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Source: Committee on the Exercise of the Inalienable Rights of the Palestinian People (CEIRPP)
Division for Palestinian Rights (DPR)
Department of Public Information (DPI)
6 February 2012

General Assembly

          Department of Public Information • News and Media Division • New York



Solvency of Palestinian Authority Tied to Complex
Diplomatic Processes Not Always Favourable to Palestinians

(Received from a UN Information Officer.)

CAIRO, 6 February — The Israeli policies towards the Occupied Palestinian Territory not only limited the growth of the Palestinian economy, amid the cost of crippling closures and obstructed passage, but transferred Palestinian resources to the Israeli economy, the United Nations Seminar heard today.

Rounding out the first day of the United Nations Seminar on Assistance to the Palestinian People, organized in Cairo, participants examined the impact of Israeli policies and practices on the socio-economic situation in the West Bank and the Gaza Strip. They considered restrictions on movement and access; displacement, dispossession and demolitions in East Jerusalem and area C, as well as the impact of settler violence; the impact of the occupation on recent economic achievements in the West Bank and of the blockade on Gaza; and unilateral economic measures as a means of political and economic coercion in the Occupied Palestinian Territory.

Significantly constraining the development of the Palestinian national economy, said Mahmoud A.T. Elkhafif, Coordinator, Assistance to the Palestinian People Unit of the United Nations Conference on Trade and Development (UNCTAD) in Geneva, was the growing physical and demographic separation of East Jerusalem from the rest of the Occupied Palestinian Territory. The viability of a future independent Palestine depended, among other things, on reintegrating East Jerusalem’s economy within the broader national economy and allowing it to reassume its historic pivotal economic role.

Another major source of Palestinian fiscal instability was rooted in the Israeli control of the tax and customs clearance revenue it collected on behalf of the Palestinian Authority, which accounted for 60 to 70 per cent of total Palestinian revenue. Had the Palestinian Authority also collected taxes on so-called “indirect imports” — goods not labelled as destined for the Palestinian Authority and imported and resold by Israel in the Palestinian Territory — clearance revenue could have increased by $500 million — more than 8 per cent of gross domestic product and 25 per cent of public revenue. The additional revenue would have covered one third of the budget deficit in 2008.

The Director of the Microfinance Programme of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), in Jerusalem, Alex Pollock, said the Israeli occupation had historically and distinctively melded and constrained Palestinian economic and social development. While the Palestinian economy and society had continued to undergo significant change during the prolonged Israeli “imperium”, the coordinates of that change had been modulated by Israeli command, control and scrutiny. Despite such subordinate position, Palestinians continued to manufacture, trade and farm.

But it was not possible to have development under occupation, only a dependency, he said. Occupation and development cannot co-exist. Despite the success of the Palestinian Authority, Israel still dominated all areas of Palestinian life. Permission was required for everything; occupation ran through every aspect of life. In fact, the occupation had “always run at a profit”. He cited as an example Israel’s initial occupation of Gaza and the West Bank and Jerusalem in 1967, when it immediately integrated a huge Palestinian labour force into Israel as a work force — “so Israel ran the occupation at no cost, while it continued to prevent the development of Palestinian industry”. For up to 20 years, it ensured that the Palestinian economy “never took off”, he said.


Maxwell Gaylard, United Nations Deputy Special Coordinator for the Middle East Peace Process and United Nations Coordinator for Humanitarian and Development Activities in the Occupied Palestinian Territory, Jerusalem, provided a snapshot of the situation through a “United Nations lens”. Although there were some 23 or 24 entities of the Organization operating in support of the Occupied Palestinian Territory, little analysis is available on what was happening socio-economically in Jerusalem or the West Bank. What was obvious is that in the West Bank, the occupation added up to a lot of Israeli troops and border police. Closely related to that, in area C, comprising nearly 62 per cent of the West Bank, land was under the full control of Israel, which maintained an “obvious” presence.

