Impact on the Palestinian Economy of the Recent Confrontations – UNSCO press release

Press Release

Gaza- 13 February 2001- UNSCO- The UN Special Co-ordinator, Mr. Terje Roed-Larsen, today announced the key findings of an updated report on the social and economic impact of the continuing conflict and closure policy.

Mr. Larsen said that his report estimates that the Palestinian economy has suffered GDP losses of over $900 million since the onset of the crisis. In addition, there have been labour income losses of over $240 million. The total loss is estimated at $1,150 million – 20% of the projected GDP for the year 2000. Each day is causing an additional US$ 8.6 million in losses. Also, infrastructure damage, the cost of caring for over 11,000 injured Palestinians, fiscal losses and other effects of the closures, caused losses of additional hundreds of millions of dollars.

His report highlights World Bank estimates that 32% of the population is now living in poverty – a 50% increase since the onset of the crisis. He said that for hundreds of thousands of Palestinians, their hopes for peace had been replaced by anger and uncertainty about their future. He said that this had contributed to the continuing instability and violence: “security cannot be built on uncertainty; peace cannot be built on anger.” The Special Co-ordinator said the closure policy had been “collossally counterproductive”: detrimental to Israel’s legitimate security interests and very damaging to the Palestinian economy and society.

The Special Coordinator noted that there had been some encouraging easing of the closures in the last weeks, with a resulting slight decline in the unemployment rate. Nevertheless, he estimated that there were now over 250,000 unemployed persons in the Palestinian Territory – 38% of the work force. He said that he had met with Prime Minister Barak and Prime Minister Elect Sharon and his close aides, and urged them to fully lift the closures.  

He said that in his meetings with Israeli officials, he had also raised the issue of transfer of VAT and customs revenues owed to the Palestinian Authority (PA). He said that the PA was facing an impending fiscal crisis, and that he had asked the Government of Israel to transfer the funds as an urgent matter. He said that no governing authority could exercise full control when it was deprived of the necessary financial resources to provide basic services to its population – including basic law and order services.

Mr. Larsen said that the fiscal situation of the Palestinian Authority should be at the top of the agenda of the international community. He announced that he would be traveling to a number of capitals, along with World Bank and International Monetary Fund officials, to raise awareness of the urgency of the issue.

The Special Coordinator also used the occasion to urge both sides to exercise maximum restraint and caution during the days and weeks ahead. He said that the situation was very volatile. He emphasized that at this stage, violence would only produce a “lose-lose” situation, and encouraged the parties to resume their dialogue as soon as possible.

For more information, please contact:

Mr. Marwan Ali, Media Officer

07-2825017 or 059-403307