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Source: United Nations Special Coordinator for the Middle East Peace Process (UNSCO)
Office for the Coordination of Humanitarian Affairs (OCHA)
17 September 2008





UN Report
Ad Hoc Liaison Committee Meeting
New York, 22 September 2008


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1. Overview

In May 2008, the Ad Hoc Liaison Committee (AHLC) meeting in London underlined the importance of reinvigorating a tri-partite approach to improving the Palestinian economy, institutional capacity and people’s livelihoods involving action by the Palestinian Authority (PA), enabling steps by the Government of Israel (GoI), and support from donors. Since then, and despite the persistent humanitarian conditions detailed in this report, the PA has pursued important security and reform efforts. These efforts are the continuation of serious and sustained process of Palestinian self-empowerment. They demonstrate a commendable determination to build the institutions and economy of a future Palestinian State, in conditions of great adversity.

Yet socio-economic conditions have seen little improvement in the West Bank and have further deteriorated in Gaza despite the ceasefire agreement which took effect on 19 June. Overall, unemployment figures remain high, despite a decrease in the West Bank1 and real GDP growth is projected at about 1 percent in 2008, lower than the 3,5% originally projected in the Palestinian Reform and Development Plan (PRDP)2, and obstacles to movement and access to resources continue to discourage investment and economic growth.
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1 PCBS release 15 September 2008: Gaza’s unemployment went up from 29.8% in Q1 to 45.5% in Q2 (ILO definition) and from 35.5% in Q1 to 49.1% in Q2 (relaxed definition). Unemployment decreased in the West Bank from 19.0% in Q1 to 16.3% in Q2 (ILO definition) and from 25.7% in Q1 to 23.2% in Q2 (relaxed definition)
2 IMF: Macroeconomic and fiscal framework for the West Bank and Gaza: Second Review of Progress, September 2008

There has been some improvement in tri-partite cooperation amongst the Government of Israel, the Palestinian Authority and the international community. Successful cooperation has included the preparation and implementation of the Palestinian Investment Conference in Bethlehem in May; the recently improved security cooperation in the Northern West Bank and the conclusion of an agreement in July to enable the launch of a second Palestinian mobile operator. However, such isolated measures will not build a sustainable Palestinian economy as the foundation for a future independent Palestinian state. Tri-partite cooperation needs to be replicated and applied to other areas such as tourism, trade, health and so on. For Palestinian economic development to occur, there must be a significant reduction in movement and access restrictions and development must be allowed in Area C, which comprises around 60% of the land in the West Bank. To further these goals, the UN would welcome the revitalization of the Joint Liaison Committee (JLC) to rebuild confidence and trust between the parties, and encourage further steps in the ongoing negotiations aimed at achieving a viable and lasting peace agreement.

The Quartet Representative’s package of measures announced in May 2008 aims to change the reality on the ground and spur economic growth, ease access and movement restrictions and improve planning and development for Palestinians living in Area C. The three tracks come together in the Northern West Bank where the goal is to support security improvements simultaneously with economic development projects. While progress has been made, in particular in the area of revitalizing economic projects, more remains to be done before the Palestinian people at large can feel a difference in their daily live.

The Quartet’s call in May for a new approach in Gaza has not yet been realized in full. Although the ceasefire has afforded the populations in southern Israel and Gaza greater security, there has been no corresponding improvement in living conditions for the population in Gaza. Imports have slightly increased since the ceasefire, but overall supplies are not sufficient to meet basic needs and the lack of exports continues to gridlock Gaza’s economy. The recent deterioration in the provision of health and education services in Gaza caused by Hamas’ transfer of public sector employees and strikes in response to that, further contributes to a decline in the well-being of the population in Gaza. Qualified staff must be allowed to continue working to ensure access to affordable, reliable and effectively managed basic services. The UN stands ready to provide any support needed and is working to identify solutions.

Looking back over the last four months, Prime Minister Fayyad and his government have consistently made a far-reaching effort in Palestinian reform, despite conditions of adversity. Good results have been achieved in the area of security and public financial management as well as in implementing a series of micro-projects, making a difference in the daily lives of Palestinians. The PA has produced a budget circular for 2009, further integrating its budget and planning procedures and providing training to all line ministries and institutions. Despite its efforts, the PA still faces a fiscal deficit of almost USD 400 million for 2008. If the PA is to succeed in providing services and continuing its reform based on the PRDP - in particular in the security sector - it is critical that funding be predictable and sufficient. Financial assistance should be linked to the positive results delivered by the government and not to the outcome of a yet uncertain political process.

However, progress does not hinge only on predictable and increased donor funds and PA reform commitments. These efforts must be matched by a heightened willingness by the Government of Israel to address its security concerns while substantially easing movement restrictions and granting fair access to a range of resources such as transport, employment, water and land. The number of obstacles to movement has in fact increased since the AHLC last met and stands at around 626 across the West Bank, compared to 611 as of April 2008. In addition, UN staff face growing difficulties in accessing areas of the West Bank and moving in and out of Gaza.

This AHLC meeting takes place in a climate of domestic political uncertainty in both Israel and the occupied Palestinian territory (oPt). It is important that none of these uncertainties deter parties from meeting their commitments and taking concrete action to begin lifting the weight of the occupation and strengthening the Palestinian economy, as well as to ensure reliable and safe basic services and employment for the population in Gaza. Our important development and humanitarian efforts can only fully bear fruit if supported by progress on two key political issues: an Israeli-Palestinian political agreement and Palestinian reconciliation. Ultimately, only a negotiated solution to ending the occupation and realizing the vision of two states living side by side in peace and security can offer a long-term solution to humanitarian issues in the oPt. Gaza and the West Bank must also be peacefully reunited within the framework of the legitimate Palestinian Authority in a manner which allows the peace process to advance.

The World Bank and the International Monetary Fund (IMF) provide reports to the AHLC focusing on the economic situation and the fiscal framework. Complementing their analysis, this report details humanitarian developments in the occupied Palestinian territory over the past four months (May - August 2008). Comparative figures refer to the four months prior to the last AHLC meeting, (January-April) unless otherwise stated. 3
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3 Credit and thanks to OCHA for providing this report with key information on humanitarian affairs in the oPt.
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