinian farmers and other small to mid-sized businesses has been given to a mobile phone firm backed by President Mahmoud Abbas and Gulf investors.

The shift in U.S. taxpayer support to Wataniya Palestine, a joint venture between a Kuwaiti and Qatari telecoms group and a holding company for public assets, the Palestine Investment Fund (PIF), has dismayed sponsors of small private enterprise.

Its supporters counter that help for Wataniya Palestine is good for jobs and free markets at a time when Washington is throwing its weight, and money, behind Abbas as a bulwark against Hamas Islamists in Gaza and as a partner in efforts to relaunch peace negotiations with Israel.”

Wataniya Palestine, which launched commercially last year, is aiming to become Palestine’s second mobile phone company and the market leader by 2010. PalTel has been Palestine’s sole mobile phone operator for years, operating in some form since 1994.

From Mobile News, in turns out that Wataniya Palestine is also receiving funding to develop from another international source:

“International Finance Corp (IFC), the private-sector lending arm of the World Bank, is to invest USD 30 million in a new operator building a mobile network in Palestine’s West Bank.”

This followed a report, by the World Bank, titled “Introducing Competition in the Palestine Telecommunications Sector”. It recommend the extension of the franchise, with the following benefits:

“Improved efficiency brought about through competition will reduce the cost of doing business in all sectors, lower the cost or telecommunications services to consumers and help increase government revenues. In addition, by developing the capacity to regulate the largest monopoly in West Bank and Gaza (WBG) and spur competition in the telecommunications market, the PA will help develop its ability to provide a better regulatory environment for the entire economy.”

Former members of the PIF (Palestine Initative Fund) have expressed disappointment that the funding has gone to a well connected and well off-company – it posted a $280 million profit last year – rather than the small businesses, like those the US State department said in 2007 would be benefited by the initiative:

“These might include an olive grower who wants to expand operations, a young person with a small information technology company, or someone who wants to hire neighbours to produce and export Palestinian embroidery.”

Obviously the US wishes to support Abbas as much as possible, given the election of Hamas, their takeover of Gaza and the subsequent power struggle between the Islamist group and their more secular-minded rivals in Fatah. However, it is questionable as to whether this should extend to supporting his associated companies, and as the Daily Star reports, awarding contracts for road-building in the terrirtories to companies run by Abbas’ sons.

There are obvious benefits in the extension of mobile phone technology in the Palestine territories. Mobile phone’s were used to record Israeli actions during the recent conflict, causing investigations and condemnations.

However, individual enterprise is also an important development in an economy – and, one would think, just as important to developing a capitalist economy as supporting a large company.

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