Submitted by Dylith on 15 February, 2008 - 20:15.
The Palestinian economy is in a current state of crisis and has been fluctuating throughout the course of the Second Intifada (2000-present). Throughout this time period the actions of Israel (while not the only cause of economic hardship) in the Palestinian territories have contributed significantly to the problem.
In order to improve security, Israel has adopted border closure policies, movement restrictions and even curfews within the occupied territories. While check points can be an effective method in reducing acts of terror, Israeli closure policies are overzealous, discriminatory (they apply only to Arabs not to Jews), and cause severe economic damages to the Palestinian people.
Over a two year period from 2005-2006 Israel had a total of 210 days in which borders to the territories were closed. Not only does this prevent people from seeing family and seeking medical treatment, it also prevents Palestinians from doing business outside of Gaza and the West Bank. This causes a large reduction in the number of jobs available to Palestinian civilians. Closure policies also serve to greatly damage an economy that is heavily based around ability to import and export products (most of the Palestinian economy consists of trade).
Closure policies have served to create a massive spike in Palestinian dependence upon Israel. Unable to do business, Palestinian exports have dropped steadily and fell by 3% in 2006 while imports rose by 20%. These trends have caused the Palestinian trade deficit to increase dramatically, as it now resides at 73% of the total GDP. Imports from Israel alone make up 55% of the deficit.
A decreasing economy and increasing debts has caused the Palestinian government to cut spending by 30% at the end of 2005. Even though the cut in spending was made, the budget deficit continued to grow, increasing by an additional $30 million (USD) in 2006.
Internal movement restrictions also play a significant role in preventing economic activity. Increased restrictions to movement in 2000 alone decreased Palestinian employment in Israel by 70%, and lead to over 50% unemployment ratings in the occupied territories. At the same time, Palestinian per capita incomes fell by 40%.
Checkpoints and closed roads make it difficult for Palestinians to commute to work. Sometimes movement restrictions even limit Palestinian ability to leave the city in which they live. Overall, Palestinians are restricted from using 41 roadways that cover a distance of over 700 Km.
Curfew practices play their part in creating economic duress as well. Curfews are a popular means for Israel to control Palestinian cities. In the past Israeli has implemented months of 24 hour curfew periods which have caused considerable economic damage as it prevents citizens from working. It also serves to damage human capital as over two million peoples’ health and education needs are not met.
A UNCTAD report estimates that the total economic costs of movement restrictions and closure policies have been around $8.4 billion from the end of 2000 to the end of 2005 (more than twice the size of the current Palestinian economy). It is further estimated that the Palestinian territories have lost about one third of its total physical capital since 1998. Gross national income dropped by 15% in 2006; also down was the gross domestic product which fell by 6.6%. A total of 53% of Palestinian households currently live below the poverty line (this is an average that consists of both Gaza and West Bank statistics) and unemployment remains constant at an average of 30%.
In 2007, a donor conference was held in Paris to discuss economic aid asked for by the Palestinian government (which calls for $5.6 billion in USD over the course of three years). However, the World Bank has estimated that even should the Palestinian government receive all of the aid that it asks for, its economic growth will still remain slightly negative stating: "Even with full funding but no relaxation in the closure regime, growth will be slightly negative... If the required aid also fails to materialize, income will decline even more, and the already high and growing poverty levels will rise dramatically."
Human rights groups have pushed for the removal of movement restrictions which have little to no safety benefits such as the removal of blockades to roads that Palestinians are now legally allowed to use. Also stressed, is the need for permit system reform. Under current law, anyone who has ever been detained by the police is denied cards that allow them to travel from section to section of the West Bank and to Israel and Gaza. These added movement restrictions stand even if the person in question was never charged with, nor convicted of a crime. The Israeli Defense Force (IDF) is notorious for committing arbitrary arrests, and while such prisoners are usually released after only short detention periods, they are no longer able to use their traveling permits. The Israeli Information Center for Human Rights estimates that around 20% of the Palestinian population has been detained at one point or another by the IDF.
"Even under the most optimistic scenarios significant aid will continue to be required for the medium-term; However, if donors give the full amount the Palestinians requested and the Israeli closure policies end, then the Palestinian economy has the potential to reach double digit growth and positively impact poverty levels."
