United Nations Seminar on Assistance to Palestinian People Analyses Current State, Future of Economy

24 March 2010
GA/PAL/1157

United Nations Seminar on Assistance to Palestinian People Analyses Current State, Future of Economy

24 March 2010
General Assembly
GA/PAL/1157
Department of Public Information • News and Media Division • New York

United Nations Seminar on Assistance to Palestinian People

 

Analyses Current State, Future of Economy

Participants also Discuss Early Recovery, Reconstruction of Gaza

(Received from a UN Information Officer.)

VIENNA, 24 March -- Five experts today addressed the current socio-economic situation in the Occupied Palestinian Territory, including East Jerusalem, and the urgent need to bring relief and reconstruction to the Gaza Strip, during the first plenary meeting of the United Nations Seminar on Assistance to the Palestinian People.

The two-day Seminar, being held under the theme “Building institutions and moving forward with establishing the State of Palestine”, was organized by the Committee on the Exercise of the Inalienable Rights of the Palestinian People.

Mahmoud Eljafari, Dean and Professor of Economics in the Faculty of Business and Economics at Jerusalem’s Al-Quds University, analysed the development of the Palestinian economy over time, noting that the main challenge now was to move away from an income economy enabled by donor funds and remittances to a productive economy.  Palestinians should forego integration with the Israeli economy in favour of integration with regional and world markets, he said.

Tarik Alami of the United Nations Economic and Social Commission for Western Asia (ESCWA) highlighted the impact of the 2008/09 Israeli Gaza offensive on the Palestinian economy, as well that of the continued blockade on the enclave, closures in the West Bank and the expansion of Israeli settlements, particularly in East Jerusalem.

Abdelfattah Abu-Shokor, Chairman of the Economics Department at An-Najah University in Nablus, analysed the Palestinian Authority’s plan for the early recovery and reconstruction of Gaza, but noted that its success hinged on Israel’s lifting its blockade on the territory.

Mahmoud Elkhafif, Coordinator of the Assistance to the Palestinian People Unit of the United Nations Conference on Trade and Development (UNCTAD), analysed what was necessary in order to move towards an economy that could support a viable and sovereign Palestinian State, urging the Palestinian Authority to strive for full membership of the World Trade Organization.

Takeshi Naruse, Senior Adviser at the Japan International Cooperation Agency (JICA), showed plans for developing an agricultural industry in Jericho and the Jordan River Rift Valley that would have outlets to markets in Jordan and the Gulf countries.  JICA would develop the plan under the aegis of the Japanese Government and would use ecologically sound technology.

All the experts stressed that a viable Palestinian economy required an end to the Israeli occupation and a lifting of restrictions.

The panel discussion was followed by statements by the representatives of Indonesia, China and Turkey, who spoke in their national capacities.

Plenary One

MAHMOUD ELJAFARI, Dean and Professor of Economics, Faculty of Business and Economics, Al-Quds University, Jerusalem, noted that, for more than 40 years, the functioning of the Palestinian economy had been subject to the interests, measures and policies of the Israeli occupation.  In that light, breaking up the unfair economic and trade ties between the Occupied Palestinian Territory and Israel was a necessary condition for ensuring economic independence and growth.  In the absence of political and economic settlements, the Palestinian economy was declining, and Israel’s economic shock policies and measures had created challenges and impediments to any improvement.

He said the “twin deficits” -- the budget deficit and the trade deficit -- tended to move jointly, noting that they had increased rapidly over the last three years.  Together they created a savings and investment gap, in which demand for investments was high but there were no savings, he said, adding that the gap between savings and investments also tended to increase over time.  The proportion of imports had increased as well, from 40 per cent in 2000 to more than 60 per cent in 2008.

Remittances had averaged 20 per cent of gross domestic product (GDP) in the period between 1968 and 2007, he said.  In the mid-1980s, as the level of remittances stood at 35 per cent in relation to GDP, remittances had been viewed as the “engine” of the economy, and had generated stable levels of consumption.  That had led to an income economy instead of a productive economy, he said, noting that remittances had gone to imports, mainly from Israel.  Remittance flows were greater than those of foreign exchanges in services, exports and foreign aid.  He said external revenues, including donor grants, had quadrupled between 1999 and 2008 to nearly $2 billion, 90 per cent of which went to financing the current budget.  Those revenues accounted for 40 per cent of GDP and were now the “engine of the economy”.

Under free trade conditions and without restrictions, intensive investment in Palestinian economic infrastructure was the necessary condition for increasing GDP on the one hand and restructuring it on the other, he said.  The rise in labour and capital employment had not been accompanied by any movement in productivity, whether in the private sector or the public sector.  Intensive labour subsectors, such as services, had seen an increase in employment.  Production factors could mostly only be imported from Israel, and the importation of technology stood at a low level.

He said the choice in the future was how to move from engagement with the Israeli economy to integration into regional and international markets while raising exports.  At present, external support was needed to activate the national economy.  As an example, he mentioned that, after 20 days of the Gaza offensive, the European Union and the United States had needed flowers and had therefore forced Israel to allow the export of those flowers from Gaza, which demonstrated that it could be done.  To show the impact of Israeli practices, he said the economy before the first intifada had been double the current one, and warned that if Israeli practices continued, the Palestinian economy would shrink by about a third.

