UNCTAD report on Palestinian Economy – Report of the Trade and Development Board

United Nations Conference on Trade and Development

Report of the Trade and Development Board

Nineteenth, twentieth, twenty-first and twenty-second

executive sessions and forty-sixth session

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Annex II

DISCUSSION IN THE TRADE AND DEVELOPMENT BOARD

UNDER AGENDA ITEM 6(b):  REPORT ON UNCTAD'S

ASSISTANCE TO THE PALESTINIAN PEOPLE

1. For its consideration of this item, the Board had the following documentation before it:

"Report on UNCTAD's assistance to the Palestinian people (TD/B/46/5).

2. The Acting Coordinator for Assistance to the Palestinian people, introducing the UNCTAD secretariat's report on this item (TD/B/46/5). said that UNCTAD's assistance to the Palestinian people, elaborated in close consultation with Palestine, had become a source of concrete and reliable technical support in terms of promoting the sustained development of the Palestinian economy. The review of UNCTAD's programme of technical assistance to the Palestinian people was presented in the empirical and substantive context in which it operated. The secretariat had also provided a brief update of major trade indicators, which confirmed an acceleration of the deteriorating trend that had begun in the 1980s. This implied serious imbalances that required close policy and technical attention.

3. Despite the challenges to be addressed in reconstructing the Palestinian economy, past years had witnessed important developments in sectors addressed by UNCTAD's technical assistance activities.  UNCTAD's assistance to the Palestinian people had aimed at bolstering Palestinian institutional development and helping to create an enabling environment for the private sector. By mid-1999, the secretariat had been able to secure about 30 per cent of the funds needed for technical assistance activities under implementation or proposed. The secretariat had provided advisory services and/or training in eight areas detailed in the report, with activities fully or partially funded through the regular budget, UNDP, UNITAR and a bilateral source. Meanwhile, technical assistance had also been provided in six other areas, though project funding had yet to be mobilized. In that connection, the secretariat had recently received indications of forthcoming extrabudgetary funding from several States members of UNCTAD for some unfunded technical cooperation activities. Central support functions in the secretariat would also be strengthened soon through extrabudgetary funding of an Associate Expert to assist in delivering technical assistance to the Palestinian Authority. Efforts continued to mobilize extrabudgetary funding from bilateral donors and Arab regional funding organizations. UNCTAD was grateful for the generous support for its technical assistance in this area provided or envisaged by the Governments of Italy, the Netherlands. Norway and the United Kingdom, as well as the ongoing funding provided by UNDP.

4. UNCTAD's activities in the area of assistance to the Palestinian people were closely coordinated with the relevant international organizations, though inter-agency coordination still needed to be improved. The scope of programmed activities had been maintained over the biennium, and a vacant post had been allocated for the Coordinator of Assistance to the Palestinian people, as called for by General Assembly decision 52/220.

5. Recently available indicators helped to provide an initial evaluation of programme impact and had revealed a number of factors which could be cited to attest to the relevance of and demand for UNCTAD's technical assistance, as well as shortcomings that needed to be addressed.  The secretariat would pursue and intensify its assistance to the Palestinian people over the coming biennium, supporting Palestine as it emerged as a distinct actor in the regional and global economic arenas and promoting the integration of the Palestinian economy at the regional and global levels.

6. The representative of Palestine said that the economic conditions of the Palestinian people had continued to deteriorate owing to Israeli economic and political hegemony, put into practice through different means. This came after long decades of Israeli occupation of the Palestinian territory and the systematic degradation of the Palestinian economic and social infrastructure. The secretariat report confirmed the accelerating deterioration in trade that had begun in the 1980s and noted that, since 1996, these chronic problems, which had begun during Israeli occupation, had reached critical levels. The report also confirmed a disappointing feature of Palestinian trade, namely the slow growth of exports and their increasing diversion to Israel.

7. Despite the positive developments connected with the establishment of the Palestinian Authority, economic activities had been adversely affected by a prolonged fall in living conditions, high unemployment and border closures, which led to an internal geographic separation of the occupied Palestinian territory. The current economic situation in the Palestinian territory confirmed once again that the Israeli occupation was the major cause of the territory's poor and deteriorating economic conditions. Such was the logical outcome of foreign occupation, be it in Palestine or elsewhere in the world.

