World Bank: Israeli control of 'Area C' deprives Palestinian economy of $ 3.4 billion a year

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.
"Since 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.

Area C 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.
Last 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.
"This 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 cosmetics.
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."
The effects 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.