A near paralysis of all sectors within the Palestinian economy, the result of the strict closure imposed on the territories since the outbreak of Al-Aqsa Intifada over a year ago, has revealed the extent to which the Palestinian economy is dependent on neighboring Israel, asserts a study recently published by the Palestinian Economic Council for Development and Reconstruction (PECDAR).
All Palestinian border entries have been closed down and Palestinian cities and villages have been cut off from one another, making travel, transport and commerce among the different parts of the territories a near impossible mission. The total losses in all economic sectors reached $4.25 billion during the period of September 2000 to September 2001, the organization concluded.
The lack in raw materials diminished the rate of production and raised prices. Since Palestinian workers have been banned from work in Israel, income rates and consequently consumption have been dramatically reduced. Internal and external trade has been interrupted and the Palestinian Territories are suffering from lack of basic supplies and fuel products.
Since 85 percent of Palestinian trade passes through Israel, the border closure led to a 60 percent decline in Israeli imports and a 45 percent drop imports from other countries. Palestinian export activities were decreased by 35 percent.
The number of Palestinians employed by Israelis was reported to be 143,000 workers before September 2000. As a result of the closure, unemployment rate rose to 51 percent from a previous 12 percent. The private sector was projected to attract $350 million new investments in the year 2001, expected to create some 4,500 new job opportunities for Palestinians, however, most all planned initiatives were put on hold, awaiting a more appropriate investment climate.
Revenues from Value Added Tax and border fees, collected by Israel on behalf of the Palestinian National Authority (PNA), are being held by Israeli authorities. The sharp drop in trade and economic activities In the period between September 2000 and September 2001, has generated revenue losses amounting to $250 million.
This income source constitutes 62 percent of the overall PNA budget and is estimated at a value of $650 million a year. At the same time, donor aid extended to various developmental projects has been largely reduced, causing a $165 million deficit in the PNA budget.
Created by PNA decree in October 1993, PECDAR was charged with the task of coordinating the international financial support and implementation of development programs, in collaboration with the World Bank. — (menareport.com)
© 2001 Mena Report (www.menareport.com)
