Gaza could become uninhabitable in less than five years in wake of 2014 conflict and ongoing de-development, according to new UNCTAD report
UNCTAD’s report on assistance to the Palestinian people states that Gaza could become uninhabitable by 2020 if current economic trends persist. In addition to eight years of economic blockade, in the past six years, Gaza has endured three military operations that have shattered its ability to export and produce for the domestic market, ravaged its already debilitated infrastructure, left no time for reconstruction and economic recovery, and accelerated the de-development of the Occupied Palestinian Territory, a process by which development is not merely hindered but reversed.
The report highlights the severe crises in Gaza, related to water and electricity, as well as the destruction of vital infrastructure during the military operations in July and August 2014. For example, Gaza’s 1.8 million inhabitants rely on coastal aquifers as their main source of freshwater, yet 95 per cent of this water is not safe to drink.
The report also estimates the direct losses (excluding people killed) of the three military operations that took place from 2008 to 2014 to be close to three times the size of Gaza’s local gross domestic product. However, the total cost may be substantially higher once indirect economic losses are included and lost future income streams from destroyed productive capacities are added.
In addition to the 500,000 people who have been displaced in Gaza as a result of the most recent military operation, the report estimates significant economic losses, including the destruction or severe damage of more than 20,000 Palestinian homes, 148 schools and 15 hospitals and 45 primary health-care centres.
As many as 247 factories and 300 commercial centres were fully or partially destroyed. Serious damage was inflicted on Gaza’s sole power plant. The agricultural sector alone suffered $550 million in losses.
It is estimated that, even before the military operations in July and August 2014, Gaza’s electricity supply capacity was not enough to meet 40% of the demand (2012 figures). The electricity and energy crisis is exacerbated by the fact that the Palestinian National Authority is not permitted to develop and use the offshore natural gas fields discovered since the 1990s on Gaza’s Mediterranean coast.
In 2014, unemployment in Gaza reached 44%, the highest level on record. Joblessness was particularly severe among young women Palestinian refugees in Gaza, with more than eight out of 10 women out of work. The economic well-being of Palestinians living in Gaza is worse today than two decades ago. Per capita gross domestic product has shrunk by 30% since 1994.
Food insecurity affects 72% of households, and the number of Palestinian refugees solely reliant on food distribution from United Nations agencies had increased from 72,000 in 2000 to 868,000 by May 2015, representing half the population of Gaza.
The report maintains that even before the three military operations, the economic blockade in place since 2007 had already led to the large-scale cessation of productive operations and loss of employment. Exports from Gaza have been almost completely blocked, imports and transfers of cash severely restricted and the flow of all but the most basic humanitarian goods suspended.
The report warns that donor support remains a necessary but insufficient condition for Gaza’s recovery and reconstruction. Short of ending the blockade, donor aid will remain vitally important but will not reverse the ongoing de-development and impoverishment in Gaza.
Discriminatory policies lie behind new recession in the Occupied Palestinian Territory
With negative economic growth of minus 0.4 per cent in 2014, the economy of the Occupied Palestinian Territory witnessed its first recession since 2006 and a fall in income per capita for the second year in a row. The deteriorating situation is due almost entirely to a range of economic policies imposed on the Occupied Palestinian Territory.
The report reveals that in the first four months of 2015, Israel withheld almost $700 million of Palestinian clearance revenue, which comes from taxes on imports into the Occupied Palestinian Territory, compounding a fiscal crisis for the Palestinian National Authority, on whose behalf Israel collects the revenues.
Since 1997, Israel has withheld Palestinian clearance revenue on six occasions, for a total period of four years and one month, and amounting to $3 billion withheld. At 75 per cent of fiscal funds, this represents the main source of Palestinian public revenue. In addition, Israel does not pay interest on money it does not transfer to the Palestinian National Authority when withholding Palestinian clearance revenue, which is in the range of hundreds of millions of dollars.
In 2014, unemployment in the Occupied Palestinian Territory increased by 3 per cent to reach 30 per cent. Food insecurity also reached historically high levels, with one in three households in the Occupied Palestinian Territory struggling to put food on the table, the report says.
Contributing to Palestinian economic decline is the growing number of Israeli settlements in the West Bank, the report says. In Area C alone (61 per cent of the West Bank), the number of settlers has quadrupled since 1994, to reach more than 340,000, and is now greater than the number of Palestinians.
The report adds that in 2014, the movement of Palestinian people and goods in the West Bank was hindered by 490 barriers installed by Israel, including checkpoints, roadblocks, trenches and the Separation Barrier, which unilaterally redefines the borders of the West Bank away from the internationally recognized Green Line.
The high costs and unpredictability fostered by multiple constraints on the movement of Palestinian people and goods subvert the actual and potential investment of export-oriented firms, as well as firms making and growing products for the domestic market, exacerbating the dependence of the Palestinian people on imports (mostly from Israel) financed by donor aid.
The report emphasizes that – contrary to claims by some observers – the efficacy of donor support has been undermined by occupation, not by poor donor coordination or the Palestinian National Authority and its policies. The burden of humanitarian crises and occupation-related fiscal losses have entrenched and deepened the Palestinian National Authority’s fiscal crisis and diverted donor aid from development to humanitarian interventions.
The fines and high interest rates that Israel imposes on the Palestinian National Authority for any delays in payments for electricity, water and sewage bills is another factor that the report identifies as a source of fiscal stress.
The report concludes that the prospects for the rest of 2015 are bleak, due to political uncertainty, reduced aid flows and the slow pace of reconstruction in Gaza.