UN report lays out prescription for reviving Palestinian economy

With the economy of the occupied Palestinian territory continuing its sharp deterioration, a new United Nations report today stressed that efforts to launch an economic revival should target poverty reduction while expanding production and trade.

“Economic reforms should aim at mutually beneficial trade and industrial policies, a gradual and sequenced approach towards liberalization, and a two-track trade strategy with export-oriented industries operating on laissez-faire principles functioning side-by-side with protected infant or strategic industries,” the UN Conference on Trade and Development (UNCTAD) said.

UNCTAD´s Annual Report on Assistance to the Palestinian People proposes that the Palestinian Authority (PA) pursue “a development-driven approach to trade rather than a trade-driven approach to development,” through a gradual and sequenced framework towards liberalization.

Established in 1964, UNCTAD promotes the development-friendly integration of developing countries into the world economy.

Years of economic retrenchment on top of almost four decades of occupation have increased poverty, reduced and distorted production, and heightened dependence on Israel, the report said.

Prescriptions for Palestinian economic recovery must take into account the Israeli occupation, protracted conflict since 2000, and the imperatives created by Israel’s unilateral withdrawal from Gaza, it warned.

It recommended that the focus should be on forming institutions that will serve the needs of an upcoming Palestinian state rather than aiming solely at reforming a transitional government.

In 2004 the economy resumed the sharp deterioration dating from 2000, the report noted. Gross domestic product (GDP) declined by 1 per cent to a level 15 per cent below that of 1999. Over the five-year period 1999-2004, real per capita gross national income (GNI) contracted by 33 per cent. Unemployment remained high: one third of the labour force was jobless at the end of 2004. Some 61 per cent of households were living below the poverty line of $350 per month.

The economic and physical capital costs of the crisis were great. Over the past five years, the estimated opportunity loss of GDP was around $6.4 billion, equivalent to 140 per cent of the size of the economy prior to 2000. During the same period, capital losses were estimated at some $3.5 billion, or 30 per cent of pre-2000 West Bank and Gaza capital stock, the report said.

The continued construction by Israel of a separation barrier and the consolidation of Israeli settlements on Palestinian land will further erode the productive capacity of the West Bank and Gaza and, in the most basic sense, people´s ability to feed themselves, the report warned.

The confiscation and levelling of Palestinian lands by Israel has substantially undermined the agricultural sector. By mid-2004, total agricultural land loss in the West Bank and Gaza was around 260 square kilometres, representing 15 per cent of the cultivated area in 2003.