Palestinians lament shrinking economy

Leaders say Israeli policies and occupation hit income and entrench territories' dependence on foreign aid

Palestinian leaders claimed yesterday that Israel's occupation was costing their economy at least US$4.35 billion ($5.65 billion), which could otherwise be used to ensure a healthy fiscal surplus and end their dependence on foreign aid.

A 35-page report published by the Palestinian Authority argues that a series of non-security related restrictions on access to natural resources, including water, Dead Sea minerals and farmland, have shrunk the economy of the West Bank and Gaza to about half of what it could be.

The US$4.35 billion is about 85 per cent of the nominal gross domestic product of the Palestinian territories.

Contrary to previous criticisms that the 43-year-old occupation damages Israel's economy because of the huge military costs of maintaining it, the report argues that Israel has gone out of its way to exploit Palestinian resources for its own benefit while imposing constraints designed "to prevent any Palestinian competition with Israeli economic interests".

Hasan Abu Libdeh, the PA's National Economy Minister, said yesterday: "This is the cheapest occupation in the world."

Abu Libdeh said the price tag of the occupation was one of the reasons why its leadership had decided to pursue its bid for recognition at the United Nations.

"It should be clear to the international community that one reason for Israel's refusal to act in good faith as a partner for peace is the profits it makes as an occupying power."

The report, compiled by Abu Libdeh's department and the Applied Research Institute in Jerusalem, with the help of consultants funded by the UN, found that Israel uses 10 times as much of the water from West Bank aquifers as the Palestinians.

Abu Libdeh said that while 620,000 Jewish settlers in the occupied territories, including East Jerusalem, cultivated 6475ha of irrigated agricultural land, four million Palestinians in Gaza and the West Bank cultivated 10,117ha.

The report argues that charges for water and electricity are up to 50 per cent higher for Palestinians.

Among a comprehensive list of other examples, the report says that Israel maintains control of West Bank mining and quarrying - an industry with a potential value of US$900 million a year. Exploitation of minerals and salts from occupied territory along the Dead Sea is estimated to be worth about US$150 million.

Ahava, an Israeli cosmetics maker using Dead Sea products, is an internationally known brand. The report says it is losing US$143 million in Dead Sea tourism. While the report accepts that a smaller part of the lost economic activity is justified by Israel on security grounds, it estimates that the bulk of about US$4.5 million - or 56 per cent of the Palestinians' actual GDP - is lost to Palestinians simply through lost revenue or higher raw-material costs because they are prevented from accessing their own resources. The report argues that its cost estimates are conservative because they concentrate on accessible data. It does not take into account losses from tourism to Bethlehem or East Jerusalem, or from the security prohibition on imports of potentially "dual use" lathe machines, which it says has "probably stifled the development of the whole Palestinian manufacturing sector".

- INDEPENDENT