The United Nations Economic and Social Commission for Western Asia (ESCWA) said on Friday that two million Palestinians were living on less than $2.1 a day, a poverty rate of 63%, in mid-2003.
By March 2003, 42% of families were destitute and dependent on humanitarian assistance. ESCWA said the World Bank had described the recession in the Palestinian territories as "one of the worst in modern history".
"The present review period demonstrates mounting economic and social damage under military occupation," said the ESCWA report, researched between January 2003 and February 2004 and released on Friday in Beirut.
"Most economic and social data show marked deterioration of living conditions for the Palestinian people, including new forms of dispossession and destruction of private and public assets of all kinds."
Israel intensified extra-judicial
killings, says the report
Refugees, women and children bore the brunt of Israeli measures, ESCWA said. Malnutrition was on the rise. Israeli restrictions regularly impeded humanitarian services to Palestinian territories.
Israel captured the West Bank and Gaza in 1967 and has stationed troops there since. The United Nations describes them as Israeli-occupied territories.
ESCWA said Israel had intensified extra-judicial killings of Palestinians suspected of armed attacks against Israelis. Extra-judicial killings or attempts killed 349 Palestinians between October 2000 and March 2004, including 137 bystanders.
Between December 2002 and December 2003 ESCWA said 785 Palestinians were killed and 5130 injuries recorded. Since September 2000, 512 Palestinian children were killed. ESCWA said 946 Israelis had been killed or injured since September 2000.
About 8000 Palestinians remained in Israeli prisons and detention centres. Hundreds were subjected to torture or inhumane treatment.
"The sustainable option for addressing the current economic and social deprivation lies in lifting the occupation of the Palestinian territory..."
Unemployment stood at 26% in the fourth quarter of 2003, but reached 70% in some areas. Food consumption was down by 86%.
"Humanitarian assistance is not sufficient to ensure a sustainable life with dignity and rights for the Palestinian civilians under occupation," the report said.
"The sustainable option for addressing the current economic and social deprivation lies in lifting the occupation of the Palestinian territory, as well as the Syrian Golan."
In the Syrian Golan Heights, annexed by Israel in 1981, ESCWA said Israeli settlements continue to expand. It said access to natural resources and social services such as schooling and medical facilities were inadequate for the Arab population.