The tragic, ongoing violence between Palestinians and Israelis
shields a far greater tragedy currently unfolding in the West Bank
and Gaza Strip: The dismemberment of the Palestinian economy. It is
so pronounced that according to the World Bank, it will take some
20 years to return the Palestinian economy to where it was on the
eve of the current Intifada. The undermining of the economy has
imposed profound pressures on Palestinian society.
The economic transformations that have occurred during the uprising
have been dramatic. The situation is so adverse that during the
last three years, the Palestinian economy has lost all the growth
it had achieved in the preceding 15 years. Real Gross Domestic
Product (GDP) is presently below its 1986 level, having declined by
24 percent in 2001 and by over 22 percent in 20021. Indeed, despite
unprecedented levels of international financial assistance
(amounting to $315 per person per year), the Palestinian economy
has contracted by half2.
The devastated state of the Palestinian economy is a man-made
problem. It is defined primarily by Israel's continued occupation
and usurpation of Palestinian lands. However, it is important to
note that the present state of Palestinian life, be it economic,
social or political, derives fundamentally from a dynamic
institutionalized by the Oslo peace process. The dynamic - closures
and the dissection of Palestinian lands into non-contiguous
entities - and the policies that emanate from it underlie current
conditions, including the erosion of the Palestinian economy and
the weakening of Palestinian society.
The present division of Palestinian areas into at least 50
disconnected enclaves is achieved through: 1) settlement expansion
and the expansion of its infrastructure - notably 250 miles of
settlement roads and the building of three major east-west highways
in the north, central and southern West Bank; 2) checkpoints, over
700 of which are located in the West Bank and Gaza; 3) other
physical barriers including trenches, concrete walls, dirt mounds,
and roadblocks; and 4) closure policy (in effect since March 1993
and never lifted), which restricts and at times completely
prohibits the movement of people and vehicles.
The division of Palestinian territory prevents Palestinians from
moving freely even within the Occupied Territories, from accessing
critically needed medical and educational services, and from
engaging in normal patterns of social and economic life. The lack
of contiguity also militates against the emergence of a unified
territorial base on which to organize a sovereign state and
economy. This fragmentation is only one of the defining features of
the shattered Palestinian economy; two others - the building of the
separation wall and the destruction of Palestine's physical assets
- are also driving the economy's negative transformation.
The Wall
In February 2003, just eight months after construction of the wall
began, an internal analysis by the World Bank revealed that
approximately 75 miles of the wall had already been built through
the northwestern governorates of Jenin, Tulkarem, Qalqiliya and
Salfit3. By August 2003, 87 miles had been completed during a
declared ceasefire by Israel and the Palestinians, and presently
the wall is over 100 miles in length. "The wall is not just a
wall," the World Bank analysis notes. "Depending upon location,
sections will comprise some (or all) of the following elements:
four-meter [12 feet] deep trenches on either side; a dirt path 'to
which access will be forbidden' where potential infiltrators would
be exposed to IDF fire; a trace path to register foot prints; an
electronic warning or "smart" fence; a concrete barrier topped with
barbed wire; a concrete wall rising as high as eight meters [24
feet]; a two-lane military patrol road; and fortified guard towers
placed at regular intervals." Furthermore, the Israeli State
Attorney has indicated that the territory between the Green Line
and the wall will be declared a "Closed Military Zone."
Most significantly, the wall is not being built entirely on the
Green Line. According to a recent UN report, only 11 percent of the
wall runs along the West Bank's border with Israel4. In some areas,
the wall curves nearly four miles into the West Bank, cutting roads
and severing water networks. By curving inward, the wall
incorporates 10 Israeli settlements on its western or "Israeli"
side. A recent Israeli government decision would see the wall move
even deeper into the West Bank to incorporate the Israeli
settlement of Ariel.
Some 95,000 Palestinians live in this same area, wedged between the
wall and the Green Line. These people are, to varying degrees, cut
off from the rest of the West Bank, from essential market outlets
and from the land they have farmed for generations. During the
first phase of construction, 51 Palestinian villages were isolated
from most of their land, and 25 lost access to all of their land, a
critical problem for their future economic survival5. In the
village of Jayyous 2,150 acres - two-thirds of the village's land -
now lie on the "Israeli" side of the wall.
Six months after construction of the wall began, the World Bank
reported extensive physical destruction of agricultural lands and
assets. In a 2002 survey conducted in 53 communities with an
estimated combined population of 141,800, 21,000 acres of olive and
fruit trees (equivalent to 32.8 square miles of land) were
bulldozed, and around 154 acres of irrigated agricultural land
(including greenhouses), 23.2 miles of water networks, and 9.3
miles of agricultural roads were destroyed.
Communities located near the wall will be cutoff from part or all
of their agricultural land, water sources, business assets, urban
markets, public services and extended social networks, resulting in
severe income loss. This is clearly seen in Qalqilya, home to
40,000 people who now have only one point of entry into the West
Bank.
The weaving path of the Wall has placed between 25,000 and 30,000
acres of Palestinian land - most of it farmland, some of it settled
- on the Israeli side, representing a loss to Palestinians of at
least 2 percent of the West Bank thus far. According to the UN, the
Israeli map (aimed perhaps at carving out and encircling the 42
percent [or less] of the West Bank that Sharon has said he is
prepared to cede to a Palestinian state) shows the completed wall
running over 400 miles on a serpentine route including along the
eastern side of the West Bank, totally surrounding 12 Palestinian
communities and cutting the West Bank into 16 isolated enclaves.
