The Palestinian economy has not been independent for centuries. Like the economies of other Arab countries, for four hundred years, it experienced control, looting and destruction under the Ottoman rule. It then came under British colonial control, followed by the Nakbah in 1948 which uprooted Palestinians from their land. Following the Israeli occupation of the West Bank in 1967, the Palestinian economy fell under the control of the Israeli colonial power. All of this made the already weak Palestinian economy an easy target for mutilation and destruction resulting in deep structural disparities.
By Dr. Nassar Ibrahim
The Palestinian economy has not been independent for centuries. Like the economies of other Arab countries, for four hundred years, it experienced control, looting and destruction under the Ottoman rule. It then came under British colonial control, followed by the Nakbah in 1948 which uprooted Palestinians from their land. Following the Israeli occupation of the West Bank in 1967, the Palestinian economy fell under the control of the Israeli colonial power. All of this made the already weak Palestinian economy an easy target for mutilation and destruction resulting in deep structural disparities.
When the Oslo Accords were signed on 13 September 1993, it was said that Palestine would witness tremendous economic prosperity becoming something like “Hong Kong”. Since that date, many efforts have been made to enable the Palestinian economy, yet we have neither seen a new Hong Kong in Palestine, nor even something much less. In fact, the Oslo Accords and its different annexes; like the Paris Economic Protocol signed on 29 April 1995, and the Cairo Security Agreement signed in 1994, placed the Palestinian people in the grip of a tight triangle, akin to the Bermuda triangle, in which the incoming disappears and the outgoing is never seen again.
The three sides of this triangle are: First; a political blockade established by the Declaration of Principles of the Oslo Accords, which specified that the responsibilities and powers of the Palestinian Authority should not conflict with the interests of the occupation or realities imposed on the ground. Second; the Paris Economic Protocol tightened the control on the Palestinian economy, without leaving an openingfor development or independence. Third; the Oslo Accords eased the burden on the Israeli occupation by giving the responsibility of security in the West Bank and Gaza to the Palestinian security services.
To understand the magnitudeof suffering of the Palestinian people at the economic level requires an awareness of the contexts experienced by this economy and the factors that control it. The first of these factors is the Israeli policies and strategies designed for its control and destruction. These policies began with the occupation of Palestine which were set in place specifically to expel its inhabitants andconfiscate their homes, land, and all natural resources. While furthermore, restructuring their economy to be subordinate to the requirements of the Israeli economy.
Awareness of this reality requires recognizing the equation which controls the relationship between the powerful and sophisticated Israeli economy and the traditional Palestinian agrarian economy. In this equation, the strong economy uses the weak economy in a way that ensures the latter‘s destruction and distorts its structure in order to increase profit for the strong and dominant economy. It is enough here to point out the enormous difference between the Palestinian and Israeli economies taking into account that there is no serious difference in terms of population: the GDP of the Palestinian Authority in 2013 was 5,435.1 million in the West Bank, and $ 2,020.5 million in Gaza (totaling $ 7,455.6 million), while GDP in Israel was $ 290.555. The GDP per capita in 2013 was $ 2,202.2 in the West Bank, and $ 1,187.5 in Gaza (the overall rate of the West Bank and Gaza was $ 3.016), with the average GDP per capita in Israel being $ 36,067.
In light of this perspective, the conditions established by the Paris Economic Protocol are clear. The role of this protocol was to control development of the Palestinian economy in order to prevent any possibility of building a vibrant national economy. "This agreement was not an economic cooperation agreement between the two countries in the literal sense of the word, but an agreement to regulate the relationship of the Palestinian economy with the occupation, and to keep Palestinian economy under the control of the occupation.One of the most prominent features is the continuous control of goods, people, crossings by land, sea and air, and thus the control of exports and imports. Furthermore, the continuous control of the tax revenues to the Palestinian Authority, which make up about sixty percent of local revenues, and the use of the return of this revenue to the authority as a tool to blackmail and subjugate the Palestinian people".
All of these ongoing operations have resulted in a weak and fragile Palestinian economy which is subordinate to the Israeli economy. Furthermore, external financing, according to the International Monetary Fund and the World Bank's terms and conditions, is based on privatization which has increased the economic burden on Palestinian citizens. This process was not spontaneous, but was planned deliberately. In fact, the former Israeli Prime Minister,Shimon Peres, during the first phase of the negotiations included many businessmen and representatives of Israeli economic interestsin the negotatiaing team. The goal of the Israeli businessmen was the transformation of the occupation into a new colonial enterprise in which the Palestinians are unable to be autonomous while ensuring the continued dependence of the Palestinian economy on its Israeli counterpart.
These economic arrangements did not lead to any positive change in the Palestinian economy, but promoted the pattern which had been prevalent since 1967, represented by the unilateral Israeli control of the customs system. Palestinian economic losses from customs revenue as a result of the application of the unilateral customs system has been estimated between 1970 and 1987 in the range of $ 6-11 billion, representing 13% of Palestinian national income.Its is thus possible to assume that this revenue level has risen since 1995, the year when Israel began to transfer customs revenues to the treasury of the Palestinian Authority. The agreements signed between the two parties did not refer to this revenue and did not oblige Israel to return it to the Palestinian treasury. In the same context, a study prepared by the Alternative Information Center and the KAV Foundation indicates that the total amount with bank interest, owed by the State of Israel for Palestinian workers for the period 1970 - 2009 equals $ 8 billion and $ 346,000.
These facts make us aware of the structural problem facing the Palestinian economy despite the launch of several strategic development plans since the establishment of the Palestinian Authority under the title of sustainable development. The result has been a very real decline in the standard of living and the erosion of wages due to higher prices and the increase in unemployment. According to the Palestinian Central Bureau of Statistics(PCBS) report of 2015, GDP in Palestine fell 2.5% in 2014 compared with 2013, resulting in a lower income per capita and of more than 5% of GDP during 2014 compared with 2013. the total number of Palestinian workers in the local labor market has remained stable in 2014 compared with 2013 despite the natural increase of the population. This shows the weakness of the capacity of the local labor market. The unemployment rate meanwhile grew during 2014, to approximately 27% from 24% in 2013.
Finally, the losses suffered by the Palestinian economy are the direct result of the systematic, historical and political process that led to the annexation of the economy to the Israeli economy. It is a deep and long-term process targeting control over natural resources, especially land and underground water, the industry sectors which have been marginalized and subjected to the requirements of the Israeli market and economy, the exploitation of a high proportion of the Palestinian labor force in the Israeli black market; as well as control of the foreign trade; taxation, and financial movement.
Facing these numerous facts and policies is only possible through a radical Palestinian resistant economic strategy as part of the national political and social liberation process. In this context, the Palestinian people must focus on the importance of social solidarity and a resistant economy. This requires an investment of all available capacities; fighting corruption, strengthening social solidarity, good management of human and natural resources with priority on the public sector and public infrastructure. We should resist any attempts that aim to subjugate the basic needs of the people to the mercy of the brutal market governed by the devastating Israeli neoliberal economic approach.
- Zaytuna Center for Studies and Consultancy - Beirut 2015.
- Zaytuna Center for Studies and Consultancy, Beirut, 2015.
- Selby, 2003: 9-76, 7-95.
- Gordon, 2008 p.186. Sher Hefer. Political Economy of the Israeli Occupation: The Exploitation as a Tool for Repression. Pluto Press, London, 2010
- Hanna Zohar, Sher Hefer. State of Israel Owes Billions of Shekels for Palestinian Workers. 2010, p. 7.