During a brief pause to hostilities in July 2014, families returned to eastern Gaza, which saw some of the heaviest bombings. Photo Credit: Oxfam / Flickr
Palestinians in Gaza are largely forgotten. They are an invisible people inhabiting a world without rights and possibilities. Over Israel’s near 50-year occupation, Gaza and the West Bank were reduced from a lower middle-income economy to a dysfunctional economy disproportionately dependent on foreign assistance. Gaza is under immense pressure from a continued blockade, now in its tenth year. Egyptian restrictions on the movement of people through Rafah, “which has remained largely closed… since October 2014, including for humanitarian assistance” increased internal discord and hindered intra-Palestinian reconciliation.
There are stunningly high levels of unemployment and poverty. According to the World Bank, unemployment currently stands at 43 percent and in excess of 60 percent for Gazan youth. Yet, while Gaza’s economic demise is well documented, the blockade’s societal impact is often neglected. The blockade created a series of long-term, chronic conditions in Palestinian society, including the destruction of civilian space, changes to social structure and health status, widespread trauma, a dramatic change in popular attitudes, and finally, a widening generational divide.
As United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) Spokesman Chris Gunness notes: “The juxtaposition of hopelessness and despair, contrasted with the transformational potential of Gazan society, has never been so palpable.”According to the World Bank, the Israeli blockade alone—which has severed almost all of the territory’s ties to the outside world, virtually terminating Gaza’s critically needed export trade—decreased Gaza’s GDP by at least 50 percent since 2007. Egypt’s near total termination of Gaza’s tunnel trade—a vital, albeit underground economic lifeline—dealt an additional and extremely damaging blow. On top of this, the 2014 Israel–Gaza conflict, or Operation Protective Edge (OPE), worsened an already bleak situation by reducing Gaza’s economy by an additional $460 million.
BEIT HANOUN, Gaza Strip—Eight months after last summer’s war between Israel and Palestinian militant groups, Gaza remains in ruins. Drive five minutes into the territory from the crossing point in southwestern Israel and you reach Beit Hanoun, one of the areas hit most severely by land and air during the conflict. Bright blue sky spreads over buildings with big bites taken out of them. Half-eaten bedrooms and kitchens yawn open to reveal tangled wires, broken rock, and household goods: a slipper, a pack of sanitary pads, a ripped-up schoolbook. People peek over mounds of rubble from tents behind their former homes, like aliens come to settle an abandoned planet.
These days, the economic health of any country relies on that of others – but the Palestinian Territories are exceptionally dependent on factors outside of them. On what do Palestinian economic fortunes rely on and how does the future look?
i. Restrictions on economic activity in Area C of the West Bank have been particularly detrimental to the Palestinian economy. Area C constitutes about 61 percent of the West Bank territory. It is defined by the 1995 Israeli-Palestinian Interim Agreement on the West Bank and the Gaza Strip as “areas of the West Bank outside Areas A and B, which, except for the issues that will be negotiated in the permanent status negotiations, will be gradually transferred to Palestinian jurisdiction in accordance with this Agreement”.1 According to the Interim Agreement, the gradual transfer should have been completed by 1997.2 However, it has not been implemented as envisaged in the Interim Agreement3 and in the meantime, access to this area for most kinds of economic activity has been severely limited. Yet, the potential contribution of Area C to the Palestinian economy is large. Area C is richly endowed with natural resources and it is contiguous, whereas Areas A and B are smaller territorial islands. The manner in which Area C is currently administered virtually precludes Palestinian businesses from investing there.
ii. Mobilizing the Area C potential would help a faltering Palestinian economy. The Palestinian economy has experienced strong growth in recent years, fuelled by large inflows of donor budget support, some easing of the Israeli movement restrictions that intensified during the second intifada, and a PA reform program. By 2012, however, foreign budget support had declined by more than half, and GDP growth has fallen from 9 percent in 2008-11 to 5.9 percent by 2012 and to 1.9 percent in the first half of 2013 (with negative growth of – 0.1 percent in the West Bank).
