RAMALLAH, West Bank - The new Palestinian prime minister is a former World Bank executive who vows to fight corruption and waste. The finance minister worked at PwC. The foreign ministry is helmed by a woman with a US doctorate and deep experience in human rights.

By many measures, the new Palestinian Authority in the West Bank is just what the US and others want for a future Palestinian state that could extend its rule to a post-war Gaza: a modern, technocratic group focused on solving problems.

But as a series of interviews in the administrative capital of Ramallah and elsewhere shows, the chances of success are low and the reasons many.

The administration is bloated and inefficient. The economy is collapsing after Israel barred 150,000 West Bankers from entering to work and withheld tax receipts needed to pay Palestinian public employees. And Israeli settler violence is increasing.

“We need someone to say to Israel: ‘This is a dire situation,’” said Ms Varsin Agabekyan, minister of state for foreign affairs. “At the end of the day, people need to find bread and butter on the table.”

She added of the new group of leaders: “All of us come from prominent positions, and we have left everything to come in and put all our energy and effort into making this work.”

Israel is waging a devastating offensive in the Gaza Strip to disable the Palestinian militant group Hamas.

Prime Minister Benjamin Netanyahu, who leads the most right-wing government in Israel’s history, has resisted US calls to allow the Palestinian Authority to extend its mandate over Gaza, and rejects the goal of an independent Palestinian state.

Once, Israel’s official position – even Mr Netanyahu’s – was in favour of two states.

But the nation’s rightward drift, along with the trauma of the attacks by Hamas on Oct 7, have hardened its stand to focus on security.

Equally, Palestinians since the attack have embraced Hamas, which is considered a terrorist organisation by the US and European Union and seeks Israel’s destruction.

A survey of 830 people in the West Bank taken on March 5-10 and released in mid-April shows dismal satisfaction with 88-year-old Palestinian President Mahmoud Abbas and his Fatah movement (8 per cent and 24 per cent respectively).

Approval for Hamas was 75 per cent. 

“Trust in the Palestinian Authority is at one of the lowest levels we’ve ever recorded,” said Mr Khalil Shikaki, head of the Palestinian Centre for Policy and Survey Research, which conducted the poll.

In the West Bank alone, gross domestic product fell by an annualised rate of 22 per cent in the last three months of 2023, while unemployment is estimated to have more than doubled to 30 per cent, up from 14 per cent before the war. 

The authorities forecast the Palestinian economy as a whole, including both the West Bank and Gaza, will continue to drop in 2024 by nearly 5 per cent after cratering 33 per cent in the fourth quarter.

That is wildly optimistic, according to Ramallah-based based economist Raja Khalid, who expects a contraction of 25 per cent to 30 per cent in 2024.

“We are now in a free fall,” Mr Khalid said. 

The Palestinian Authority no longer receives the portion of tax receipts from Israel it needs to pay salaries and pensions of employees in Gaza, and says it is owed US$1.3 billion (S$1.75 billion).

It faces a “spiralling fiscal crisis”, the World Bank said in a report in February. It had to cut salaries to as low as 60 per cent of pre-war levels.

“Averting a dramatic recession, a large uptick in poverty, and a continued unparalleled shock to the economy” will require a cessation of hostilities in Gaza, urgent international aid, and the transfer of tax revenues to the Palestinian Authority in full, the Washington-based lender said.

Mr Ahmad Sudani, owner of a men’s clothing store in Ramallah which was deserted on a recent visit, has seen his business plunge 95 per cent since Oct. 7.

“The last thing someone would think of is to buy clothes now,” said Mr Sudani, who has laid off 10 of his 14 employees.

Even at the best of times, the Authority would face an uphill struggle. It inherited a bloated administration – with 25 ministries, a dozen public agencies and 147,000 civil servants – that barely provides basic services, said Mr Khalid, the economist.

And public dissatisfaction soared after Israel introduced restrictions on movement inside the West Bank as well as shut down the borders in the wake of Oct 7.

Since then, there has been rising violence by Israeli settlers as well as security forces, who freely enter all areas of the West Bank – including the 20 per cent nominally under full Palestinian control. Attacks by Palestinians are also increasing.

Since Oct 7, 474 Palestinians have been killed in the West Bank, including at least 10 by Israeli settlers, according to the United Nations, which in 2023 recorded the highest number of Palestinians killed by Israeli security forces since it began collecting this data in 2005.

Land seizures and the expansion of settlements in the West Bank, where close to 500,000 settlers live alongside 2.8 million Palestinians, are another key source of friction.

About 4,000 Palestinians were displaced in 2023 because of the actions of security forces and settlers, the UN says.

The year 2024 has already set a new record for land grabs, with about 1,100ha of West Bank land seized by Israel so far in 2024, more than twice the previous yearly high of 520ha taken in 1999, according to the Israeli advocacy group Peace Now.

“The Palestinian Authority does not seem able to help either Gaza or the West Bank,” said Mr Shikaki, the pollster. “The ability of one man, of one government to do anything, given all these challenges, I think, is almost non-existent.” BLOOMBERG