Faltering Palestinian economy needs bold new strategy, contends UN report

8 September 2009

The economy of the occupied Palestinian territory faces unprecedented challenges from coping with Israeli closures to the loss of natural resources, the United Nations said in a new report, calling for an economic strategy that marks a bold departure from the norm.

“An alternative approach which recognizes the realities of the Palestinian economy and the evident incompatibility between occupation and development has become imperative,” the UN Conference on Trade and Development (UNCTAD) stated in a news release on its 2009 report on assistance to the Palestinian people.

“This requires a shift in the dynamics of Palestinian economic policy from those driven by the demands of occupation to one based on the developmental priorities and aspirations of Palestinian people,” it added.

According to the report, the Palestinian economy lost ground for the ninth year in a row in 2008, posting 2 per cent growth, despite extensive reforms by the Palestinian Authority and $1.9 billion in donor support.

The economic decline is rooted in Israel’s closure policy, the erosion of the Palestinian productive base, the loss of some of the territory’s most fertile land and natural resources to the Israeli separation barrier, and expanding settlement activities, the report noted.

Poverty continued to widen and deepen, and the trade deficit as a ration of gross domestic product (GDP) reached an all-time high of 79 per cent.

The report also noted that Gaza has been dealt a particularly severe blow owing to the two-year old Israeli blockade and the recent conflict, with the latter causing economic losses estimated at $4 billion – almost three times the size of Gaza’s economy.

In addition, living conditions and access to sources of livelihood in Gaza are currently at their worst since 1967, with poverty affecting 90 per cent of the area’s 1.5 million inhabitants.

In response to the worsening humanitarian and economic crisis in Gaza, UNCTAD has designed an emergency package to support ongoing rehabilitation and reconstruction efforts.

The agency said a review of 25 years of reporting on the subject has revealed the need for a “bold departure” from the conventional approach, which leaves unchallenged the context, constraints and policies of the occupation.

It stressed the need for a “strategic repositioning” of Palestinian economic policy aimed at restoring territorial integrity, addressing the specific needs of the war-torn economy, and laying the grounds for a future viable State in line with UN resolutions.


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