Forum: Economic and Social Council (ECOSOC) Issue: Measures to improve the economic situation of post occupation Palestine Student Officer: Taing Eaindray Aung Position: Chair Introduction Communities in conflict situations, such as Palestine, are extremely liable to economic and social rights violation. Economic insecurity is a common trait in nations facing or emerging from conflict. Ever since Israel s occupation of the West Bank, including East Jerusalem, and Gaza Strip in 1967, the Israeli government has enforced multiple military and economic measures that have influenced all sectors of the Palestinian economy, ensuing in long-term economic volatilities and, in some cases, irreparable retrogression. The Israeli s restrictions prevent Palestinians from accessing the majority of their land and from using most of their natural resources. They also influence the isolation of the Palestinians from global markets. Furthermore, this has been accomplished in conjunction with stripping the Palestinian government and institutions of any means to multiply or even maintain its policy space and obtain control over its sovereign affairs. Hence, these have inhibited economic growth for Palestine. The current Palestinian economy ranks low among world economies and is highly susceptible to instability. According to the World Bank, the Palestinian economy fits in the category of lower-middle income countries. The key challenges prevalent in the Palestinian economy today are high growth rates of unemployment, restrictions to growth (land attainment), and severe poverty rates. Key Terms Gross Domestic Product (GDP) GDP is the monetary worth of all the finished products and services manufactured within a nation s borders in a detailed amount of time. Oslo Accords [1993 & 1995] The Oslo Accords are a series of agreements between the Israeli government and the PLO. The accords implied the establishment of a Palestinian state. Israel was to abandon its denial of Palestinian claims to sovereignty and Palestinians were to accept that such entitlements were limited to a specific region of the whole territory. The Paris Protocol [May, 1994] Research Report Page 1! of 9!
The Paris Protocol was signed between Israel and PLO which further allowed a Palestinian economy incorporated in and reliant on on the Israeli economy. Israel collects the import taxes on products and transfers to the Palestinian Authority the taxes on goods that were intended for the Occupied Territories. The Gaza Strip The Gaza Strip is a small self-governing Palestinian territory on the Mediterranean Sea s eastern coast. Gaza also comprises the Palestinian territories claimed by the Palestinians as the future sovereign State of Palestine. Since June 2007, Gaza has been governed by Hamas which is a Palestinian Islamic organization. Hence, it was placed under and Israeli and American led international economic and political boycott from that time onwards. The West Bank The West Bank is a land-locked region near the Mediterranean coast of Western Asia and forms the majority of the Palestinian territories and the State of Palestine. It also shares borders of Israel, and to the east, with Jordan. Commodity Market A commodity market is a physical or virtual market for selling, trading, or buying raw or primary products. There are two kinds of commodities: soft and hard. Soft commodities are agricultural products and hard commodities are mined. Export Market It is a foreign country to which goods and services from a particular country are sold. Private Sector A private sector is a section of the national economy that is not under direct state control. History Israeli-Palestinian Conflict After World War II in which six million Jewish people were murdered, more Jewish people wanted their own country. They were given a large region of Palestine, which they considered their traditional home but the Arabs who already lived there and in neighboring countries felt that was unfair and did not agree to the new country. In 1948, the two sides went to war. When it ended, Gaza was controlled by Egypt and the West Bank by Jordan. They contained thousands of Palestinians who fled what was now the new Jewish home, Israel. But then, in 1967, after another war, Israel occupied these Palestinian areas and Israeli troops maintained there for years. Israelis hoped they might exchange the land they won for Arab countries recognizing Israel's right to exist and an end to the fighting. Israel finally left Gaza in 2005 but, a group called Hamas won elections and took control there. Much of the world calls Hamas a terrorist organization as it refuses to recognize Israel as a country and wants Palestinians to be able to return to Research Report Page 2! of 9!
