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JERUSALEM - Israeli restrictions have divided the occupied West Bank into 10 economically isolated enclaves, severing financial links and denying Palestinians access to some 50 per cent of the land, according to the World Bank.
The Washington-based international lending agency, in a report released on Wednesday in Jerusalem,
said Israeli security concerns were "undeniable and must be addressed".
But the World Bank said Israel's West Bank barrier and system of road and zoning restrictions were aimed at "protecting and enhancing the free movement of settlers and the physical and economic expansion of the settlements at the expense of the Palestinian population".
The West Bank and the Gaza Strip have been hard hit economically by a year-old Western embargo of the Hamas-led Palestinian government.
A freeze on direct financial assistance to the Palestinian Authority has prevented it from paying full wages to its work force since Hamas Islamists came to power in March 2006.
The World Bank report said the damage was compounded by Israeli restrictions that prevent Palestinian businesses from functioning and stymie investment.
"Palestinian economic revival is predicated on an integrated economic entity with freedom of movement between the West Bank and Gaza and within the West Bank," said David Craig, the World Bank's country director for the West Bank and Gaza.
According to the World Bank report, Israeli restrictions deny Palestinians access to large segments of the West Bank, including all areas within the municipal boundaries of settlements, the Jordan Valley, East Jerusalem, restricted roads and other "closed" areas.
These restrictions have "fragmented the territory into ever smaller and more disconnected cantons," the report said. "Estimates of the total restricted area are difficult to come by, but it appears to be in excess of 50 per cent of the land of the West Bank."
"While Israeli security concerns are undeniable and must be addressed, it is often difficult to reconcile the use of movement and access restrictions for security purposes from their use to expand and protect settlement activity and the relatively unhindered movement of settlers and other Israelis in and out of the West Bank," the World Bank added.
About 270,000 Jewish settlers live in the occupied West Bank among some 2.5 million Palestinians. The World Court has ruled that settlements built on land captured by Israel in the 1967 Middle East War are illegal.
Israel says the travel restrictions and the barrier, a mix of wire fencing and concrete walls up to 5.5 metres high, stop suicide bombers from reaching its cities.
Israel's closest ally, the United States, has proposed easing restrictions in the West Bank and recently presented a timeline to remove specific checkpoints and roadblocks to Israeli Prime Minister Ehud Olmert.
In return for Israel allowing greater freedom of movement, the US timeline asks Palestinian President Mahmoud Abbas by mid-June to start deploying his forces to halt rocket fire and smuggling by Gaza militants.
It is unclear how hard Washington is prepared to push the parties to complete the list of so-called benchmarks on schedule.
- REUTERS