iii. This slowdown has exposed the distorted nature of the economy and its artificial reliance on donor-financed consumption. For a small open economy, prosperity requires a strong tradable sector with the ability to compete in the global marketplace. The faltering nature of the peace process and the persistence of administrative restrictions as well as others on trade, movement and access have had a dampening effect on private investment and private sector activity. Private investment has averaged a mere 15 percent of GDP over the past seven years, compared with rates of over 25 percent in vigorous middle income countries. The manufacturing sector, usually a key driver of export-led growth, has stagnated since 1994, its share in GDP falling from 19 percent to 10 percent by 2011. Nor has manufacturing been replaced by high value-added service exports like Information Technology (IT) or tourism, as might have been expected. Much of the meager investment has been channeled into internal trade and real estate development, neither of which generates significant employment. Consequently, unemployment rates have remained very high in the Palestinian territories and are currently about 22 percent – with almost a quarter of the workforce employed by the Palestinian Authority, an unhealthy proportion that reflects the lack of dynamism in the private sector. While the unsettled political environment and internal Palestinian political divisions have contributed to investor aversion to the Palestinian territories, Israeli restrictions on trade, movement and access have been seen as the dominant deterrent.
November 5, 2012 – Interfaith Peace-Builders (IFPB) is pleased to announce that our 21 member delegation to the Gaza Strip passed safely through the Rafah Crossing Monday morning and is now safely in the Gaza Strip.
Interfaith Peace-Builders has sent more than 44 delegations to Palestine/Israel since 2001. This is the first IFPB delegation to enter the Gaza Strip since 2003. Like other IFPB delegations, its purpose is to educate North Americans about the region and deepen their understanding of its conflicts.
On the eve of the Presidential Election in the United States, the US-brokered peace process continues to show few results and US military aid to the region continues to flow unabated.
This delegation focuses on the realities of Palestinian life in the Gaza Strip. Participants have the unique opportunity to hear directly from Palestinians throughout the territory regarding their hopes for peace and the role of the United States, the US government, and other international actors, in promoting a resolution to the conflict.
The Palestinian economy has deteriorated sharply since the start of the
uprising in 2000, and Israel’s separation barrier in the West Bank will
depress it further, a United Nations agency said.
The economy shrank 1% in 2004, one in three Palestinian workers was jobless
at the end of last year and 61% of households had income below the poverty
line of $350 per month, the UN Conference on Trade and Development said in
its annual report on the occupied territories on Thursday.
“Put simply, in the wake of the past four years of Israeli occupation and
war, the Palestinian economy invests and produces less and therefore
consumes more imports, especially those from Israel,” the report said.
Palestinian net imports from Israel represent two-thirds of the total trade
deficit of $2.6 billion, it said. Some 80,000 workers formerly employed in
Israel must also be absorbed.
The Palestinian Authority must now focus on reducing widespread poverty and
boosting production to revive its war-torn economy, the UNCTAD report said. Continue reading →
SHAMAI K. LEIBOWITZ and KATERINA HELLER, CounterPunch, August 24, 2005
The imminent handover of the Gaza Strip to the Palestinian Authority and the evacuation of a small portion of the West Bank from Israeli settlers has been billed by the international media as a turning point in the violent history of Israeli-Palestinian conflict. Through well-planned media strategies, which included inviting the world media to capture images of Israelis dragging men, women and children out of their homes in the illegal settlements they occupied for thirty-eight years, the Israeli government has succeeded in marketing the Unilateral Disengagement Plan as a great “concession” on Israel’s part and a revival of the “peace process.”
But the Unilateral Disengagement Plan will turn out to be no such thing as it is no more than a tactical military redeployment of Israel’s Occupation Forces. This is evident from Israel’s decision to retain military control over the would-be evacuated areas in the West Bank and control over airspace, coastline and border crossings of the Gaza Strip, as well as Israel’s decision to continue with the building of the West Bank Wall deep inside the West Bank.
In a December 2004 report, the World Bank predicted that by continuing to control the flow of people and goods into and out of the Gaza Strip, rather than offering Gaza inhabitants economic progress, the Disengagement will worsen the already dire economic situation of the Gaza Strip.
Effectively, the Disengagement Plan will turn Gaza into the world’s largest open-air prison with 1.3 million Palestinian inmates. The result will be a continuation, if not an increase, of the bloodshed and violence. Similarly, the removal of 4 out of 130 Jewish-only settlements in the Occupied West Bank while building and expanding others, at the expense of 2 million Palestinians who continue to live without human or civil rights, does not signal an end to the Israeli Occupation but, rather, its perpetuation.