He said that settlements were “big cities”; “they’re no joke, they’re well and truly there”. There was also the separation barrier, which was 700 kilometres long. The International Court of Justice said Israel had a right to defend itself, ruling that the wall should be the length of the Green Line, or 400 kilometres, which makes the wall 300 kilometres longer than stipulated. Those Palestinians caught on the Israeli side numbered in the tens of thousands, and their standard of living was dropping, in some cases, “catastrophically”.

Some of the more odious fallout of such a situation was settler violence, with Israeli settlers basically attacking “the Palestinians next door”. For Palestinian farmers, 10,000 olive trees had been poisoned or cut down in 2011; each worth more than $1,000, amounting to an estimated $1 million loss.

The separation wall split the farms forcing Palestinian farmers to line up at 5 a.m. to cross the barrier to pick olives, and line up again at 5 p.m. to get back. The United Nations also considered Gaza to be under occupation; it was true that the settlers had left in 2005 and that there was no permanent Israeli military presence there. However, when one stood on the beach and looked out to sea, one could see the Israeli Navy not three miles away. Maritime restrictions had ruined the local fishing industry. The airspace was also completely controlled by Israel, as jet fighters crossed regularly, and blimps or drones hovered over Gaza.

People said Gaza was an “open-air prison”, and he agreed. Many Gazans simply could not get out. Gaza and the West Bank are territorially divided, and in order to have a functioning State, people need to be able to cross between the two territories to do business, and to visit each other — that could not happen at the moment. Imagine, he said, what that meant in terms of the socio-economic development of a State. As an advocate for lifting the Gaza blockage, he said, “let the trade flow; let the Government of Israel look to its security concerns, but not simply lock it [Gaza] up”.

The United Nations regularly said that Palestinians were more than capable of looking after their own affairs, whether political, economic or social. Palestinian people are very highly educated, innovative, entrepreneurial – there is no good reason why they could not run their own affairs. The only reason is the occupation.

Alex Pollock, Director, Microfinance Programme, in the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), said that for up to 20 years, the occupation had ensured that the Palestinian economy had not taken off. The Oslo process should be looked at positively, in that it had created significant conditions of change, which altered the landscape for Palestinian people, particularly in Gaza. Palestinians were allowed to build houses, roadways, schools and so forth. With Oslo, Palestinians were allowed to “massively” improve their infrastructure and create opportunity, but at the same time, Oslo had created a nexus of dependency, in the form of a tripartite relationship between the Palestinian Authority, the donor community and Israel, with Israel being a significant force in that relationship.

He said that just 35 per cent of the Palestinian Authority’s budget in 2011 came from domestic revenues; the other was under the control of the Israeli authorities. So while the Oslo architecture had significantly unburdened the occupying authorities, the bulk of costs in fact got transferred to the donor community. That meant that the Palestinian Authority was in a very fragile situation tied to a complex diplomatic process, which was not always in the interest of Palestinians. Israel often had significant leverage, which meant it could disrupt the Authority at any time. Another aspect of such set-up was that the Authority had been running on a significant budget deficit of more than $1 billion a year. Most of that was picked up by the donor community, which had allowed the Palestinian Authority to create massive improvements in the lives of Palestinian people throughout the West Bank and Gaza. But that was a diplomatic relationship, which could change along with changes in strategic policies. As a result, the Palestinian Authority’s standing today was a one-way-street dependent on western Governments.

Ramesh Rajasingham, Head of Office, United Nations Office for the Coordination of Humanitarian Affairs, Occupied Palestinian Territory, discussed the humanitarian impact of the occupation, in Gaza and the West Bank. The Palestinian community, he said, had the capacity, organization, motivation and will to fully and independently develop its territory. At the core of the problem was a protection situation, emanating from international law violations within the occupation. Those were built into illegal policies and measures by Israel to prevent the development of a normal situation, which, in turn, led to a dependency where international aid propped up people’s lives.

