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EDITIONS
Thursday, 12 September, 2002, 12:08 GMT 13:08 UK
Palestine's economy 'impossible to fix'
A mother lifts her child through barbed wire placed by Israeli soldiers
Blockades have left the Palestinian economy in tatters
The renewed fighting between Israelis and Palestinians over the past two years has pushed the Palestinian economy into "de-development", a United Nations report has warned.

According to the UN Conference on Trade and Development (Unctad), as much as $2.4bn (1.5bn) has drained out of the economy of the West Bank and the Gaza Strip thanks to closures, mass unemployment, and the flattening of most infrastructure by Israeli tanks and helicopters.

The damage is so extensive that it could prove impossible to fix, regardless of when - or whether - peace is restored.

"The profound changes that have taken place in the functioning of the economy ... are unlikely to be easily reversed even if stability is attained," the report said.

Almost half the population is living on an income below the UN's own poverty threshold of $2 a day.

Blockade

The report placed the lion's share of the blame for the devastation at Israel's door.

It said the restrictions on travel had flattened manufacturing, construction and much of the public service sector.

And the prolonged occupation had also led to "deep-seated structural weaknesses and imbalances" that would make it almost impossible for the Palestinian Authority (PA) to meet either domestic or international demands for reform.

This meant that Palestinians' ability to look after themselves had been exhausted, leaving them entirely dependent on aid and handouts.

And until Israel slackened its stranglehold and stopped writing the rules of its accords to favour its own commercial interests, there was little hope for recovery, the report said.

"The ability of PA institutions to operate without Israeli intervention in areas under PA jurisdiction is a prerequisite for mounting any sustained development," Unctad said.

Fault on both sides?

But part of the responsibility also had to be allotted to the Palestinian Authority itself, the report warned.

The PA was now effectively bankrupt thanks to the blockade and the deliberate Israeli destruction of not only security but public service infrastructure.

Even before that, the Authority had displayed worrying levels of incompetence, with a "weak executive capacity in translating goals and priorities into action".

More seriously, the report said, there were "weaknesses in the budgetary process" - including accounting problems and "fiscal leakage", the standard code words for corruption.


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