ISRAELI CLOSURES WIPE OUT PALESTINIAN ECONOMIC GAINS. If Israel pulls back its tanks from Palestinian towns and cities in the coming days, the gesture may be too late and too little for the Palestinian economy, reports the Financial Times (p.6). According to Palestinian economists, even if Israel lifts the closures imposed on the Palestinian territories that prevent free movement of goods and people, gains made by the economy in the past year have already been wiped away. The concern now of the World Bank and the private sector is that any long-term investment projects will be replaced by short-term programs aimed at preventing poverty and coping with the sharp levels of unemployment.
According to the Bank, between January 1999 and June of this year, the Palestinian economy, spurred by a marked increase in the private sector, grew by 6.1 percent compared with negative growth of 5.1 percent in 1995 and a negative 0.7 percent in 1998. During the first half of 2000, investment by the private sector was valued at $350 million. It was also employing an additional 3,500 workers from among the 612,000-strong labor market. Unemployment was also falling. The 40,000 Palestinians who had permits to work in Israel and a further 60,000 who worked illegally had brought unemployment down from over 20 percent in the mid-1990s to under 14 percent.
The impact of the closures has quickly bitten in, the story says. The 120,000 Palestinians, often the main breadwinners for large families, have no work. In the territories, trade has been completely disrupted, employees have been unable to get to work and agriculture has come to a standstill. This is because of the internal closures Israel imposed across the West Bank.
The result is threefold, says the story. Over $3.4 million has been lost in remittances from Palestinians working in Israel. In trade, over $6 million a day has been lost from tax receipts and customs fees. Figures released yesterday by the World Bank estimate a shortfall in gross national income of $210 million from an annual $6.1 billion.
If the closures continue, the Bank said the decline in GNP could reach $630 million for 2000, with income per capita decreasing by 11 percent. As households will be forced to reduce their savings rates, poverty is likely to increase. "The share of the population living below the poverty line will increase from about 21 percent to about 28.2 percent by the end of the year," the Bank is quoted as saying. If the closures continue into next year, income per capita will decrease by 27 percent. "The poverty rate would reach 43.7 percent. Gaza would be particularly hard-hit, with even higher poverty rates and unemployment reaching 50 percent more."
With little perspective of improvement in living standards, economists said it was hard to see how frustration could not again boil over on to the streets.
Commenting in an editorial, the FT (p.20) says separation of Israel from the West Bank and Gaza strip-the last resort being contemplated if the unrest continues-would suffocate the Palestinian economy and deepen the anger. All it would achieve is to isolate a tiny Palestinian state and an army of unemployed youth seething with anger. This is recipe for an even bigger explosion, not a means of achieving security.
In a separate report, the FT (p.6) also says the Middle East crisis is threatening to derail the Euro-Mediterranean partnership, an EU-inspired process to bring southern Mediterranean countries into a free trade area. Syria and Lebanon indicated at the weekend that they were considering a boycott of the 27-nation meeting of European and southern Mediterranean foreign ministers, set to open in Marseilles on November 15. The move would be in protest against the participation of Israel.