Economic Suicide

Palestinian economy has been a major victim of the intifada.

GIL SEDAN
Jewish Telegraphic Agency

Jerusalem

S

uppose a miracle takes place and Israelis
and Palestinians stop shooting and resume
talking. Even then, the Palestinian economy
will need at least three years to recover,
according to economic experts at Israel's Defense
Ministry.
"It is not a matter of just saying, 'OK, let's return
to the good old days,"' Lt. Col. Isaac Gurvich, head
of the economic branch of government activities in
the West Bank and Gaza Strip, said this week. "It is
a much more complex process. The wheels will have
to start rolling again, and it will take time."
It may also take some time before Israeli employ-
ers try their luck again with Palestinian workers due
to uncertainty over whether they will be able to
make it to daily jobs — and because of the security
risk they represent.
"As the intifada (uprising) continues, more and
more foreign workers replace Palestinians,"- Gurvich
explained.
"Even if the security situation stabilizes, you can't
send them back to Thailand and Romania
overnight. It will take time before Palestinian
laborers can return."
It also will take time before the tourism industry
recovers, before Israeli shoppers return to Palestinian
towns, and even before Israelis return to gamble at the
Jericho casino in the West Bank.
"The situation is worse than ever," agreed
Reserve Col. Shalom Harari, a former Arab affairs
adviser at the Defense Ministry. "There are almost
no trade contacts."

Politics Vs. Business

Whatever contacts could develop likely would be
vetoed by Palestinian militants. Few dare challenge
the semiofficial boycott the Palestinians have
imposed on Israeli products, even though the
Palestinian population pays the price.
Moreover, even small business ties between Israeli
merchants and their Palestinian colleagues have
come to a halt. Several Israelis who continued to
meet their business partners along the pre-1967
border were murdered — the latest case about two
months ago. Even well-meaning yuppies from Tel
Aviv's Sheinkin Street, the center of Israeli post-
Zionism, have stopped believing in Palestinian
good will since two Sheinkin restaurateurs were
murdered in Tulkarm while lunching with a friend
last winter.
The figures are shocking. According to Israeli esti-
mates, in the past year the Palestinians have lost 28

million work days, the equivalent of $650 million in
income.
The volume of trade between Israel and the
Palestinian Authority has shrunk from $3 billion
prior to the intifada to $2.5 billion in the last year.
"This is unbelievable — half a billion dollars have
disappeared," Gurvich said. "Some 120,000
Palestinians families have lost their main source of
income.
Forty percent of Palestinians now live beneath
the internationally accepted poverty line of $2.10
daily income per person.
Palestinian economists are worried. They know
that they desperately need the Israeli market, at
least in the foreseeable future. According to a recent
Palestinian poll quoted by the Associated Press, only
44 percent of Palestinians — down from 67 percent
just six months ago — advocate a Palestinian state
that does not have economic ties to Israel.
Two weeks ago, 14 Israeli economists and four
Palestinians met at a conference center of
Germany's Konrad Adenauer Foundation, located
in northern Italy, to try to renew the economic dia-
logue.
But it appears there is little the sides can do
beyond talk. Of the 300,000 Palestinians that the
Oslo accords envisioned working in Israel, hardly
12,000 presently have jobs — and 3,000 of those
are in the Erez industrial park on the border
between the Gaza Strip and Israel.
Some 400 Palestinian used to work in Israel's
Gush Katif settlements in the Gaza Strip, but after
a year of relentless violence the settlers are trying to
replace the few remaining Palestinians with Thai
workers.

Blocked Assets

Israel has frozen all Palestinian economic assets.
Customs on imported goods — including gasoline
and cigarettes — as well as the value added tax,
which Israel used to transfer to the Palestinian
Authority, are now being held by Israel until
Palestinian attacks cease.
It is estimated that Israel is holding $250 million
due the Palestinians. Foreign Minister Shimon
Peres recently explained why, saying that Israel
would not finance the salaries of the Palestinian
policemen who have led attacks on Israelis.
The level of cooperation between Israel and the
Palestinians has shrunk to the essential. After many
Palestinian businessmen defaulted on their Israeli
business partners — and Israel had little recourse
— Israeli banks no longer give Palestinian business-
men credit beyond a limited overdraft.
Palestinian checks are unwelcome, and they are
urged to pay in cash.

The Palestinians also depend on Israel for gaso-
line, through the Israeli company Dor Energy. As
soon as a gasoline tanker reaches the Gaza border
checkpoint, the local authorities pay cash.
Oil is one of the few forms of cooperation that
still exists — for the simple reason that Israel is
not willing to break all economic ties with the
P.A., both for economic and political reasons.
Although the Palestinians receive most of their
water from local sources — wells, springs and the
central aquifer — at the end of 2000 they received
from Israel 31.3 million cubic meters of water.
The Palestinians receive all their power from the
Israel Electric Company. In fact, maintenance
work is often carried out by electric company
workers under heavy protection of Palestinian
security.
The P.A. now owes the company $20 million.
Energy Minister Avigdor Lieberman recently sug-
gested halting the power supply until the
Palestinians pay, but the government rejected the
proposal.
There has been one ray of light, however — the
export of Palestinian produce to Israel's fervently
Orthodox community during the shmita year last
year. According to Jewish tradition, Jewish-owned
fields must lie fallow every seventh year, and many
Orthodox Jews will not eat produce from Israel
during that year.
Palestinian farmers continue to use Israeli chan-
nels for their exports. Strawberries grown in Gaza
are exported under Israel's Carmel brand through
the Israeli agricultural export company Agrexco.
And last spring, facing the,threat of hoof-and-
mouth disease, Israel's agriculture minister, Shalom
Simhon, hosted his Palestinian counterpart, Hikmat
Zeid, to discuss joint efforts to fight the disease, and
Israel provided vaccine for Palestinian cattle.

Economic Gap

But the overall economic situation in the territories
is gloomy. On the eve of the intifada, which began
in September 2000, the Palestinian GNP stood at
$2,000 per capita. At the end of this year, it will be
only $1,100 — even less than in neighboring
Jordan.
Take the Israeli GNP of $16,000 per capita, and
one can see the chasm between the two nations.
Some Palestinian economists are determined to
find a silver lining, no matter what.
"Even now, what we see is that the economy may
make or mar the relationship," said Zakkariya al-Qaq,
who attended the Lake Como meeting. "I can't foresee
that any party can ignore the economy"
The meeting in Italy also was attended by Majali
Wahabee, director general of Israel's Ministry of
Regional Development. In an interview, Wahabee
pointed out the gap between militant Palestinian
politicians and more pragmatic Palestinian economists.
The politicians are aware of the need for eco-
nomic recovery, but they give preference to politi-
cal considerations, which have wrought havoc on
the Palestinian population.
Theoretically, the Palestinians could import
products from Jordan and Egypt to replace Israeli
ones, but this has not happened.

❑

11/9
2001

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