THE Palestinian Authority in the West Bank faces a $400 million budget shortfall, even if current donor pledges are met, the World Bank warned in a report on Wednesday, calling new funding ‘critical.’

The 21-page report, prepared ahead of a meeting of international donors in New York next Monday, also accuses Israel of stifling Palestinian growth by impeding development in the West Bank’s Area C, which is under full Israeli control.

The report warns of ‘a time of deepening fiscal crisis for the Palestinian Authority,’ and comes after cost-of-living protests in the West Bank that forced prime minister Salam Fayyad to slash VAT and fuel prices.

The PA’s fiscal situation will ‘likely worsen by the end of 2012,’ the report says, noting a budgetary gap of approximately $400 million – ‘if donor pledges are met.

‘If no additional donor funding is identified,’ it says, ‘the PA may be forced to finance the gap through accumulating additional arrears to the pension system and cutting some of its basic spending such as wages, which could have severe social impacts.’

The report stresses that to ‘reverse the downward trend in economic growth,’ the private Palestinian sector ‘needs access to land in Area C.

‘Area C’s significance, as the only contiguous land in the West Bank connecting 227 separate geographical areas (A and B), is the key to economic cohesion,’ says the report.

It is ‘the most resource abundant space in the West Bank, holding the majority of the territory’s water, agricultural lands, natural resources, and land reserves that provide an economic foundation for growth in key sectors of the economy.

‘However, restrictions put in place by the government of Israel continue to stand in the way of potential private investment and remain the major impediment to sustainable economic growth,’ the report says.

Area C of the West Bank falls under full Israeli administrative and military control.

The World Bank made a plea for additional donor support, which ‘will be critical in the medium term to sustain…achievements and support the PA through its current crisis.’

It estimated real growth rate for the West Bank and the Gaza Strip combined at 5.6 per cent, ‘more than three percentage points lower than the Q1 2011 growth figure and almost one percent lower than the growth forecast contained in the PA’s budget’.

In the West Bank, growth in the first quarter of 2012 was ‘broadly unchanged from its 2011 level,’ the report said.

While the financial slowdown in Gaza was attributed to a ‘major decline in the agriculture and fishing sector,’ the report notes that ‘other sectors in Gaza expanded and the highest growth levels were witnessed in the construction, and hotels and restaurants sectors.’

The Palestinian government has warned for months of a major budget shortfall, created in part by the failure of donors to deliver on pledged funds.

Meanwhile, President Abbas reiterated on Wednesday that he will deliver a speech at the General Assembly of the United Nations to ask for recognition of Palestine as a non-member state.

The comments, which were posted on the president’s Facebook page, added that the speech would most likely take place on September 27.

‘As in every year, I will tell the whole world about the suffering of my people under the Israeli occupation and its settlements, settler attacks and violations on a daily basis which contradict the United Nations and international law,’ the comments said.

‘We are determined, despite all pressure, and I am confident that you will all support my request.’

Abbas also announced that he will make a 10-day visit to Turkey in the coming week, noting that the country has always supported the Palestinian cause.

The United States opposed Abbas’ 2011 bid for UN membership, which got stuck at the Security Council, where the US has the veto.

• About 200 Palestinians protested outside offices of the Red Crescent near Ramallah on Tuesday, in solidarity with hunger-striking Palestinian prisoners held by Israel.

Four men are currently fasting in a demand to be released from detention without trial.

The Ramallah-based Palestinian Prisoners Club said on Monday that one of them, 38-year-old Samer Barq, had been moved to the intensive care unit at Assaf Harofeh medical centre in central Israel, suffering from a drop in blood sugar.

On Tuesday, the club said that his condition had improved, although officials there did not say whether he was still in intensive care.

They said that Hassan Safdi, who like Barq has been fasting for weeks, was in the same hospital. The other two, Ayman Sharawneh and Samer Assawi, were fasting in prison, they said.

In Israeli-annexed east Jerusalem, dozens of Palestinians also demonstrated outside the Red Cross offices, demanding the release of Assawi, a local resident.

The International Committee of the Red Cross warned on Friday that Barq, Safdi and Sharawneh were close to death.

More than 1,500 Palestinian prisoners, including Safadi, in May ended a mass hunger strike for better conditions in a deal with prison authorities.

One of the terms of the accord was that those held without trial in administrative detention would go free at the end of their current terms, unless fresh evidence emerged against them.

Safadi went back on hunger strike after his detention order was renewed.

Meanwhile, in the West Bank town of Jericho, a former Palestinian militant leader held by the Palestinian Authority without charge since May, said he too was launching a hunger strike ‘to the death’.

A statement from the Freedom Theatre, of which Zakaria Zubaidi was a founder member, said he made the pledge at a court appearance on Tuesday in Jericho, where he has been held since his arrest.

It said the court extended his remand for a further 19 days but warned prosecutors that they must charge him by then.

He was a friend of the Jenin-based theatre’s Israeli-Palestinian director Juliano Mer-Khamis, who was gunned down in the northern West Bank city in April last year.

Zubaidi was arrested four months ago during a security crackdown following the death of Jenin governor Qadura Mussa, who suffered a fatal heart seizure after shots were fired at his home.