Jerusalem’s Economic Shift and the Gap between the City’s Arabs and Jews
Since the occupation and unilateral annexation of Arab East Jerusalem in June 1967, Israel has sought not only to annex the city, but also to change its image and demographic balance. Therefore, it is obvious that the economic destruction in Jerusalem must be studied within the framework of the general Israeli policies in Jerusalem. The geopolitical changes that resulted in coercive demographic changes led, in combination with the natural demographic changes in the population, to socioeconomic challenges.
Social, economic and demographic transformations in Palestine in general, and in Jerusalem in particular, are caused both by the Israeli occupation and by natural development. Natural transformations result from population growth, migration, fertility, mortality, technology and new economic spheres, while "occupation-made" transformations have been imposed through displacement and compulsory economic mobility. There are direct and indirect challenges to a healthy economy and the well-being of the population. High population density, limited job opportunities, lack of investment, poor quality of services and unmet service-related needs all have made living conditions extremely difficult and have deprived society of the chance for stability.
In 1948 about 98,000 Palestinian residents left or were expelled from Jerusalem. Since Israel annexed East Jerusalem in 1967, the Palestinians in Jerusalem have been subjected to forced demographic change aimed at tipping the population ratio. In 1967 the population of East Jerusalem was, by low-end estimates (due to the absence of accurate statistics), about 69,000 people. The estimated population in 1991 was approximately 151,000. Since 1997, when the first Palestinian census was conducted, there has been an accurate count of the number of Palestinians in the Jerusalem governorate, which is now comprised of two parts: the area annexed by Israel in 1967 (J1) and the rest of the Jerusalem district (according to previous regional divisions) under Palestinian administration (J2).
Two integrated stages can be highlighted in the Israeli policies towards Jerusalem. The first is based on the segregation of and limitation on Palestinian growth in three dimensions: constraining physical Palestinian expansion, increasing dependence on Israeli resources and linking the population's basic needs with Israel. This was combined with administrative and legal measures to increase the number of Israeli settlers and to decrease the number of Palestinians in Jerusalem. Israel also adopted a policy of demolishing Palestinian houses and separating Jerusalem from the surrounding Palestinian villages, using the structural scheme of the city, bureaucratic procedures at checkpoints, the permit system, physical segregation by the separation wall and strengthening the links between Jerusalem and the surrounding Israeli settlements. The second stage is based on weakening the remaining Palestinian society by undermining the institutional frameworks, deepening the subordination of the Palestinian existence in Jerusalem to Israel's judiciary system and minimizing opportunities to utilize the natural resources.

Recent Statistical Trends

Israel's separation wall adds another challenge to these trends. Approximately 62% of Palestinians in Jerusalem 10 years of age or older have been forced to move out of areas surrounded by the wall, in order to reach educational and health services, to go to work, and for tourism and social and entertainment activities. In addition, some 33% of Palestinians in Jerusalem have changed their place of residence, with 54% of these changing their residence for the first time after the wall was built. The wall's construction resulted in the confiscation of land belonging to 19.2% of Palestinian families in Jerusalem.
Some studies show that the wall has had a major impact on trends in international emigration. Since the construction of the wall, the number of people who are thinking of emigrating has risen by approximately 22% in the Jerusalem governorate. It should be noted that this tendency is much higher in annexed Jerusalem (J1) compared with the rest of the Jerusalem governorate, or J2 (54% of households in J1 compared with 10% in J2). As such, the wall should be viewed as a system forcing isolation, rather than as a solitary physical structure. Along with this wall comes a permit system, specified crossing times and limitations on the freedom of movement. Combined studies show that the impact of this system is greater in its ramifications for residents' ability to move than those of both the Nakba of 1948 and the Naksa of 1967.

