Israel’s control over the largest part of the occupied West Bank deprives the Palestinian economy of an estimated $3.4 billion a year, the World Bank reported Tuesday.
This lost potential income is
equivalent to some 35 percent of the Palestinian gross domestic product
in 2011, according to a new World Bank report, "Area C and the Future of
the Palestinian Economy."
The report, released Tuesday, is the
first comprehensive study of the potential impact of the occupation on
economic production in Area C. It blames the Israeli military’s
exclusive control over the territory for undermining the Palestinian
economy and contributing to wide-ranging unemployment.
Area C is where the majority of the West Bank’s natural resources lie,
the impact of these restrictions on the Palestinian economy has been
considerable," the report concludes, and "the key to Palestinian
prosperity continues to lie in the removal of these restrictions with
due regard for Israel’s security."
The report also estimates that
if Area C were to be returned to Palestinian control, government
revenues would increase by $800 million, cutting the Palestinian
Authority's fiscal deficit in half and reducing its crippling reliance
on international aid.
"Rolling back the restrictions would bring
substantial benefits to the Palestinian economy and could usher in a
new period of increasing Palestinian GDP and substantially improved
prospects for sustained growth," the report concludes.
makes up about 61 percent of the occupied West Bank. Under the terms of
the 1993 Oslo Accords between Israel and the PLO, it is under full
Israeli military control.
month, Palestinian Authority Prime Minister Rami Hamdallah announced
that his government needs to raise $500 million by the end of the year
to allow it to continue functioning and pay its employees' salaries.
The PA has faced growing difficulties in paying salaries and paying
off debts over the past two years. In the first half of 2013, the
Palestinian gross domestic product hit 1.9 percent, down from 5.9
percent in 2012 and 9 percent in the years 2008-2011. Foreign aid,
meanwhile, has dropped by half.
slowdown has exposed the distorted nature of the economy and its
artificial reliance on donor-financed consumption," the report said.
To reach the $3.4 billion figure, the World Bank report’s authors said
they had to make "deliberately conservative assumptions" about the
effects of Israeli restrictions on Area C.
They predicted the
benefits of lifting movement and access restrictions as well as other
obstacles to investment and economic activity in Area C. They also
examined potential growth sectors like agriculture, Dead Sea minerals,
mining and quarrying, construction, tourism, telecommunications and
Taken together, "the potential additional output from
the sectors evaluated in this report alone would amount to at least
$2.2 billion annually in valued added terms – a sum equivalent to 23
percent of 2011 Palestinian GDP. The bulk of this would come from
agriculture and Dead Sea minerals exploitation."
would also be felt in reductions of unemployment and poverty rates for
Palestinians across the West Bank, as the "spillover" effects of
increased Palestinian access to Area C would include stronger
infrastructural links in all regions and cities.