Assault on the economy
Reports by the World Bank and UN warn of the growing humanitarian crisis in the occupied territories. Annika Hampson reports from Jerusalem
Twenty-seven months after the outbreak of the Intifada, the Palestinian economy is in shambles and the humanitarian crisis in the occupied territories is escalating to unprecedented levels. That's the message conveyed by reports on the Palestinian economy prepared by the World Bank and the Office of the United Nations Special Co-ordinator (UNSCO) that were made public at a press conference on 5 March in Jerusalem. There was no mistaking the gravity of the message presented by both Nigel Roberts, the World Bank director for West Bank and Gaza, and Terje Roed-Larsen, the UN Special Co-ordinator for the Middle East Peace Process.
The World Bank's report, "Two Years of the Intifada, Closures and Palestinian Economic Crisis" surveys the economic and social damage caused by the current conflict. Gross national income per capita has fallen to approximately half of what it was two years ago; average unemployment stands at 50 per cent -- though this figure rises to nearly 70 per cent in the Gaza Strip; and between June 2000 and June 2002, Palestinian exports declined by almost a half, and imports by a third. The overall national income losses since September 2000 have reached $5.4 billion -- the equivalent of an entire year's national income prior to the Intifada.
The UNSCO report, "The Impact of Closure and Other Mobility Restrictions on Palestinian Productive Activities, 1 January-31 December 2002" covers one of the worst-ever years for the Palestinian economy. Focussing on indicators such as unemployment levels and poverty rates, this report also chronicles a precipitous decline in all economic indicators. Through the use of case studies, the report puts a human face on the impoverishment engulfing the Palestinian population.
One such study focusses on the Khawaja family, whose members live in Neleen, a village west of Ramallah, where they farm 20 dunams of land (one dunam is approximately 1,000 square metres). In 1990, when the sons were old enough to work, they left the family land to take up jobs in Israel where they received higher salaries. The family patriarch, who was growing old and had no help, shifted from growing labour-intensive vegetable crops to olive trees. Until 2001, the trees produced good olives and the olive oil sold for a reasonable price locally. However, in 2001 all seven sons, who were by then working in Israel, lost their jobs. None was able to find work locally, and instead, helped with the olive picking. The harvest for 2002 was excellent. But, owing to the closures, markets were inaccessible and the dire economic situation caused the price of luxury goods such as olive oil to take a nose dive. The case study concludes that approximately 1,500 kilogrammes of olives remain unsold and the family is facing an uncertain future. The Khawaja's story is similar to that of families throughout the West Bank and Gaza Strip.
Both the UNSCO and the World Bank reports unequivocally attribute the cause of the crisis to the Israeli-imposed closures. In his statement, Larsen argued that the best way to address the humanitarian crisis is to give Palestinians the means and opportunity to earn enough to manage their own lives, rather than ploughing more and more aid into the economy. The report shows that this cannot be achieved when people cannot travel to markets, the workplace or from one village to the next. The World Bank report supports the UN findings, warning that confrontation and closures will continue to throttle the Palestinian economy.
The findings of the two reports emphasised that humanitarian aid and donor assistance can only contribute to the immediate alleviation of the crisis but a political solution, whereby the Palestinian economy is allowed to function normally, remains crucial. Says Roberts, "Under closure, every additional billion in foreign aid will only pull down the poverty rate by about six percentage points," adding, "This is not a crisis that can be resolved with money alone... to tackle the root causes of the problem, and to help mend the traumatised economy, a political solution must be reached."
The United Nations, together with the EU, US and Russia in a group dubbed the Quartet, has been working on a political solution presented in its so-called road map. "The road map is a compromise," said Larsen, "but at least it puts all the issues on the table and points us in the right direction."
The picture painted by these two reports is bleak, and total economic collapse only seems to have been averted because of the high levels of donor assistance -- particularly donor budget support for the Palestinian Authority. Another key reason is the steadfastness of Palestinian society and the strength of family ties. As the World Bank report notes, even with a dependency ratio of over 18 in Gaza -- meaning that each bread earner in Gaza supports 18 people -- and minimal formal safety nets, outright destitution is still limited. However, people's ability to cope is waning and if the trends outlined in the reports continue, the battered Palestinian economy could face total collapse with devastating consequences for the Palestinian population.
