Israeli restrictions have had 'disastrous' impact on Palestinian economy, UN reports

Israeli restrictions in the West Bank and Gaza have had a "disastrous" effect on the Palestinian economy, according to a report released today by the United Nations Office of the Special Coordinator in the Occupied Territories.

Painting a bleak picture of the deteriorating conditions since the latest crisis began in September 2000, the report estimates that total losses to the Palestinian economy could reach $2.5 billion. While joblessness had been steadily declining between 1997 and September 2000, "the crisis has completely offset these gains with core unemployment reaching 26.9 per cent at the end of the first quarter of 2001."

Unfavourable labour market conditions are engendering a sense of hopelessness, according to the report, which states that "increasingly, Palestinian workers are giving up all attempts of even looking for work."

The fiscal revenue base of the Palestinian Authority is also in serious jeopardy. The report blames this trend in part on the fact that Israel has refused to hand over taxes collected on behalf of the Palestinian Authority. Even with international support, the Palestinian Authority's budget deficit for 2001 is anticipated to amount to $371 million. "Without the fiscal support of the international community, the Palestinian Authority institutions would not have been financially sustainable."

The crisis is also taking a heavy toll on social services, with the Palestinian health care system "under severe strain from the increased burden of caring for thousands of wounded, especially those with debilitating injuries." At the same time, closures have limited access to health care services and impeded the flow of supplies to hospitals.

Education is also hard-hit, with reports indicating that 190 schools have been temporarily closed, while 1,300 students from Gaza have been unable to reach their universities in the West Bank.

According to the report, recovery will be difficult. "The rapid and sustained deterioration of the Palestinian economy suggests that recovery will take longer than after previous periods of economic recession even if the conflict is ended soon and mobility restrictions [are] lifted completely," it states.