Kubursi says Palestinian farmers face a system rigged in favour of Israel  [GALLO/GETTY]

The UN Conference on Trade and Development (Unctad) recently reported that the Palestinian economy has hit an all-time low.

With the Middle East peace process locked in stalemate, Al Jazeera speaks to Atif Kubursi, a professor of economics at Canada's McMaster University and a former UN development expert, about the future of the Palestinian economy under occupation.

Al Jazeera: Why are Palestinians unable to independently trade on the world market? What impact does that have on the local economy?

Atif Kubursi: The major issue is water with agriculture becoming a corollary. The whole issue is that [the Israelis] govern the water accumulated under the hills of the West Bank and prevent the Palestinians from using it, while averting these water supplies to settlements and other Israeli uses.

This is not a secret. It is public information that more than one third of Israel's water consumption comes from natural supplies in the West Bank.

The second issue is the Israelis have prevented the Palestinians from generating income and sustenance derived from their land. Palestinians produce more than the Israelis, and more efficiently, but Israelis have, in many respects - particularly in fruits and vegetables - burdened the Palestinians so they can't compete with the Israelis.

Some of the road blocks, people believe, have acted as a barrier and prevented the Palestinians from delivering cheaper and fresher fruit to the Israeli market.

And the general situation is that fertiliser costs - along with all the other manufacturing costs - are now much higher in the West Bank than the rest of the Arab world, which was the traditional market destination for the Palestinians.

The PA has been trying to join the World Trade Organisation (WTO) for many years now. Saeb Bamya, a senior adviser to the now resigned PA minister of economy, said a WTO membership would allow Palestinians to "join the multilateral trading system." Would this really open trade for Palestinians?

Anything that would liberate the Palestinians from the Israeli stranglehold, I would like. But it's only one aspect. The dependency is so ingrained. Palestinians cannot import all their materials, and they can only export on Israeli terms.

I would be very happy to see the Palestinians developing an alternative market to the Israelis, but is this a chance to gain economic independence? I doubt it, because the structures are all rigged in favour of Israel.

We need full liberation and full independence. And if the Palestinians would like to recreate a Palestinian union, let it be from a position of strength, and with a position of alternatives - people who don't have alternatives always lose.

There is no bargain when someone fights with their hands tied behind their back.

Would increasing agricultural output make the economy more productive?

I don't really want to consider this to be the only alternative open to Palestinians, but surely it will be one alternative. I'm not so sure the Palestinians can compete - given the Israeli costs that are now imposed on their economy - with the Syrians, Lebanese or Jordanians.

There's an echoing sentiment in Ramallah that Israeli produce not only tastes better but is also more nutritious.

This is a case of the Palestinians legitimising their occupation and their disenfranchisement. First, the Israelis control the water; they also control and implement the prices of all the machinery and fertiliser the Palestinians can use.

At the same time, the Israelis subsidise and advertise their products and create this kind of humiliating situation.

How can the Palestinians resolve this situation?

No economist will tell you that there is a possibility of development in the Palestinian economy while it is under occupation. There first needs to be a liberation of society in order to liberate the economy.

Currently, there is no chance that the Palestinians can develop an independent and viable state when the strong rule the weak. 

The Israeli government has taxed Palestinians to a situation where the poor subsidise the rich.

Palestinians are paying for their occupation. Israel quickly devoured all things we economists call comparative advantage by the way they control Palestinian water and agriculture.

The Palestinians cannot survive under these circumstances. It really is a testimony to the resilience of the Palestinians that under such conditions they are able to survive.

We really need to cut into the matrix of control, these subjugation mechanisms used by the Israelis.

It should not have to be isolated, independent or small measures. Don't believe this will liberate the Palestinian people.

What we need is to re-galvanise the Palestinians into believing they have to take their destiny into their own hands. There is no way Palestinians can have any meaningful economy unless they gain their independence.

Source: Al Jazeera