However, other internal factors also contribute to poor economic growth.
It was advertised as a way to bring political autonomy to Palestine and start the Palestinian Authority , however, Israel was still in subtle economic control of Palestine.
The Paris Protocol was supposed to last only five years with the expectation of a two-state solution having been achieved by its conclusion.
The signing of the Paris Protocol encouraged joint industrial and business relations, but most importantly, collapsed Palestine’s water, agricultural and private sectors, instead encouraging credit debt among the public, causing a culture of consumerism throughout the society.
Ultimately, the major flaw with the Palestinian Authority was its failure to address the issue of Palestinian sovereignty.
The reality of this situation is often hidden by politicians and economists talking about ridiculous and artificial economic growth driven by aid from foreign countries.
Palestinians must strive to shift away from the existing situation and toward a mindset that perceives development as a tool for achieving rights, freedoms and self-determination.
A large proportion of the adults in Palestine are currently not involved in the formal financial system while many with access are underserved due to restrictions or high costs.
For example, Israel has been demanding that Palestinian banks close the accounts of Palestinians which they have blacklisted.
In that case, each trade would require the two sides to have exactly what the other side needs.
But how does money keep its value? The commodity theory of money states that money’s value is derived from the commodity by which it is backed.
The common name for government-issued money is “fiat money,” from the Latin word for decree, order or authorization.
The current economy in Palestine is based on a centralized monetary system, with the central bank being at the top.
With the government also having a great impact on the central bank’s actions, you would think that they would aim to keep the currency under sound money characteristics.
Therefore, when the money supply is being increased, it is backed by nothing but a liability on behalf of the banks which lend the money.
Banks are given too much power, as they are the best way for the government to capitalize off of its citizens and control the money for political reasons.
There are four currencies that are allowed to be used in the Palestinian market: the Israeli shekel, EU euro, Jordanian dinar and U.S.
However, the Israeli banks that provide these services demand large cash collaterals, amounting to more than a billion shekels, which are deposited into the Israeli banks.
However, the real problem is the fact that these same opportunities are not offered to Palestinians.
Access to the traditional banking system in Palestine is very limited, where only 24% of the population over 14 years of age have bank accounts compared to 93% in Israel.
Agriculture in Palestine has been undermined for so long, even though it should be the first step in forming independence from Israel.
In the 1990s, there was a shift in labor that led to a switch by many Palestinians from agricultural and local jobs to working in Israel due to lack of opportunities there or incomparable wages.
When a currency such as the shekel is used in Palestine, monetary policy being implemented by Israel will align with the people in power, most likely harming Palestinians.
Gaining economic independence, more specifically being able to implement its own monetary policy, would be a disaster for Israel’s occupation agenda of controlling all flow of money and resources in and out of Palestine in order to slowly take over settlements.
Bitcoin is a permissionless network that provides everyone access to financial services.
Products sold in Palestine could be found way cheaper in Israel because Palestinian businesses would have to have higher prices to cover up the costs of these extra fees imposed by Israel.
Due to this, Israeli businesses are much more competitive than Palestinian businesses selling the same products.
Labor-intensive economic sectors such as agriculture will be recovered, making Palestine more independent — not just independent from monetary policy but also from all types of products, resources and services.
Lately, credit facilities have been opening in Palestine as citizens are taking out loans and buying consumption goods.
El Salvador also suffered from some similar issues to those in Palestine that stem from the lack of a domestic currency.
The president of El Salvador, Nayib Bukele, has announced that there are more citizens with Bitcoin wallets than bank accounts.
Bitcoin has also made transaction in and out of El Salvador much cheaper compared to other competitors, such as Western Union which applies high fees.
Existing remittance providers impose fees for these transactions, which can account for a large fraction of the total amount transferred, especially for smaller amounts.
The need for changing the status quo of the monetary system is way more important for the Palestinians than some people realize.