their old home. Since then, Israel has held Gaza under a blockade, which means it controls its borders and limits who can enter and exit. Economic Conditions In the early 1990s, the economic conditions in the West Bank and Gaza Strip worsened as the economic going-on was administrated by the Paris Protocol of 1994. GDP per capita (also for the West Bank and Gaza Strip) decreased by 36% between 1992 and 1996 due to the amalgamation of declining incomes and rapid population growth. The recession in economic activity was also because of widespread corruption in the newly governing Palestinian Authority (PA) and also due to Israeli closure policies in response to security incidents in Israel, which disturbed earlier well-established labor and commodity market relations. The most severe effect of the economic crisis was the rise of incessant unemployment. Labor force Since the 1970s, a significant section of the Palestinian labor force found occupation in the Israeli economy with wages higher than average compared to at home. For 30 years, Israel allowed thousands of Palestinians to work inside the country every day in construction, agriculture, and other blue-collar work. Although allowing these workers inside the country increased collective demand in the Palestinian economy, which raised living standards and local production, the rise in living standards was not yet fully coordinated by the progress of productive capability of tradable goods in the Palestinian economy. This still continued to rely on employment in Israel. Until the mid-1990s, approximately 150,000 citizens (a fifth of the Palestinian labor force) worked in Israel each day. Unemployment is a significant issue in the Palestinian economy. In the 1980s, the average unemployment rates were in general under 5%. By the mid-1990s, they had risen over 20%. In October 1999, Israel allowed the inaugural of a channel between the West Bank and the Gaza strip which refueled a reasonable economic recovery in 1998-99. West Bank In 2007, West Bank s economy improved progressively. Economic growth for the occupied territories increased about 4 to 5% and unemployment declines about 3%. Israeli statistics showed that incomes in the West Bank increased more the 20% in 2008 and trade rose approximately 35%. In 2009, an economic boom initiated with growth reaching 8%, higher than in Israel or the West. Yet, inflation was prevalent 9.9% the same year; hence actual economic growth was negative as purchasing power declined. As of recently in the last 5 years, the Palestinian Authority (PA) has had success in implementing economic and securing reforms and easing some movement and access restrictions by the Israeli government. However, Israeli closure policies still continue to disrupt labor and trade flows, basic commerce, and corroding the productive capacity of the West Bank economy. The PA for the Research Report Page 3! of 9!
predictable future will continue to rely heavily on donor aid for its budgetary needs and West Bank economic activity will depend majorly on the PA s ability to attract such aid. Gaza Strip The Hamas Party won the Palestinian elections in 2006 but came to power in 2007 and claimed that Israel s closure policy, physically and politically, was responsible for the extreme rates of poverty and unemployment and the noticeable decrease in the private sector which was dependent upon export markets. Israel retaliated by blaming Hamas for their actions which led to the implementation of the closure policy. In 2010, Israel eased its closure policy which resulted in progress in some economic sectors although exports from the Gaza Strip were still banned. According to the Israeli Defense Forces, the economy progressed in 2011, seeing a decline in unemployment and a rise in GDP. Key Issues Unemployment The unemployment rate of Palestinians, particularly among the youth population, soared over 25% in 2014 in comparison to the previous year of only 338,300. The corresponding rate for Gaza was the double to that of the West Bank. The youth unemployment rate rose to almost 40% for young men and 63% for young women 2014. More than 70% of Palestinians are under 30 years old and are facing extreme obstacles in finding work after finishing their education. This is mostly due to severe economic restrictions placed by the Israeli government. There is also a rising number of Palestinians with access to the Israeli labor market, with or without necessary permits. However, they often work in unregulated circumstances that tend to be exploitative. Agriculture Since Israeli occupation, the Palestinian agriculture s contribution to the economy has been on the decline. The most prevalent is in the West Bank whose GDP percentage dropped to an alarmingly low rate of 5.1% in 2011. However, the rate of employment, in agriculture, in West Bank has doubled between 1995 and 2006. Contrastingly, agricultural labor productivity has only decreased by falling 50% between 1995 and 2011. These uncharacteristic trends imply that the numerous restrictions on Palestinian access to and investment in the land and water resources of the West Bank, mainly those restrictions functioning in Area C which is exclusively under the control of the Israeli government. Area C contains practically all the land in West Bank appropriate for agricultural production. Poverty Poverty rates in the occupied Palestinian territory remain high and on the increase for consecutive years. This is due to the unstable and falling rate of economic activity, low wages, loss of employment chances due to the Israeli closure policy, reduced employment capabilities of the public Research Report Page 4! of 9!