Labor and Wages

The labor force in the Jerusalem governorate is comprised of those who work in Israel, the settlements and the Palestinian territories. The Israeli labor market provided job opportunities for 35.6% of workers in 2004, in comparison with 39.1% in 2002. Residents of the Jerusalem governorate have also suffered from a rise in unemployment since the outbreak of the al-Aqsa intifada in September 2000.
Unemployment rose by 53% between 2000 and 2005, from 11.5% to 17.6%. Comparatively, unemployment in the West Bank rose to 26.8% in 2005, up from approximately 11% in 2000. This high rate is due largely to the closure policy that Israel has imposed on Palestinian population centers since the end of 2000. Relatively speaking, the unemployment rate in J1 is lower than that in J2 because of the relative ease of accessing labor markets in Israel. The unemployment rate in J1 was 15.5% in 2005, compared to 21.9% in J2.
Even though wages in Israel are higher than those in the Palestinian labor market, and although Palestinians in the J1 area are able to move easily within Israel, 43.5% of Palestinian workers receive less than minimum wage - more than four times that of Israelis (10%). Furthermore, the main source of income for 32.2% of Palestinian families in J1 comes from salaries and wages from the Israeli labor market, compared with 14.2% of families in J2.

Poverty and Social Security

Average household consumption and expenditure are major indicators for determining the quality of life and proximity to the poverty line. Even though expenditure and consumption levels in the Jerusalem governorate are better in comparison to other districts in the Palestinian territories, the percentage of Palestinian residents of J1 who live below the poverty line (61.8%) is almost four times that of Israeli residents (17.5%). Nearly 70% of children in J1 live below the poverty line, as opposed to 26.7% of Israeli children, i.e., poverty is three times more prevalent among Palestinian children than among Israeli children.
The above challenges contribute to a growing deterioration in the quality of life, as seen in high poverty rates, low standards of living, low school enrollment rates, low levels and quality of health services and the lack of entertainment and cultural centers. This deterioration is compounded by the isolation, geographic alteration and confiscation of land that has come hand-in-hand with Israel's separation wall. Social, physical and psychological ills are up, including the spread of crime, corruption, deviance, hatred and mental illness. Some studies have shown that 38.3% of families polled in Jerusalem believe that someone in their locality is doing drugs, and 16.1% say that members of their family have been harassed by these people. Twenty percent of families attribute the spread of this phenomenon to the deteriorating economic situation.
Survey results also show that 84.6% of families report being unable to visit socially with relatives who live beyond the wall. Another 56.3% of families report being unable to participate in entertainment, cultural and social activities because of the wall.

The Gap between the City's Arabs and Jews

At the end of 2005, the total population of the Jerusalem governorate (J1+J2) was approximately 324,000. The Palestinian residents of the area annexed to Israel (J1) constituted about 34% of the Jerusalem municipality (following the Israeli-defined borders of the Jerusalem municipality). Israel has acknowledged its desire to ultimately lower the percentage of Palestinian residents of the Jerusalem municipality to just one-fifth of the municipality's total population (22%).
In 2005, the population of the Jerusalem governorate constituted approximately 17% of the population of the entire West Bank, with 62.2% of Jerusalemites living in the area annexed to Israel's borders after the occupation of 1967. Statistical data indicate that the average housing density in this area today is approximately 1.8 persons per room, as opposed to 1.1 among the Israelis.
The stark imbalance between indicators of social and economic status between the Palestinian and Jewish communities in Jerusalem affects all aspects of social and economic life. For example, statistics show that the average number of children to each Palestinian pediatrics clinic is approximately 69,000, while the average number of Israeli children per clinic is 1,821. The percentage of Palestinian schools equipped with computers is 16.5%, compared with 83.5% of Israeli schools. There is no shortage of classrooms in Israeli schools in Jerusalem, while an additional 650 classrooms were needed in the city's Palestinian schools in 2005. In addition, 40% of Palestinian classrooms were originally designed as houses. There is one public park for every 7,362 Palestinians, compared with one for every 447 Israelis, in their respective areas of the city. Furthermore, Palestinians have no public athletic facilities, while Israelis have 36 facilities. In the Palestinian areas, there are 2,620 buildings that remain unconnected to sewage systems, while only 70 buildings are unconnected in Israeli areas.
The Palestinian Authority is prevented from providing services in the city, while the services offered by Israeli authorities are not distributed equally among the city's residents. These disparities place residents under continuous pressure to leave the city and escape the prohibitions against construction and the high costs of obtaining a building permit (between $25,000-30,000). According to a special study conducted by Meir Margalit, a former Jerusalem councilman, the cost of a building license in Palestinian areas for a 200-square meter apartment runs at NIS492,109 (nearly $100,000, an exorbitant fee given Palestinian earning potential). This fee does not include additional required fees for connecting the property to the sewage system or for paying lawyers. This means that the cost of obtaining a building license might exceed the cost of the actual construction.