He said that the more than 40 year old occupation was unsustainable. Mr. Rajasingham illustrated the effects of Israeli “illegal” policies by air, land and sea, which, he said, placed enormous physical and administrative restrictions on the Palestinians. He noted that closure policies had been in place since the early 1990s, with restrictions that also dated back more than 20 years. In Gaza, their severity meant that the average Gazan was unable to provide for his or her family. Israeli-imposed access restrictions delved 1.5 kilometres into Gaza, which severely impacted life there and rendered 35 per cent of extremely arable land unavailable for cultivation as it had been levelled by military operations.

As for restrictions at sea, they had severely eroded the fishing industry and contaminated the main food source for Gazans, making them dependent on food aid. Despite measures to ease the blockade in 2010, the situation remained “extremely fragile”, as only 40 per cent of imports from 2007 levels were allowed in, and exports were at a minimum — limited to agricultural products to Europe. Thus, Gaza could not meet most of its infrastructure and reconstruction development needs.

The situation in the labour force was similarly dire, especially among youth and refugees, he said. Gaza remained isolated from the rest of the Occupied Territory. There were some 200 to 300 illegal crossing tunnels operating between Egypt and the Occupied Palestinian Territory at the Gaza border, but there were serious safety concerns and the tunnels in no way substituted for reopening the crossings. Since the beginning of the blockade, 190 tunnel workers had died and many more had been injured. Moreover, the tunnels were not a source of fiscal revenue; there was much trade through them, but it was unregulated and unable to serve the population as a whole.

Paradoxically, he said, Gaza might be the more stable of the two territories because the Palestinian presence itself was threatened in the West Bank. There, the occupation affected 60 per cent of the population in area C, and there had been a 20 per cent increase in new settlements on the eastern side of the planned route, meaning on the “wrong side” of the separation wall. There were more than half a million settlers in the West Bank, including in East Jerusalem. There were forcible displacements of children from demolitions, representing an 80 per cent increase over last year, and more than 60 per cent of this year’s demolitions had occurred in areas allocated to settlements. Israeli settlements received preferential treatment in terms of allocation of water, law enforcement, and other services. Settlement activities were also the root cause of civilian casualties in the West Bank.

By the end of 2011, there were more than 500 obstacles to Palestinian movement in the West Bank, excluding Hebron. Those included earth walls, barriers and trenches. Some 200,000 Palestinians had to use detours taking five times longer to access schools, jobs and relatives. The situation was equally bad in East Jerusalem, where much land had been confiscated for settlements and only a 13 per cent area remained for Palestinian construction, every square inch of which was already full. Almost 90,000 Palestinians were at risk of housing demolitions. The 2012 consolidated appeal for 150 projects was a manifestation of policies and measures of the occupation.

Picking up on the point that there was no access for Palestinians in Gaza, affecting fishing, farming and international trade passage, was Hanan Taha, Chief Executive Officer, Palestine Trade Center, Ramallah and Gaza. She recalled that although the strict blockade on Gaza started in June 2007, trade and movement access was heavily restricted long before that, and that despite interim agreements and memorandums of understanding, no safe passage between the West Bank and Gaza Strip for goods, vehicles and persons was currently in place. Six terminals at Gaza’s border with Israel, which were used for people and commodities crossing between Israel and the West Bank, also were now closed or had limited accessibility.

Ms. Taha presented findings by her Center, which indicated that 38 per cent of Gazans lived in poverty, with 26 per cent unemployed, more than half “food insecure”, and more than 75 per cent receiving aid. Gazans were unable to provide for their families and the quality of infrastructure and vital services had deteriorated. Despite measures taken to ease the blockade in June 2010, imports were still less than 40 per cent of pre-2007 levels, and exports remained tightly restricted and limited to agricultural produce to Europe. Gazan businesses could not access their traditional markets in Israel and the West Bank, and access to land and sea remained highly restricted.

Additionally, she said, only a minority of the projects aimed at improving housing and vital services in Gaza had been approved by the Israeli authorities, and implementation of those approved faced funding shortages and limitations in capacity posed by the single crossing for goods. Civilian casualties resulted from armed clashes during efforts to enforce restrictions, and thousands of people, many of them children, risked their lives smuggling goods through the tunnels under the border with Egypt every day. Gazans remained cut off from the rest of the Occupied Territory. The closures had also had a major impact on the water supply and electricity production; power cuts and lack of diesel for generators had undermined water distribution and pumping to household reservoirs.