and private sectors, limited access to natural resources, and the lessening employment opportunities in Israel. The rate and amount of poverty varies between the West Bank and the Gaza Strip. Major Parties Involved and Their Views Palestine Liberation Organization (PLO) The Palestine Liberation Organization, established in 1964, is the embodiment of the Palestinian national movement. It is an extensive national organization dealing with matters regarding the lives of the Palestinians civilians. PLO represents the Palestinian civilian population in the United Nations, the Movement of Non-Aligned Countries, the Organization of the Islamic Conference, and in many other fora. The PLO, although active in trying to establish Palestine s independence, has often been unsuccessful in its attempts at improving the economy especially since it is not financially strong enough to rebel or overturn Israel s economic restrictions. World Trade Organization (WTO) WTO is a global organization which controls international trade. It establishes legal basic guidelines for global trade amongst member nations and hence offers an arrangement for international commerce. In 2005 and 2009, the Palestinian Authority submitted a request for observer status. However, Palestine has yet to be accepted because Israel is one of the founding member nations of this organization and Israel has yet to give in acceptance to this offer. The observer status of the WTO can help Palestine improve its trade policy and will help establish the trade policy in the global trading system. Government of Israel Since Israel s occupation of Palestinian territory, Israel has entrenched themselves into Palestinian economy. Their economic restrictions lack of access to natural resources, forced isolation of Palestine from private markets, and its closure policy have greatly hindered Palestine s economic growth. Furthermore, the Oslo and Paris Accords only further intertwine the two states which mean the decline of Israeli government in recent years has greatly affected not only the Palestinian economy but the civilian population as well. However, Israel needs Palestine just as much to support its only declining economic activity as Israel has the second highest poverty rate of 2015 within the Organization for Economic Cooperation and Development (OECD). Greater Arab Free Trade Area (GAFTA) Palestine plays a significant role in the enhancement of provincial economic and integration of Arab countries through its active contribution and commitments in GAFTA which was born from the Arab League in 1997, with the aim at full liberalization of trades for goods of Arab national origin. Palestine s contribution in GAFTA has lessened the responsibilities of the other Arab nations; hence, this proves beneficial for Palestine as they receive more not only aid but the support of Arab League. Timeline of Relevant Resolutions, Treaties and Events Research Report Page 5! of 9!
1939-45: The Holocaust commences during World War II which consequents Jewish immigration into Palestine. 1947: The UN General Assembly passes Resolution 181 which segregates Jewish and Arab states. 1948: Egypt, Syria, Iraq, Lebanon, and Saudi Arabia declare war on Israel. The war results in a separated Jerusalem and around 650,000 to 700,000 Palestinian refugees. 1949-1950: At the end of the war, Israel holds the majority of the Palestinian Mandate s territory at 78%. 1964: The establishment of the Palestinian Liberation Organization 1967: The Six-Day War commences in which Israel wins over the Gaza Strip, the West Bank, and the East Jerusalem only creating more Palestinian refugees. 1986: The Israel economy suffers an economic recession which greatly affects the Palestinian economy regarding Palestinian labor market, social, and living conditions. 1990: The Gulf War s commencement results in a sharp downturn of Palestinian employment and income as most were employed in the Gulf economies. 1993: Israel and the PLO sign the Oslo Agreements which calls for mutual recognition. The PLO relinquishes violence and the use of terrorism and agrees to review the PLO Charter to eliminate sections discussing Israel s destruction. 1994: Israel and the PLO sign the Paris Protocol again which agrees upon Palestinian economy s dependence on Israeli economy. 1995: The Oslo Accords implement three regions of control in the West Bank; each designated to the Palestine, the Palestinian civilian control and Israeli security control, and Israeli control. 1995: Palestine signs a trade agreement with Jordan establishing a free trade area between them. 1997: Palestinian Authority signs a trade agreement with Egypt with the intention of establishing the economic and technical cooperation agreement in regards to trade. 2005: The Agreement on Movement and Access was signed in hopes of improving Palestine s economic activity. 2006-2007: Hamas s victorious elections results in the economic sanctions against the Palestinian National by Israel of the Gaza Strip. 2010: There is an easing in the blockade in which Israel permits the entry of civilian goods into Gaza but forbids the entry of weapons and duel-use items. In the middle of the year, Israel allowed the entry of all non-military related items. Evaluation of Previous Attempts to Resolve the Issue The Agreement on Movement and Access (AMA) The AMA signed in November sought to liberate the movement of Palestinian goods and people but the key obstacle for Palestinian enterprises remains the closure regime. The dwindling market access and hindered movement are the primary restraints for the businesses, as uncertainties in the Research Report Page 6! of 9!