TARIK ALAMI, Chief, Emerging and Conflict-Related Issues Section, United Nations Economic and Social Commission for Western Asia (ESCWA), said the blockade imposed on the Gaza Strip since June 2007 had severely restricted the movement of goods and people.  In addition, the Israeli military had extended a buffer zone into Gaza covering some 30 per cent of the arable land and restricting fishing to three nautical miles, down from six nautical miles previously.  The direct impact was a humanitarian crisis, he said, noting that Gaza suffered shortages of food, medicine, electricity and other necessities, including cash, which had resulted in a 10 per cent increase in unemployment.

The West Bank had suffered some 500 closures in 2009, but they were only one layer of restrictions on movement, he said, pointing out that 22 per cent of West Bank land was deemed closed military zones.  The restrictions also affected the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), which had lost 625 working days as a result.  The separation wall was 723 kilometres long, twice the length of the Green Line, and isolated most agricultural productive land, he said, noting that only 20 per cent of farmers in the closed areas were granted permits.  Once completed, the wall would separate Palestinians from Jerusalem.

The number of Israeli settlers in the West Bank, excluding East Jerusalem, had been estimated at 301,200 in September 2009, constituting a growth of nearly 5 per cent throughout that year, he said.  However, Israeli settlements in East Jerusalem had increased nearly two-fold by April 2008, and more than half of the land appropriated was privately owned Palestinian land.  Israeli settlers also damaged Palestinian property, he said, adding that other Israeli measures included extrajudicial killings, razing agricultural lands, uprooting trees and complete closure of the West Bank.

He said total unemployment in the Occupied Palestinian Territory had reached 31.4 per cent in 2009, and absolute poverty rates had reached 57.3 per cent, according to 2007 figures.  In Gaza, 76.9 per cent of households were under the national poverty line, he said, going on to describe the impact of Israeli measures on other social indicators, such as health, nutrition and food security, education, and water and sanitation.  The damage suffered during “Operation Cast Lead” stood at some 25 per cent of GDP, while 72 per cent of imports in 2008 had come from Israel, he said.  That demonstrated Israel’s use of the Palestinians as a secondary market while restricting their exports to Israel.

The blockade made reconstructions of Gaza impossible, he said.  Investment was at a standstill due to the destruction of Palestinian productive capacity, access restrictions and high political risks.  Conditions in the Occupied Palestinian Territory were tantamount to a humanitarian crisis, he said, warning that the man-made disaster in the Gaza Strip only highlighted the absence of ways to alleviate Palestinian suffering except an end to the Israeli occupation.

ABDELFATTAH ABU-SHOKOR, Chairman, Economics Department, An-Najah University, Nablus, addressed the Palestinian Authority Programme for the early revitalization and reconstruction of Gaza following the Israeli aggression, saying it was based on the principles of rebuilding the enclave while fighting economic stagnation and poverty.  It aimed to revitalize the private sector and civil society; increase employment opportunities, effective coordination and exchange of information among participants; and to work towards sustainable development in general.  Impediments to implementing the Programme included the continuing Israeli blockade; the lack of movement and access imposed by the occupiers; the internal Palestinian division; and the absence of financing.  In order to fund the Programme, it was necessary to open a “unified account”, set up transparent mechanisms to manage aid and establish indicators for monitoring implementation.

In order to measure the effect of the Israeli aggression, data had been collected in several ways, he said, noting that it was now estimated that 1,314 people had been killed and twice that number maimed.  More than 15,000 houses had been destroyed, and the damage to the educational sector, Government infrastructure and the environment, among other things, amounted to $1.326 billion.  The social sector needed $315 million to reconstruct hospitals and provide medical aid.  Schools and other structures must also be reconstructed and educational materials bought.  More than $500 million was needed for the reconstruction of damaged buildings, water treatment plants and communications infrastructure.

The Programme also recommended addressing damage to fishing areas, he said, adding that some $12 million was also needed to help rebuild fishing areas, reconstruct irrigation systems, and repair roads as well as Ministry of Agriculture storage facilities.  Tourism facilities also required reconstruction.  The Government sector needed $68 million for the reconstruction of municipal facilities and commercial markets as well as facilities for non-governmental organizations.

Some $29 million was needed to improve water quality and waste water treatment, as well as for rubble removal and the establishment of new dumping sites, he said.  Although the international community had contributed $1.7 billion so far, an additional $1.15 billion was needed to guarantee the Programme’s success.  However, everything hinged on the lifting of the blockade.

MAHMOUD ELKHAFIF, Coordinator, Assistance to the Palestinian People Unit, United Nations Conference on Trade and Development (UNCTAD), recalled that, prior to the 1994 establishment of the Palestinian Authority, there had been a kind of integration of the Palestinian and Israeli economies, mainly used by Israel to take advantage of Palestinian land, water and labour, while isolating Palestinians from their historical economic partners in the Arab countries.