Anywhere from 15 to 60 percent of the West Bank - containing some
of the area's most fertile lands - would be effectively annexed to
Israel, isolating or otherwise adversely affecting between 674,000
and 875,000 people.
Physical Damage
Another critical feature of the negative transformation of the
Palestinian economy over the past three years has been the
wide-scale destruction and damage of Palestine's physical
resources, most of which had been financed by the international
community during the Oslo period. These include homes, businesses,
public and private buildings, workshops, factories, vehicles,
roads, sidewalks, schools, clinics, agricultural land and crops,
agricultural infrastructure, water supply networks, waste disposal
and sanitation systems, electricity networks, transformers and
street lighting, and telecommunications equipment. The damage and
destruction of Palestine's capital stock has dramatically weakened
the economy's productive capacity. According to the World Bank, the
West Bank and Gaza had incurred a total loss of $1.7 billion in
total raw physical damage by the end of 2002.
The destruction of housing, often justified for security purposes,
offers a dramatic illustration of Palestine's contracting physical
base. According to the UN Office for the Coordination of
Humanitarian Affairs (OCHA), 40 percent of all Palestinian homes
were either damaged or destroyed by the Israeli military during the
first two years of the uprising. The destruction of Palestine's
physical assets constitutes, in effect, an imposed decline of
productive capacity. If one adds to this the destructive impact of
closure, territorial cantonization, settlement expansion, and
rapidly declining incomes, the result is, according to an October
2003 UN report, the creation of a "subsistence economy heavily
dependent on agriculture and the informal sector in the form of
petty services, and commercial and rent-seeking activities."
A Humanitarian Catastrophe
Widespread unemployment and poverty are the direct and perhaps most
egregious outcomes of the destruction of Palestine's physical and
economic base. Although unemployment and poverty levels rose
steadily during the Oslo period, they have become acute during the
current uprising. Between September 2000 and May 2003, the
unemployment rate rose from an average of 10 percent to over 40
percent respectively, with rates in the Gaza Strip exceeding 50
percent. At present, average unemployment has fallen to 30.3
percent according to the Palestinian Central Bureau of Statistics -
still much higher than before the Intifada - due to Israel's easing
of restrictions on Palestinian workers entering Israel. However,
given the ongoing occupation and Israel's total control over land
and movement, declining unemployment is now, as in the past, a
temporary measure.
In the three years since the second Intifada began, the Palestinian
population has grown by 13 percent, lowering per capita incomes by
46 percent from 1999 levels, to $755 in 20026. The World Bank found
that by September 2002, 58 percent of all Palestinian households in
the West Bank and 54 percent in Gaza had lost over 50 percent of
their income since before the uprising. Between September 2000 and
December 2002, the number of people living in acute poverty
increased from 21 percent of the population (650,000 people) to 60
percent (or 1.9 million people). Alarmingly, over 22 percent of
Palestinian children below five now suffer from malnutrition, a 300
percent increase from 2000. Of these, 9.3 percent suffer from acute
malnutrition, representing an eight-fold increase since 2000. For
the first time, Palestinian families say that food, not employment,
has become their first priority, reflecting their deepening
impoverishment.
The Occupation
The physical, economic, social and psychological destruction of
Palestinian society is real and demonstrable. The rapid contraction
of the Palestinian economy and the erosion of its physical base are
two critical expressions of this destruction. Yet the principal
obstructions to growth are not economic but political. It was the
unwillingness of the donor community to directly confront this fact
during the Oslo period that accounted, in large part, for the
failure of assistance efforts in the West Bank and Gaza despite
massive infusions of foreign aid.
The present political context is extremely adverse. The policies of
the Sharon government - state expansion into Palestinian lands, the
destruction of Palestine's physical base, and displacement of the
indigenous population - are becoming the policy norm. What also
appears increasingly unequivocal is the government's desire to
control Arab land, relinquishing only small parts of it to create,
perhaps, a diminished entity controlled by Israel. The emerging
strategy seems to be one of giving Palestinians more territorial
contiguity within a highly circumscribed or imprisoned area while
diminishing, if not altogether eliminating, their control over the
whole of the West Bank and Gaza Strip (and East Jerusalem). In
order to do this, the government needs to attenuate Palestinian
demands - which it has attempted to do largely through economic
deprivation - and, as Israeli analyst Jeff Halper has argued,
create a malleable leadership that will accept a highly compromised
outcome. If it succeeds, the Sharon government will argue it has
ended the occupation but in a manner that will undeniably maintain
it. The occupation will then be transformed from a political and
legal issue with international legitimacy, into a simple border
dispute, ensuring for both peoples a continued descent into
violence and despair.
* A longer version of this article first appeared in Sara Roy,
"The Palestinian State: Division and Despair," Current History,
January 2004. Reprinted here with permission.
1 United Nations Conference on Trade and Development (UNCTAD),
Report on UNCTAD's Assistance to the Palestinian People, Geneva,
October 6-17, 2003, p.5.
2 The World Bank, Twenty-Seven Months-Intifada, Closures and
Palestinian Economic Crisis: An Assessment, May 2003, pp.
xiv-xv.
3 The data in this section come from an internal analysis by the
World Bank entitled, The Impact of the "Wall" on Affected West Bank
Communities, Draft, Internal Document, February 14, 2003.
4 Greg Myre, "U.N. Estimates Israeli Barrier Will Disrupt Lives of
600,000," New York Times, November 12, 2003.
5 See Christian Science Monitor, August 1, 2003.
6 Ibid, p. 5.
