UNCTAD=B4s latest report argues that limiting the vulnerability of the Palestinian economy to Israeli restrictive measures requires expanding the policy space available to Palestinian decision-makers and re-orienting Palestinian trade within a context of regional transit transport agreements.
With the momentum of de-development reinforced by further tightening of Israeli restrictive measures, the viability of the economy of the occupied Palestinian territory (oPt) is no longer the central concern. Rather, the focus is increasingly on relief efforts to limit vulnerability, a new UNCTAD report (TD/B/54/3) warns.
To break the occupied Palestinian territory=B4s (oPt) isolation and reduce its dependence on Israel, it is critical to establish alternative routes for Palestinian trade through port facilities in Jordan and Egypt. Re-routing of Palestinian trade should be developed within a context of regional transit transport agreements. Needed also is a shift in the debate from security issues to ensuring secure flow of trade.
Israeli mobility restrictions have effectively separated Palestinians in the West Bank and Gaza, and fragmented the oPt.
Palestinian per capita gross national income (GNI) dropped by 15% in 2006, while the gross domestic product (GDP) declined by 6.6%. Unemployment remained high, at 30%, and around 53% of households are living below the national poverty line. UNCTAD estimations put the cumulative income losses between 2000 and 2005 at $8.4 billion, more than twice the size of today=B4s economy.
Physical capital loss is estimated at one third of the oPt=B4s 1998 productive capacity.
As a result of Israel=B4s withholding of Palestinian tax revenues collected on behalf of the Palestinian Authority (PA) and the reluctance of donors to support the PA since 2006, the public deficit increased to $791 million in 2006 (19 % of GDP) from $761 million in 2005 (17 % of GDP). Revenue losses, excluding taxes withheld by Israel, exceeded the $250 million mark in 2006. The cumulative losses in public revenues are estimated at $1.2 billion in 2000- 2005. The report argues that offsetting Palestinian economic vulnerability requires:
- creating the necessary institutions for addressing the population=B4s growing needs;
- building the foundation required for the sovereign economic functioning of the envisaged Palestinian State; and
- providing Palestinian decision-makers with a range of policy instruments much wider than those offered by the Paris Protocol.
UNCTAD has achieved significant progress in its programme of technical assistance to the Palestinian people in the areas of customs modernization; establishment of the Palestinian Shippers=B4 Council; and preparations for Palestinian observer status at the World Customs Organization. To intensify the secretariat=B4s efforts, donor funds are needed for projects in the areas of SMEs development and investment retention.