8. The secretariat report was an important document which provided a realistic account, though phrased in polite language, of the economic hardship and strict political constraints faced by the Palestinian people.  The latter continued to suffer from the Israeli occupation and its harsh policies, despite the stalemated negotiations, which had yet to begin to address the most essential issues. As long as Israeli occupation continued in any form, directly or through the maintenance of illegal, Israeli settlements, there was no hope for a sustained improvement in the economic situation or for growth and development of the Palestinian economy. For these reasons, Palestine attached great importance to the assistance provided by the UNCTAD secretariat, and that assistance would continue to be required until the Israeli occupation was ended and the Palestinian people was able to take its own affairs in hand, free from any form of hegemony or external control. In conclusion, he thanked the UNCTAD secretariat for all of its projects of assistance to the Palestinian people.  He hoped that these efforts would continue until the Palestinian people had attained their national goals of liberation and the end of Israeli occupation of the Palestinian territory.

9. The representative of Egypt, speaking on behalf of the African Group, said that the shift in focus of the secretariat programme from research and analysis to technical cooperation as from 1995 was a positive development. The efforts deployed had been based on the broad guidelines provided to the secretariat and the relevant analytical framework. The continued hardships facing the Palestinian people and their economic implications made it imperative for the international community to deepen its efforts to ameliorate the situation and to support the efforts of the Palestinian Authority to establish an economic environment conducive to growth and development. In this respect, it was necessary that UNCTAD's programme of assistance to the Palestinian people be expanded to respond to the needs of the Palestinian Authority.

10. Even though the secretariat's report attested to the efforts expended by the Palestinian Authority in many areas, including institutional frameworks, infrastructure development and trade agreements, much remained to be done.  Despite the negligible improvements in indicators for 1998, the Palestinian economy still faced many challenges, most important of which were the predominance  of small industrial enterprises, low private sector productive investment, a low savings rate and restrictions on the movement of goods and labour.  In addition, the persistent and large balance-of-trade deficit, which had increased by some 300 per cent between 1990 and 1998, further burdened the infant Palestinian economy.  Several measures needed to be taken to tackle these problems, including the introduction of new policies to encourage investment and savings, diversification of the economy, export promotion and technology upgrading.

11. UNCTAD's programme of technical cooperation for the Palestinian people was extremely valuable for the Palestinian Authority.  However, only 31 per cent of the required budget was available, and she called on the international community to finance the programme promptly; to that end, UNCTAD should intensify its efforts in respect of donor co-ordination. In conclusion, she welcomed the intention of the secretariat to appoint a Coordinator for the programme of assistance to the Palestinian people before the end of the year.  The programme had been implemented with half of the envisaged staff resources provided for in the 1998-1999 biennium and required by General Assembly resolution 52/220. The African Group hoped that the Coordinator would be appointed as indicated so as to enable the secretariat to respond to the needs of the Palestinian people.

12. The representative of Israel said that his Government viewed the improvement of the economic situation in the Palestinian Authority areas as an important objective, since the Israeli and Palestinian economies were closely interrelated.  An increase in the standard living of the Palestinians was an important goal for the achievement of good neighbourly relations between the two peoples.  Israel had made a considerable effort to support the Palestinian economy, working along two principal avenues, namely employment and private sector development.  Currently, over 60,000 Palestinians worked in Israel with a permit, as a result of which Palestinian unemployment had been reduced.  Many efforts had been made to promote the Palestinian private sector by encouraging investment, assisting businessmen and contributing to the establishment of industrial zones.

13. Over the past 41 years, Israel's Center for Development Cooperation, MASHAV, had assisted different peoples through technical training and technology transfer, and it was only natural that emphasis be placed on cooperation with the Palestinian Authority.  Accordingly, some 2,400 Palestinian students had already received training in the past few years from MASHAV, covering health, labour, agriculture and enterprise development.  In conclusion, he reiterated Israel's support for UNCTAD's technical assistance to the Palestinians, as long as these activities were in line with Israeli-Palestinian bilateral agreements.  He hope that in the near future Israel could cooperate with UNCTAD in technical cooperation programmes for the benefit of the Palestinians and the region as a whole.

