The Palestinian Economic Situation Gets Worse, Worse and Worse 

The economic situation in the Palestinian territory and the living conditions of the Palestinian people there, have worsened over the last two years. In fact, the economic situation and living conditions in many respects are worse now than they had been before the signing of the Declaration of Principles in 1993.

The GDP dropped by about 9% in 1995 and projections indicate that it will likely fall by about 15% this year. The per capita income of Palestinians has dropped from $2,600 to $1,800. (In Israel, per capita income is approximately $16,000) The Palestinian unemployment rate reached the unprecedented high of 50%, and Palestinian exports have dropped by 50%. Furthermore, the budget deficit of the Palestinian National Authority is increasing and accompanying social and political problems are on the rise.

Donor countries have delivered some of their pledged contributions, which stood at $2.4 billion at the Washington Summit in October 1993, to be disbursed over a five-year period. The aid, however, has been slow and has been marred by all types of problems.

Even this amount of international assistance has been offset by the Israeli policies and measures that have been the main cause of the deterioration of the situation and have practically led to the preclusion, and in fact strangulation, of any economic improvement and growth.

At the forefront of these policies and measures is the closure imposed on the Palestinian territory, which in reality has meant the obstruction of freedom of movement within the West Bank, between the West Bank and Jerusalem and between the West Bank and Gaza, in addition to the restriction of movement to and from Israel and the outside world. The closure has also meant a dramatic fall in the number of Palestinian workers working in Israel, an arrangement that was part of the economic agreement between the two parties in exchange for other arrangements in the agreement. Financial losses caused by the closure were estimated to be $7 million per day.

The Israeli authorities have also caused various problems and impediments, preventing the progress or completion of any important infrastructure projects related to trade and other sectors of the economy, including the agreed upon industrial parks and the construction of the seaport and airport in Gaza.

The Israelis have also waged a campaign to obstruct any independent Palestinian franchising rights for foreign companies, practically also obstructing possible Palestinian joint ventures with foreign capital. The Israelis have also repeatedly failed to meet their responsibilities under the agreement with regard to the reimbursement of collected customs and VAT (Value Added Tax) on goods imported by the Palestinian side.

Such dangerous policies and practices not only violate the agreements reached, they are unjustifiable under any security pretext and are illogical, regardless of the political goals or orientation of any Israeli government. Some such measures can only be perceived to emanate from an ill desire for collective punishment and for vindictive control of the Palestinian market and economy.

It is high time for the Israeli side to understand that they must immediately stop and reverse these policies. It is impossible to speak of regional cooperation or to have meaningful results of economic regional summits while the Palestinian economy is destroyed. In fact, we cannot even speak of peace while such an economic situation prevails.