Israel has used the last 50 years of occupation to shape the Palestinian economy to suit its own interests.
A new UN report has strongly condemned Israel for the “de-development” and “deteriorating humanitarian conditions” of the Palestinian territories of East Jerusalem, the West Bank and the Gaza Strip, brought about by Israel’s 50-year occupation.
The report by the United Nations Conference on Trade and Development (UNCTAD), published on Tuesday, said the performance of the Palestinian economy is “far below potential”, while unemployment has persisted at levels rarely seen worldwide since the Great Depression.
“2017 marks the fiftieth anniversary of the Israeli occupation of the Gaza Strip and the West Bank, including East Jerusalem; the longest occupation in recent history. For the Palestinian people, these were five decades of de-development, suppressed human potential and denial of the basic human right to development, with no end in sight,” the report states.
“Instead of the hoped-for two-State solution envisaged by the United Nations and the international community, occupation is currently even more entrenched, while its complex socioeconomic toll has worsened over time.”
Among other issues, the report reviews the steady decline in gross domestic product (GDP) growth over the past two decades, the imposition of Palestinian economic dependence on Israel, the theft of Palestinian natural resources, and Gaza’s isolation. It reaffirms a previous finding that the Palestinian economy would be at least twice as large if the occupation were lifted.
The primary causes for the economic stagnation include “continuing loss of land and natural resources to settlements and the annexation of land in the West Bank”, along with market fragmentation and Israeli-imposed import restrictions, the report notes.
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 Palestinian state and economy, expansion of illegal Israeli settlements and the building of the separation wall have made this goal increasingly difficult to achieve.
Israel also has direct control over more than 60 percent of the West Bank, including most of its natural resources.
All of Israel’s illegal settlements in the West Bank, numbering around 125, are located in Area C, where at least 300,000 Palestinians live. Israel prohibits Palestinian construction and development in about 70 percent of this area.
“[T]he increasing belligerence of occupation presents a two-fold challenge, because it denies the Palestinian people access to their natural and economic resources and at the same time discourages donor support by minimizing development gains,” the UN report states.
Sami Abdel-Shafi, an independent economic consultant, cited a “massive depletion of the Palestinian human resource, simply because it is unable to practice what it does best”.
“You have hundreds of thousands of people who are unemployed and very few that are actually working,” Abdel-Shafi told Al Jazeera. “So whatever increase you have in the number of people who are working, this is not nearly enough to catch up with the demand that is generated by population growth and new graduates in the market.”
The economies of the occupied Palestinian territories are highly integrated with and dependent on Israel’s economy, as per the terms of the 1994 Paris Protocol signed by Israel and the Palestine Liberation Organisation.
The agreement is among a number of factors that make it difficult for Palestinians to establish their own factories to compete with Israeli products. “Palestinian agricultural producers also face unequal competition with subsidized imports from Israel and settlements – in the range of $500 million per year – while producers in Israel operate under normal cost conditions and benefit from a range of supportive government policies,” the report notes.
With Israel’s restrictions on movement and access to goods in the occupied territories, economic growth in the private sector is highly limited. As Israel continues to build the separation wall and confiscate West Bank land to build illegal settlements, the area has morphed into enclaves surrounded by checkpoints, making it difficult to transport goods or raw materials.
The Palestinian economy has thus been transformed into a collection of small, local markets that cannot compete with Israeli monopolies on goods such as dairy. In other cases, Israel has been directly involved in the destruction of Palestinian manufacturing plants.
In Gaza, which has been under an Israeli siege for more than a decade, the situation is markedly worse. Israel directly controls what enters and exits the territory, and keeps the borders largely shut.
“Before 2007, Gaza used to export internationally. We were a competitor in European markets for furniture and fresh produce, especially strawberries. I think that, compared with 2007, Gaza is only able to export some 15 to 20 percent of its products – and that’s during a good time,” Mohammed Abu Jayyab, the editor-in-chief of an economic newspaper in Gaza, told Al Jazeera.
But economic analysts have also laid the blame for the high cost of living on the governments of the Hamas movement in Gaza and the PA in the West Bank.
“It is expected of Israel, as an occupying country, to behave in this manner, but what is needed from the government in Gaza is to help ease the situation,” Abu Jayyab said, adding that Hamas uses excuses such as security, public education and health to impose high taxes.
The rift between the two main Palestinian political parties, Hamas and Fatah, has made the situation worse. Recently, the PA, led by the Fatah movement, requested that Israel reduce the electricity supply to Gaza in an attempt to pressure Hamas to forfeit control of the territory.
Abdel-Shafi maintained that the key to saving the Palestinian economy is to address this political issue.
“The PA needs to seek a political solution so that the Palestinian economy can develop. The division between the West Bank and Gaza is making it much easier for the Israeli government to separate us,” he said.
“So far, Palestinians are in sustenance mode. They are not developing as they should be. No solution will be sustainable unless the political issue is resolved; this goes for internal Palestinian disagreement and the conflict between Palestinians and Israel.”