Palestinian economy ‘under siege’, says PA minister
Hebron - The Palestinian economy is reeling under constraints resulting from Israeli domination, wars on the Gaza Strip and violence in the West Bank, Palestinian Economy Minister Abeer Odeh said.
Odeh’s remarks, in a telephone interview with The Arab Weekly, come in the wake of violence that engulfed the West Bank and the Gaza Strip following what Palestinians saw as Israeli provocations at the al-Aqsa mosque, Islam’s third holiest shrine.
Dozens of Palestinians and ten Israelis have been killed in the month-long unrest that raised fears over another Palestinian intifada.
“As long as there’s occupation, the Palestinian economy is bound to remain decrepit,” asserted Odeh, a minister in the Palestinian Authority (PA), which is responsible for the West Bank and partially in Gaza.
“Unemployment in the Palestinian territories is one of the highest in the world, with an overall average of 27% in the West Bank and Gaza, or more than 330,000 jobless Palestinians.”
In Gaza unemployment is estimated at 43% and youth unemployment there is a staggering 60%, Odeh noted.
She explained that 85% of Gaza’s population of 1.8 million lives on social welfare provided by international donors and channelled through the PA.
Independent figures obtained by The Arab Weekly from West Bank economists on condition of anonymity indicated that the PA is facing severe budgetary problems causing delinquent payments of salaries to civil servants.
The reason, according to the economists, is Israel withholding payment of customs revenues it collects on behalf of the PA. The payments are supposed to be repatriated to the Palestinians each month but Israel stopped doing so in January.
The levied customs represent 70% of the PA’s revenues. The rest comes from international donations, including aid from oil-rich Gulf Arab states.
A World Bank report in September cited critical figures for the Palestinian economy but the report’s general upbeat tone suggested that the Palestinian economic crunch can be overcome.
“The current (economic) decline could be reversed in an environment where sustainable, private sector-led growth is fostered, coupled with a commitment of ongoing financial support from the international community,” the report said.
It said a “dynamic private sector can generate the sustainable growth needed”.
But, it highlighted that “restrictions put in place by the government of Israel continue to stand in the way of potential private investment”.
The World Bank concluded that “access to Gaza remains highly controlled, and much of Area C, which makes up 60% of the West Bank, is inaccessible to Palestinians”.
An Israeli siege of Gaza after Hamas violently took it over from the PA in 2007 swelled poverty to 38.8%, Odeh said. “Of this figure, 21.1% live in total poverty and this is an indication of an unprecedented economic deterioration in Gaza.”
“Israeli practices and policies in the Palestinian territories are the main reason for the distortions and structural imbalances in the Palestinian economic infrastructure since the occupation began in 1967,” the minister said.
In the context of the unequal relationship between the two sides, Israel made the West Bank and Gaza a source of cheap labour used in its market and transformed the Palestinian areas into a consumer market for Israeli products, Odeh said.
Meanwhile, she added, Israel “continued to impose restrictions on Palestinian economic activity, especially the industrial sector, and drained Palestinian financial resources through an arbitrary tax policy on individuals and businesses”.
“There is no growth in the Palestinian economy, compared to previous years,” Odeh said. She did not disclose the growth rate. The World Bank, however, said Gaza’s economy contracted 15% following Israel’s war in July 2014 but that of the West Bank grew by 4.5%, driven primarily by new building construction.
“The reason for the weaknesses is that our economy is simply under siege,” Odeh explained.
She maintained that the PA had “no control on the border and there are restrictions on the export and import that would have a negative impact on growth”. Of total Palestinian imports, Israel comes first with 80%, Odeh said, with the rest coming from Jordan, Turkey and China.
Exporting is difficult because of Israeli restrictions. “We don’t export from a state to another but have to go through a third country, which makes our products more expensive and less competitive on the international market,” she said.
Talaat Alawi, chief editor of Al-Safeer Al Iqtisadi, an independent Palestinian economic monthly newspaper, said indicators show the Palestinian economy “going from bad to worse”.
“For a fact on the ground, Palestinians buy essential commodities at the same price paid by Israeli consumers, whose monthly wages are at least four times more than those earned by Palestinians,” he said.
Nael Mousa, an economics professor at An-Najah National University in Nablus north of the West Bank, said the Palestinian economy evolved since the uprising in 2000.
“But its performance remains modest and below the required level because of the Israeli restrictions and obstacles,” he said.