According to a report issued by the United Nations Office of the United Nations Special Coordinator (UNSCO), recent confrontations, mobility restrictions and border closures are causing millions of dollars of damage to the Palestinian economy.
The report, issued on 19 October, says confrontations, roadblocks and Israeli checkpoints have disrupted productive activities and the internal circulation of goods. Short-term losses involve reduced wages, output and commercial revenues, and according to UNSCO the internal effects of such disruptions are likely costing the Palestinians some “eight million dollars for each normal working day during the period 30 September-19 October.”
The external closure has also prevented the outflow of Palestinian labor — notably the 125,000 Palestinians working in Israel — at an estimated cost of $3.4 million per day, according to the report. Exports from Gaza have been blocked due to border closures, and UNSCO estimates that losses in agricultural exports to Israel could reach $1.9 million per day.
Palestinian imports from Israel have been negatively affected, since commercial crossings into Gaza have been stopped since 30 September and there has been a “complete halt to goods imports.”
Similarly, trade between Israel and the West Bank has been severely restricted, the report says. “Registered non-agricultural imports from Israel averaged $135.9 million per month in the first half of 2000 or about $5.9 million each working day. Furthermore, direct Palestinian imports from abroad averaged about $3.1mn per day in the first half of the year.”
The destruction of physical assets is difficult to estimate but, says UNSCO, “is almost certainly in the millions of dollars.” Material losses have been caused by Israel’s use of heavy weapons, including rocket fire from helicopter gunship, against numerous buildings and vehicles. Such actions have also destroyed fruit orchards located near flash points.
“Israeli settlers have also engaged in the destruction of private property such as numerous Palestinian trucks used to transport goods to and from Gaza which were located in car parks under Israeli control,” says UNSCO.
Aggregate losses, excluding damage to physical assets, are estimated at $186.2 million for the 22-day 28 September-19 October period alone. “These losses exceed the value of donor disbursements to the Palestinian Authority (PA) during the first half of the year, which were $183 million,” the report notes.
Other non-quantifiable losses include those to the public sector in the form of lost domestic, customs and VAT revenues and those such as increased expenses in the case of the Ministry of Health “to cope with the large number of killed and wounded Palestinians.”
Some of these costs, notes the report, have been covered by emergency assistance provided by donor agencies and NGOs. But the Palestinians are also facing reduced public services and disruptions in capacity-building and institutional development programs and projects, “many of which are supported from donor and multi-lateral sources.” According to the report, the crisis has also practically halted infrastructural development projects, most of which are donor financed.
In the longer term, UNSCO projects that the disruption of labor flows, and notably the disemployment of some 125,000 workers formerly employed in Israel, will temporarily raise the core unemployment rate from about 11 percent in the first half of 2000 to nearly 30 percent. “If such a situation persists, the decline in household incomes will have the secondary effect of reducing domestic purchases of goods and services and thereby further lower income and employment.”
Rates of poverty will also increase, warns UNSCO, which would involve extra spending on social assistance at a time when revenues are falling. The current crisis will also carry a cost as domestic and foreign investors reassess their risk perception of the area, and “this can threaten the short- and long-term growth of the Palestinian (and Israeli) economy and reduce the rate of income and employment growth.” — (MEES)