São Paulo – The Gross Domestic Product (GDP) of the Occupied Palestinian Territories was up 9.9% last year, according to a report released this Wednesday (5th) by the United Nations Conference on Trade and Development (Unctad). The organization warns, however, that the growth seen in 2011 and early this year is not sustainable, and that the long-term perspectives for the Palestinian economy have in fact worsened.
The survey claims that the growth seen last year is a reflection of the reconstruction of the Gaza Strip after the Israeli attack in December 2008 and January 2009. In 2011, according to the Unctad, the economy of Gaza grew by 23%, and the West Bank’s grew by 5.2%. Nonetheless, the per capita GDP of Gaza is now 10% lower than in 2005.
Furthermore, the study informs that the growth was based on a narrow base of comparison, and was basically financed by international donations, rather than internally-generated revenues. The Unctad claims that despite the increased GDP, the average wage paid was down last year, productivity declined, and the unemployment rate remained at 26%.
“There is continued severe poverty and chronic food insecurity,” according to the Unctad. “Food insecurity affects two of every three Palestinians in the Occupied Palestinian Territory, but is most severe in Gaza. Also alarming is the poverty rate in East Jerusalem, estimated at 78% higher than the rates in the West Bank and Gaza.”
According to the Unctad, of the many factors which render the Palestinian economy unstable, the occupation is by far the strongest. Gaza remains blockaded by Israel, and the circulation of people and goods in the West Bank is hampered by the wall surrounding the region, and the Israeli checkpoints.
“Demolitions of Palestinian homes and infrastructure increased in 2011, and the expansion of Israeli settlements, particularly in the areas surrounding East Jerusalem and Bethlehem, worsened the existing physical fragmentation between various Palestinian ‘Bantustans,’ or disconnected enclaves,” according to the Unctad. “Bantustans” used to be territories allotted to the black population in South Africa during the apartheid regime.
According to the Unctad, the occupation has virtually put an end to trade and investment opportunities. The report informs that Israel accounted for 83% of trade with Palestinians in 2011, and for 84% of the territories’ trade deficit. Furthermore, the occupation has eroded the land and natural resources of the territories. There are restrictions on urban constructions and agricultural land exploration, and Israel is overusing one of the scarcest resources in the region, water.
According to the Unctad, the contribution of agriculture to the Palestinian economy dropped from 12% in 1995 to 5.5% in 2011, and that only 35% of the irrigable area is actually irrigated, which prevents 100,000 jobs from being created each year, at a cost equivalent to 10% of the GDP. Besides, due to restrictions on navigation on the Mediterranean, the fishery industry in Gaza has all but vanished.
According to the report, however, agriculture is capable of a swift recovery, but the Palestinian National Authority (PNA) and international donors are guilty by omission. The organization suggests “corrective measures” to minimize the effects of the occupation, such as establishing an agricultural development bank to ensure credit, insurance, sales support and other services to farmers.
“All efforts should focus on preventing further encroachment by settlements and on occupation of the Palestinian productive base,” the study claims.
The picture is made worse, according to the Unctad, by the fiscal efforts undertaken by the PNA under the advisory of other multilateral institutions, including spending cuts and increasing tax collection. Still, the Palestinian current account deficit keeps rising. To the Unctad, advising on fiscal austerity at a time of international crisis “ignores the reality of the occupation” and may well be “self-defeating,” because further spending cuts will lead to an economic slowdown.
“Additional pressure on public employment and wages threatens to further depress the economy, undermine social cohesion and jeopardize progress made towards laying the institutional foundation for a viable Palestinian State,” according to the report, which adds that international donations are currently on a downward trend.
*Translated by Gabriel Pomerancblum