14. The representative of the Islamic Republic of Iran, speaking on behalf of the Asian Group and China, said that the Asian Group had been at the forefront of the initiative to establish the secretariat's programme of assistance to the Palestinian people, beginning at UNCTAD VI. It remained committed to sustaining this programme, at the level of resources mandated by the General Assembly.  The Asian Group had followed closely the work programme, which had matured from analysis and research into a comprehensive range of technical assistance programme that responded to the needs of Palestine.  This programme provided a good example of how UNCTAD could combine its analytical capabilities with limited but well allocated regular and extrabudgetary

resources to deliver relevant and timely technical assistance to developing countries.

15. While technical cooperation was the overriding priority of the programme, it was useful that the secretariat had not abandoned its original objective of providing an update on recent Palestinian economic and trade performance. While recent developments had produced some important benefits for the long-term restructuring of the Palestinian economy, economic hardship, unemployment, poverty, trade bottlenecks and structural imbalances had remained high and in some cases at alarming levels.

16. The secretariat report had provided a helpful birds-eye view of the emerging international consensus on the performance of Palestine in managing its national economy. The growing diversification of import sources would certainly help Palestine to reintegrate into the regional and global economics after decades of occupation and isolation. The concentration of exports on one market and their slow growth pointed to trends that could not be sustained in the face of a trade deficit that had tripled since 1990.

17. However, Palestine had begun to tackle policy shortcomings and technical impediments seriously in order to redress trade imbalances and promote market access for Palestinian exports, attract foreign investment and technology, and enhance its trade and economic status at the bilateral, regional and multilateral levels. In that regard, the Asian Group fully supported the efforts of Palestine to integrate into the multilateral trading system.

18. The international community had a continuing responsibility in respect of the question of Palestine, which had preoccupied the United Nations since its inception. In this respect, UNCTAD had a special role to play. Palestine had benefited from the best of UNCTAD technical assistance and should continue to receive this valuable support in the critical years of nation-building that lay ahead. Finally, in its programme of technical assistance, the UNCTAD secretariat had done a great deal with limited budgetary resources and should receive further funding from donors, both bilateral and multilateral, to ensure the continuity of UNCTAD's special role in the sectors of trade, finance, investment and related services.

19. The representative of Switzerland congratulated the secretariat for the quality of its work, as reflected in its report, and for its assistance to the Palestinian people in the past and in the future. The secretariat had shown great vision with regard to the future activities of assistance proposed for the coming years. In the future it would be important for the secretariat to further coordinate its efforts in the area of trade and cooperation with relevant multilateral and bilateral sources active in the region. Total transparency should be maintained in the secretariat's work, as had been the case in the item under consideration. Regular reporting was required to closely monitor coordination efforts with other international organizations, as well as with experts and non-governmental organizations operating in the field, in order to avoid duplication of work and projects. The Swiss delegation further insisted on the crucial importance of enhancing regional economic integration.

20. The representative of the League of Arab States said that the shift in focus of UNCTAD's programme of assistance to the Palestinian people from research and analysis to technical co-operation was a positive step.  Since 1995, the technical co-operation programme had targeted the trade and services sectors through advisory missions, training and workshops in response to various requests received from several ministries of the Palestinian Authority.

21. The Palestinian Authority had worked hard to develop an economic environment that facilitated the implementation of development plans.  Most important in this regard had been the establishment of separate legislative and executive powers.  The Palestinian Authority had also realised the importance of emphasizing infrastructure, as attested by the Development Plan 1999-2003, which dedicated 48 per cent of capital investment to infrastructure, including vital sectors such as transportation, health and energy.

22. Despite the progress achieved by the Palestinian Authority over the past several years with donor assistance, more needed to be done. Because of a lack of sufficient resources, UNCTAD was unable to implement several projects, and he called on donor countries and UNCTAD member States to augment their support for the programme of technical co-operation for the Palestinian people to allow Palestine to be active in international and regional forums. This was particularly important in view of the fact that during the meeting of the Group of 77 and China in Marrakech, Palestine had officially declared its intention to apply for observer status at the WTO, as a separate customs area.

23. He expressed the hope that the vacant position of Coordinator for assistance to the Palestinian people would be filled promptly, in accordance with General Assembly resolution 52/220 of 12 December 1997, which stressed the need for a coordinator and another officer.  He also welcomed the decision of the Netherlands to fund an associate expect for the programme.  In concluding, he stressed the importance of a just and comprehensive peace in the Middle East for the development and well-being of the peoples of the region.  The Arab States viewed peace as a strategic option.

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