- 2007 World Bank report on the Palestinian Economy
In order to improve security, Israel has adopted border closure policies, movement restrictions and even curfews within the occupied territories. While check points can be an effective method in reducing acts of terror, Israeli closure policies are overzealous, discriminatory (they apply only to Arabs not to Jews), and cause severe economic damages to the Palestinian people.
Over a two year period from 2005-2006 Israel had a total of 210 days in which borders to the territories were closed. Not only does this prevent people from seeing family and seeking medical treatment, it also prevents Palestinians from doing business outside of Gaza and the West Bank. This causes a large reduction in the number of jobs available to Palestinian civilians. Closure policies also serve to greatly damage an economy that is heavily based around ability to import and export products (most of the Palestinian economy consists of trade).
Closure policies have served to create a massive spike in Palestinian dependence upon Israel. Unable to do business, Palestinian exports have dropped steadily and fell by 3% in 2006 while imports rose by 20%. These trends have caused the Palestinian trade deficit to increase dramatically, as it now resides at 73% of the total GDP. Imports from Israel alone make up 55% of the deficit.
A decreasing economy and increasing debts has caused the Palestinian government to cut spending by 30% at the end of 2005. Even though the cut in spending was made, the budget deficit continued to grow, increasing by an additional $30 million (USD) in 2006.
Internal movement restrictions also play a significant role in preventing economic activity. Increased restrictions to movement in 2000 alone decreased Palestinian employment in Israel by 70%, and lead to over 50% unemployment ratings in the occupied territories. At the same time, Palestinian per capita incomes fell by 40%.
Checkpoints and closed roads make it difficult for Palestinians to commute to work. Sometimes movement restrictions even limit Palestinian ability to leave the city in which they live. Overall, Palestinians are restricted from using 41 roadways that cover a distance of over 700 Km.
Curfew practices play their part in creating economic duress as well. Curfews are a popular means for Israel to control Palestinian cities. In the past Israeli has implemented months of 24 hour curfew periods which have caused considerable economic damage as it prevents citizens from working. It also serves to damage human capital as over two million peoples’ health and education needs are not met.
A UNCTAD report estimates that the total economic costs of movement restrictions and closure policies have been around $8.4 billion from the end of 2000 to the end of 2005 (more than twice the size of the current Palestinian economy). It is further estimated that the Palestinian territories have lost about one third of its total physical capital since 1998. Gross national income dropped by 15% in 2006; also down was the gross domestic product which fell by 6.6%. A total of 53% of Palestinian households currently live below the poverty line (this is an average that consists of both Gaza and West Bank statistics) and unemployment remains constant at an average of 30%.
In 2007, a donor conference was held in Paris to discuss economic aid asked for by the Palestinian government (which calls for $5.6 billion in USD over the course of three years). However, the World Bank has estimated that even should the Palestinian government receive all of the aid that it asks for, its economic growth will still remain slightly negative stating: "Even with full funding but no relaxation in the closure regime, growth will be slightly negative... If the required aid also fails to materialize, income will decline even more, and the already high and growing poverty levels will rise dramatically."
Human rights groups have pushed for the removal of movement restrictions which have little to no safety benefits such as the removal of blockades to roads that Palestinians are now legally allowed to use. Also stressed, is the need for permit system reform. Under current law, anyone who has ever been detained by the police is denied cards that allow them to travel from section to section of the West Bank and to Israel and Gaza. These added movement restrictions stand even if the person in question was never charged with, nor convicted of a crime. The Israeli Defense Force (IDF) is notorious for committing arbitrary arrests, and while such prisoners are usually released after only short detention periods, they are no longer able to use their traveling permits. The Israeli Information Center for Human Rights estimates that around 20% of the Palestinian population has been detained at one point or another by the IDF.
"Even under the most optimistic scenarios significant aid will continue to be required for the medium-term; However, if donors give the full amount the Palestinians requested and the Israeli closure policies end, then the Palestinian economy has the potential to reach double digit growth and positively impact poverty levels."
- 2007 World Bank report on the Palestinian Economy
