UN says Palestinian economy ''nearly unsustainable''
The Palestinian economy may be near collapse even with current external funding due to the Israeli blockade of the territories, Terje Roed-Larsen, the UN's special coordinator for the Middle East, said at a press conference Thursday, September 6.
Even with continued funding by the EU of $400 million and the payments by Arab nations through the Islamic Development Bank, Roed-Larsen said, "unemployment rates are back to their 1996 levels and the Palestinian Authority's fiscal basis has become nearly unsustainable."
By the end of the year, half of all Palestinians in the West Bank and Gaza Strip are predicted to be earning less than two dollars a day, a figure that puts them under the UN poverty rate, he said. "The PA's ability to sustain its public payroll is now a key element in sustaining a minimum of welfare in the Palestinian society," Roed-Larsen said.
Israel imposed a blockade on the territories a few days after the uprising against Israeli occupation erupted on September 28. More than 100,000 Palestinians used to work in Israel, and the blockade has had a dramatic impact on the economy.
Palestinian unemployment rates are predicted to soar to nearly 40 percent by the end of the year, affecting over 885,000 people, Roed-Larsen said. He warned that the collapse of the Palestinian economy is not in "Israel's interest," arguing it will only breed "more hatred and violence" and lead to a "situation of anarchy in the territories."
He added that, "donors are not willing to sink hundreds of millions of dollars in the PA forever," and suggested Israel pay the 206 million dollars it is withholding in back taxes.
In a UN report issued on August 21, Roed-Larsen said the crippling blockade of the territories "could lead to a deficit of $371 million, or 22 percent of the 2001 budget".
Larsen said the Israeli blockade was "an ineffective way to prevent terrorism that harms innocent lives," and recommended lifting it.
Roed-Larsen's remarks come ahead of a suggested meeting between Palestinian leader Yasser Arafat and Israeli Foreign Minister Shimon Peres, who has been given the mandate to discuss a ceasefire and the easing of economic sanctions on the territories by Israeli Prime Minister Ariel Sharon.
The UN official also recommended the implementation of the Mitchell report, stating that "a bridge must be built on the pillars of security, economics and politics." — (AFP, Jerusalem)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)