transport of inputs and products increase costs. However, the conditions promised with the AMA signing has yet to be implemented. Although there is legitimacy of Israel s security concerns, it is challenging to associate between access restrictions and the protection and expansion of Israeli settlement in the West Bank. The implementation of AMA is progress towards stability, not a resultant of it. The Donor Response The aid income of more than 40 donors from the World Bank Group has been considerable; many donors sought creative mediums to help regardless of their boycott of the Palestinian Authority (due to corruption). However, aid is still disjointed and focused on bilateral agreements with donors regarding individual political statuses rather than a shared long-term view on increased economic activity. Hence, donor projects are more affiliated with the donor s requests than with local priorities. Furthermore, starting from 2000s, donor assistance seems to have decreased in conjunction with the deterioration of Palestinian economic activity in bad times and contributed greatly in favorable times. However, donors have been very aware of these negative factors which led to the formation of new aid coordination bodies and multilateral financing mechanisms. Possible Solutions Improving Physical Infrastructure The incapacitated Palestinian infrastructure is a key challenge for a new Palestinian State. It is also necessary in preventing unregulated urban growth that could lead to a rapidly growing population and an amassing rural-urban migration. To offset the undeveloped status imposed on the infrastructure, extensive international attention should be engaged in developing the quality and lowering the cost of infrastructure facilities, such as transportation, electricity, and water. The significance of infrastructure in investing the power should be complemented with their access to credit. This could be accomplished by granting microloans to the poor, hence enhancing their employment opportunities at a low rate of interest. More viable options are to implement labor-intensive programs for a long-term solution to the employment and poverty rates. Furthermore, by training the poor in new skills and teaching them with handling the requirements of the market and labor opportunities only help establish a safe social network that will protect the poor. Enhancement of Human Capital Extreme requests for higher education, in conjunction with the failure of the market in producing sufficient amount of jobs for graduates, have led to declining levels of unemployment. It is necessary for the labor market and the enrichment of labor capacities to enhance the human capital of the poor by giving them quality access to education and job opportunities. This entails advances in career education, access to career information, career advice and guidance, and professional development. There is also major necessity to improve health services. Accomplishing this would empower the poor and help them rise form the poverty demographic. Reducing Dependence on Israel Research Report Page 7! of 9!
The present state of Palestine is too weak for their business to even endure slight competition in international or even domestic markets. It is most probably that this situation will continue until Palestine benefits from an independent national economy. What Palestine needs is a trade policy that is practical and acknowledges the realities of the occupation and the needs of Palestinian business and national development goals. The policy should center on increasing employment and decreasing poverty and laying the foundation for persistent economic recovery. Furthermore, the Paris Protocol s standards represent a barrier to trade; hence the PA should consider designing specific policies to improve trade and foster growth. Bibliography - "Palestine." Center for Economic and Social Rights. CESR, 2016. Web. 23 Jan. 2016. <http:// www.cesr.org/section.php?id=24> - Kanafani, Nu man, and Sahar Taghdisi-Rad. The Palestinian Economy: Macroeconomic and Trade Policymaking under Occupation. United Nations Conference onf Trade and Development, 2012. Web. 23 Jan. 2016. <http://unctad.org/en/publicationslibrary/gdsapp2011d1_en.pdf> - Khalidi, Raja, and Sahar Taghdisi-Rad. The Economic Dimensions of Prolonged Occupation: Continuity and Change in Israeli Policy towards the Palestinian Economy. United Nations Conference on Trade and Development, 2009. Web. 23 Jan. 2016. <http://unctad.org/en/docs/gds20092_en.pdf>. - "Israeli Occupation." Palestinian Mission to the Netherlands. N.p., 2016. Web. 23 Jan. 2016. <http://www.palestine-delegation.nl/the-israeli-occupation/#structure>. - Trade Policies and Strategies. United Nations Conference on Trade and Development. UNCTAD, 2013. Web. 23 Jan. 2016. <http://unctad.org/en/pages/gds/assistance%20to%20the%20palestinian%20people/tradepolicies-and-strategies.aspx>. - Restriction of Movement: The Paris Protocol. B Tselem The Israeli Information Center for Human Rights in the Occupied Territories. B Tselem, 19 Sept. 2012. Web. 23 Jan. 2016. Research Report Page 8! of 9!
<http://www.btselem.org/freedom_of_movement/paris_protocol>. - "Oslo Explained." Aljazeera America. Al Jazeera America, LLC., 13 Sept. 2013. Web. 23 Jan. 2016. <http://america.aljazeera.com/articles/2013/9/13/oslo-accords-explained.html>. - The World Bank. Two Years after London: Restarting Palestinian Economic Recovery. The World Bank, 24 Sept. 2007. Web. 23 Jan. 2016. <http://www.pij.org/documents/palestinian %20economic%20recovery.pdf>. Research Report Page 9! of 9!