Palestinian economy hit by Israeli atrocities

Israel has smashed the Palestinian economic backbone by destroying industrial and agricultural facilities, crippling government institutions and depriving hundreds of thousands of Palestinians of their jobs, according to an official Arab report.

After a relative recovery following the signing of the Oslo Peace Accord between the Palestinians and Israel, the economy of the West Bank and Gaza Strip collapsed by nearly two thirds in 2001, unemployment soared and the living standards sharply retreated.

Estimates by the Abu Dhabi-based Arab Monetary Fund showed the total economic losses stood at around $7.5 billion in 2001 while the gross domestic product plummeted from $4.57 billion in 2000 to $1.46 billion in 2001.

The gross national product also tumbled from nearly $5.46 billion to only $2.12 billion, pushing the Palestinian per capita income from around $1,420 to $422, one of its lowest levels.

"The Palestinian economy has almost completely been destroyed because of Israeli practices. The destruction covered all sectors including infrastructure and development projects set up after the Oslo agreement," the AMF said in its 2002 report on Arab economic and social conditions, co-prepared by the Kuwaiti-based Arab Fund For Economic and Social Development.

"Economic performance collapsed by more than 55 per cent while unemployment reached between 80 and 85 per cent as a result of the destruction of all sectors and Israel's policy of depriving the Palestinian workers from their jobs.

"Debt on the Palestinian National Authority also climbed to more than $1.5 billion, adversely affecting its ability to pay salaries and run government institutions and other services and sectors."

The report put the Palestinian population in the occupied territories at around 3.47 million, including 2.1 million in the West Bank. Population growth was estimated at 4.5 per cent while the work force was estimated at 950,000, of whom only 218,000 are employed.

More than 130,000 of them work in the public sector and this illustrates the deteriorating economic and social conditions due to Israel's aggression and continuous siege.

"The public sector is hardly functioning as the Authority is unable to pay salaries on time. The Palestinian economy in general reached a stage of full stoppage in 2001."

It said systematic Israeli incursions into the Palestinian farms and destruction of trees has sharply depressed agricultural output although the sector's share of the GDP doubled to around 12 per cent mainly because of the collapse of most other sectors.

In value, the agricultural sector declined to around $176 million last year from $275 million in 2000.

"Its share of the GDP grew because of the serious deterioration in other sectors. Construction almost came to a halt and more than 75 per cent of the factories and workshops in the occupied areas have been devastated. Tourism plummeted to very low levels while the trade sector suffered its most serious blows," the report said.

"The decline in farming output was caused by Israel's destruction of more than 220,000 dunums and 500,000 olive, palm and citrus trees in addition to destruction of water wells and irrigation systems and barring the entry of fertilisers and farming equipment. Israel has also killed thousands of cattle, banned animal fodder and prevented fishing."

The industrial sector was another victim of Israel's measures to smash the Palestinian economy to break the people's will and impose its own peace conditions, it noted.

From 18 per cent in 2000, the industrial sector's contribution to the GDP dived to only eight per cent in 2001 to reach just $117 million from $824 million. The decline had a serious impact on jobs, with the number of workers plummeting from 82,000 to only 17,000.

The report said: "This was a result of direct damage to factories and workshops by Israeli occupation forces and measures to bar spare parts and other production requirements.

"Because of the continuous bombardment and siege of key institutions and border points, the trade sector was also badly hit.

"Palestinian exports tumbled from around $857 million in 2000 to only $110 million in 2001 while imports dived from $3.5 billion to $970 million. From more than 20 per cent, the exports plunged to seven per cent of the GDP.

"Such developments had an immediate effect on the Palestinian public revenues, which collapsed to only $170 million from $964 million. This means revenues accounted only for 17 percent of the expenditure and almost all of them were in current spending as no funds were channeled into investment and development projects."

Lower earnings more than doubled the budget deficit to around $820 million from $400 million, forcing the Palestinian Authority to borrow to finance the shortfall. By the end of 2001, the Authority was reeling under a foreign debt of around $1.57 billion.

"Despite the flow of foreign aid into the Palestinian coffers, the level of aid remained far lower than actual needs because of the extent of damage caused by Israel.

"Foreign aid was estimated at around $370 million last year but according to international estimates, the Palestinians need between $7-8 billion to revive their economy, rebuild the infrastructure and find jobs for their people."