He went on to say that after Oslo, the Paris Protocol framework for economic relations had been devised as a quasi-customs union in which the Palestinian Authority could not have its own currency and could therefore not develop a monetary or trade policy.  Israel had determined value added tax, collected it and, depending on goodwill, paid it to the Palestinian Authority, he said, noting that in good times, the payment had been just 60 per cent of the figure owed.

The second intifada had led to the erosion of the Palestinian production base, he continued, pointing out that one third of that base had been lost between 2000 and 2005 due to destruction, closure-related overuse and lack of maintenance.  In addition, because of the construction of the wall, the West Bank had lost 15 per cent of its agricultural capacity.  About 15 per cent of the arable land in Gaza had not been available to farmers and the fishing area had been reduced.  Since Palestinians could not produce, they had been forced to import, mainly from Israel.

In the 1980s, Israeli income had been about 7.5 times that of Palestinians and was now about 17 times higher, he said.  The closure policy and the destruction of the agricultural sector had led to a substantial drop in agricultural productivity.  Foreign net transfers came mainly from donor funding, and donor funds were just sufficient to pay for the trade deficit with Israel.

Three different scenarios had been developed in economic models, he said.  The baseline scenario assumed the impact of destruction and depreciation of capital stock as well as continued tight closures.  The second assumed reconstruction under closures, and the third assumed reconstruction amid relaxed closures.  The last scenario showed what the future economy would look like in a sovereign and viable Palestinian State.

He concluded by saying that no matter how much was injected into the Palestinian economy, it would leak out as long as siege remained.  The solution was to rebuild and expand the eroded productive base; to provide the Palestinian Authority with all policymaking tools and instruments; to lift the closures and blockade; and to allow the free movement of people and goods to, from and between Gaza and the West Bank.  Full membership of the World Trade Organization would also be beneficial for the Palestinian Authority, he added.

TAKESHI NARUSE, Senior Adviser on the Middle East and Peacebuilding, Japan International Cooperation Agency (JICA), said that, in his presentation on JICA activities and the Japanese peace initiative in Jericho, the most important points to emphasize had been institution-building with communities in Gaza and the West Bank, and economic growth.  The economy, now dependent on donations, should be shifted to a productive economy for future independence.  Communities were the most important elements for achieving stability, and it would be useless for donors to supply funds unless communities joined in.

He said JICA and the Japanese Government had extended community-based technical cooperation known as the Corridor for Peace and Prosperity to the people of Jericho and the Jordan River Rift Valley, chosen because of its links to both east and west.  Four operational gateways constructed with Japanese assistance, two bridges to the east and two to the west, allowed access to the markets of Jordan and the Gulf countries.

According to the Japanese concept, existing infrastructure was being used to establish an agricultural industry park, he said.  Additionally, the Japanese Government had committed itself to construct solar panels, in accordance with its concept of “eco-industry” in an area where water was precious.  In combination with solar energy and recycled water technologies, industry in Jericho could produce high market-value products, he said, adding that, if successful, the concept might be applicable to other isolated areas in Middle East or sub-Saharan Africa.

Following the presentations and discussion, Government representatives were given an opportunity to address issues arising from this morning’s opening session.

GUSTI AGUNG WESAKA PUJA ( Indonesia) said it was regrettable that, while global leaders would be convening in New York later this year to review progress on the Millennium Development Goals, the Goals were meaningless for Palestinians.  Although they could not develop their economy and institutions, the Palestinians continued to wage their struggle for sovereignty and social and economic normalcy, which Indonesia had always supported.  Today, that support must be made more practical and sustainable, he said, adding that, in order to contribute to Palestinian capacity, the Indonesian Government had conducted training for Palestinian diplomats for two years, despite its limited resources.  In addition, it had pledged to provide support to help 10,000 Palestinians build the political economy and social institutions and ensure the viability of a future Palestinian State.  He also called attention to his country’s hosting of the 2009 United Nations Asia and Pacific Meeting on the Question of Palestine, organized by the Palestinian Rights Committee.

PEIJIE CHEN ( China) said that, thanks to tireless international efforts, both sides had agreed to indirect talks.  However, by announcing the expansion of settlement construction, the Israeli side had eroded the new and fragile trust between Israel and Palestine.  She urged the Israeli side to show a responsible attitude by lifting the blockade and taking concrete measures to improve Palestinian living conditions.  China supported the legitimate rights of the Palestinians and their efforts to build institutions for an independent State.

SEDAT ÖNAL ( Turkey), announcing that his country would host the next meeting of the Palestinian Rights Committee in Istanbul, said the question of Palestine lay at the heart of all problems in the Middle East, and a solution was therefore important in terms of its implications for the region.  The international community must keep the pressure on Israel, so that it would refrain from provocative acts, freeze settlement construction and lift the blockade.  The perpetuation of the current situation in Gaza was dangerous from the humanitarian, political and security points of view.  Turkey remained committed to helping to achieve progress on all tracks, and supported Palestinian State-building and socio-economic development.

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For information media • not an official record
For information media. Not an official record.