Palestinian Resistance to Israeli plans

The Palestinian vision in resisting the Israeli plans in Jerusalem is based on the political and legal bases concerning Jerusalem among the PLO resolutions, Arab summits, United Nations General Assembly resolutions and the Arab position on the Security Council resolutions. The operational realization of this vision was affected by the actual sovereignty on the ground, the generally supportive but often complacent Arab role and the changeable international position regarding the political and legal status of Jerusalem. The Palestinians relied on strengthening the institutional frameworks, raising and reviving religious and national feelings and mobilizing international support to put more pressure on Israel. But the conflict in Jerusalem was imbalanced. The Palestinian efforts were loyal but achievements on the ground remain modest due to a lack of organization and coordination.


The Palestinians in Jerusalem have been subjected to Israel's systematic policies of discrimination. These policies weakened Palestinian identity and downgraded Jerusalem from a resource city for the whole West Bank to a city in need of development aid at the institutional level and of humanitarian aid at the population level. They also weakened the Palestinian infrastructure and replaced the Palestinian economy with the Israeli economy. As a result, they diminished the role of the Palestinian institutions in providing basic services and increased the emigration of persons and institutions outside the city. These policies have created a large socioeconomic gap between the Palestinian and Israeli residents of Jerusalem. Despite all this, the Palestinians still remain in Jerusalem demographically and economically; they cannot be neglected or ignored. Therefore, it is Israel's responsibility to ensure social, economic and demographic justice as a key element for coexistence and prosperity in Jerusalem.


Al-Shamishi, Maytha'. Population Policies and Demographic Transformation in the Arab Homeland, United Arab Emirates University, 2004 (Arabic).
Ghneim, Ahmad. Jerusalem and the Zionist Movement, 2005 (Arabic).
Margalit, Meir. Discrimination in the Heart of the Holy City, Jerusalem: International Peace and Cooperation Centre, 2006.
Shabaneh, Luay. "Jerusalem's Shifting Demographic Profile: A Statistical Reading of the City's Demographic Map," Jerusalem Quarterly, Issue 27. Institute for Jerusalem Studies, 2006.
Shabaneh, Luay. "Forty Years of Occupation… Forty Years of Hindering Development," Impact of Israeli Policies on the Socioeconomic Structure in Jerusalem. Palestine Economic Policy Research Institute (MAS), 2007.
Shtayyeh, Mohammed. The Possibility of Economic Development under Siege, 2005 (Arabic).
Palestinian Central Bureau of Statistics & Badil, Impact of the Wall and its Associated Regime on the Forced Displacement of the Palestinians in Jerusalem, June, 2006.
Palestinian Central Bureau of Statistics, Jerusalem Statistical Abstract No. 7, Ramallah, Palestine, 2006.
Palestinian Central Bureau of Statistics, Jerusalem Statistical Abstract No. 8, Ramallah, Palestine, 2006.
Palestinian Central Bureau of Statistics, Labour Force Survey Database 2000-2004, Ramallah, Palestine, 2006.
Palestinian Central Bureau of Statistics, Palestinian Statistical Abstract No. 6, Ramallah, Palestine, 2005.
Palestinian Central Bureau of Statistics, Social Survey of Jerusalem Database 2005. Ramallah, Palestine, 2005.
Tufakji, Khalil. Jerusalem: The Key to Peace and Freedom, 2005 (Arabic).