The economy of the occupied Palestinian territories would be at least twice as large if the 49-year-old Israeli occupation was lifted, a new United Nations report has found.

“Occupation imposes a heavy cost on the economy of the Occupied Palestinian Territory, which might otherwise reach twice its current size,” reads the report released by the United Nations Conference on Trade and Development (UNCTAD) on Tuesday.

The report, which analyses the economy of the occupied Palestinian territories of the West Bank, East Jerusalem and the Gaza Strip for 2015, underlines Israeli “restrictions on the movement of people and goods; systematic erosion and destruction of the productive base; losses of land, water and other natural resources”, as some of the main factors hindering the territories’ ability to thrive.

It adds that the separation of the Palestinian market from international markets, the blockade on Gaza, expansion of illegal Israeli settlements and the construction of the separation wall on Palestinian land, are further causes for the underdeveloped state of the Palestinian economy.

“In 2015, Israel withheld Palestinian fiscal revenue for four months, donor aid declined and Israeli settlements continued to expand into the Occupied Palestinian Territory, while poverty and unemployment remained high,” according to the report.


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Palestinians in the occupied territories have not had full control over their economy since 1967, when Israel occupied East Jerusalem, the West Bank and the Gaza Strip.

Although the Palestinian Authority (PA) was established in 1994 with the hope of creating an independent state and economy for the Palestinians, expansion of illegal Israeli settlements and the building of the separation wall have made the creation of any feasible state increasingly difficult to achieve. 

Today, Israel collects tax on behalf of the PA and has, in the past, used the revenue as a means of pressuring the Palestinian leadership into compliance.

Israel also has direct control over more than 60 percent of the West Bank, which renders much of the land inaccessible to Palestinian farmers, according to the report. Israeli products are also imported into the Palestinian market at subsidised prices.

Ikrema Rayyan is the director of a nonprofit organisation in the West Bank village of Beit Doqu called Beit Doqu Development Society, which aims to generate jobs and sustain the town’s local economy through farming and food manufacturing.

According to Rayyan, Israeli restrictions and policies have contributed heavily to Beit Doqu's economic strangulation. 

"The Israeli imports into the Palestinian market are much cheaper and at a much higher quality than Palestinian produce," Rayyan told Al Jazeera.

"Although our products are all natural, the Israeli closures and restrictions on the Palestinian economy have brought our businesses down." 

The UN report estimates that 55 percent of all Palestinian trade occurs with Israel, while the Palestinian territories account for just 3 percent of total Israeli trade, describing the situation as an "asymmetric trade dependence" that renders the Palestinian territories "a captive market". 


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Hadeel Badarni, a Jerusalem-based economic researcher, says Israel is profiting from the occupation.

"While these reports are crucial, they portray the West Bank, Jerusalem and Gaza as separate economies rather than Palestinian captive markets feeding one economic web woven by Israel," Badarni told Al Jazeera.

“Israeli and international corporations continuously profit from the occupation whether they are headquartered inside or outside the green line," she continued, citing private Israeli companies in illegal settlements.

"Palestinians are being stripped of their natural key resources in billions of dollars yearly. The conservative estimate is that they are losing $3.4bn as a result of the occupation’s exploitation," said Badarni, a fact highlighted in the report.

Israeli exploitation of key natural resources on Palestinian land, she continued, has left the Palestinian territories "de-developed, besieged and drowning in poverty".

"The options are very dim for Palestinians. All the choices you make under occupation and without solid economic infrastructure are merely for economic survival and not collective self-determination."

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Source: Al Jazeera News