Among her recommendations was removing the barriers to trade and market entry; allowing free access to goods and people; revitalizing the Gaza infrastructure and the private sector; reintegrating the Gaza economy with that of the West Bank; and re-opening the Israeli market for Gaza products.

Mr. Elkhafif of UNCTAD said the Conference estimated that between 2000 and 2005, the cumulative gross domestic product loss to the Palestinian economy was $8.4 billion, or twice the size of the Palestinian economy in 1999. In fact, the economy lost more jobs than it generated in 2005. More detrimental was the forced erosion and destruction of the productive base: at least one third of the Palestinian pre-2000 physical capital had been lost and not replaced. The separation barrier had caused a loss of one fifth of the West Bank’s agricultural land, and the economic losses incurred by the Israeli military campaign in December 2008 on Gaza was estimated at about $4 billion — almost three times the size of Gaza’s economy.

Given the revenue that the Authority could have earned had it collected taxes on “indirect imports”, he called urgently for an operational and transparent mechanism to accurately distinguish between bona fide imports from Israel and “indirect imports”. That necessitated reconsideration of the entire revenue collection and clearance arrangement currently in place, in order to overcome the information asymmetry of the two sides. Moreover, the UNCTAD representative had highlighted the need for action and further research on Palestinian revenue leakage from a wider perspective of issues including purchase tax on Palestinian imports from and through Israel, smuggling from Israel, and settlements and rules of origin.

Rehabilitating and restructuring the fragmented East Jerusalem economy called for a significant national and international effort in the coming years to reconnect it to the Palestinian Territory through better integration of trade, labour and financial markets.

During the lively discussion that followed, speakers talked of the “safe passage” as an obligation to which Israel had committed in various agreements. It was not about generosity, one asserted, but about obligation — 15 years overdue. The new border crossing, said the speaker, was not actually within Gaza but in Israel and had turned the Strip into an island. Israel was either trying to open one crossing and close all others or create an island under Israeli army control, with only one highway or bridge as the passageway for imports or exports. Even now, 24 per cent of Gaza was restricted; anything that moved in this area was “shot, killed, or destroyed”.

The United Nations had a responsibility, speakers stressed, urging the United Nations not to force Palestine to accept bilateral negotiations with Israel. Jerusalem, water, security, borders, they said, were all regional, and not bilateral, issues. The United Nations must assume its responsibility and stand up in the face of the status quo, which was leading nowhere, they said.

As an international law professor, said another, it was very difficult to explain to students how Israel was allowed to be an outlaw nation. He hoped the United Nations would respect fundamental international law, breached by Israel both in times of war and peace. Also, he noted he had not heard of any action against Israel by the International Criminal Court, and he wondered why not.

The Israeli occupation used all ways and means to break down the Palestinian people, said another participant. The Palestinian economy lost millions of dollars due to unemployment and poverty as a result of occupation.

A member of a youth organization worried about a future sovereign State of Palestine in the face of depleted natural resources owing to the occupation.

Unfortunately, replied Mr. Gaylard, international law was only as strong as the Member States of the United Nations wanted it to be, and that came down to the General Assembly and the Security Council. Civil servants “can do some things; can’t do others”. They certainly could not force Governments to do what they were not doing. What civil servants could do was watch, witness, monitor, report and condemn.

He said the Secretary-General had spoken out often in relation to the Occupied Palestinian Territory. Just recently, in Lebanon, he had been asked about settlements and he had said, simply, in one line, that settlements, whether new or old, were illegal. “As United Nations civil servants, we haven’t got an army to back us up, but we do speak,” he said, adding that this Seminar was part of that process, “very much so”. Without the violations, without the settlements, this forum would not be needed, but for the moment, it was.

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For information media • not an official record

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