Israel pullout 'won't help Gaza economy'

Israel will retain control of Gaza's airspace and coastal waters

Israel's plan to withdraw from the Gaza Strip will not help the territory's devastated economy, the World Bank has said.

The key economic issue remains control of borders - something Israel has said it will retain after the proposed pullout.

"The cause of depression and economic decline in the region is the security closure policy," Nigel Roberts, World Bank director for the West Bank and Gaza, told BBC News Online.

"It is the main engine driving unemployment."

Compete to prosper

Without an easing of Israel's almost continuous blockade of Gaza since the start of the second Palestinian uprising in 2000, there is little hope of increasing investment and trade or reducing unemployment.

"Palestinians need to compete in the outside world if they are ever to prosper," says Mr Roberts.

"The... disengagement plan describes a continuation of the economic and access status quo in Gaza.

The Bank denies it will compensate Israel for leaving illegal settlements

"Of course there are security reasons underlying this - but it is not a status quo that allows for economic growth, or that will attract donors."

The EU previously funded construction of a Palestinian port and airport but both were destroyed by Israeli bombing.

And Israel has said it will also keep control of Gaza's airspace and coastal waters.

Earlier this month, Chris Patten, an EU commissioner for external affairs, said the EU would not provide money to rebuild the facilities unless it received assurances they would not be destroyed for a second time.

In poverty

The World Bank estimates that capital inflows into Gaza dropped to $50m-100m in 2002 from $1.25bn in 1999.

The bank says about 75% of Gaza's 1.4 million inhabitants live in poverty, while unemployment stands at about 30%.

It has been as high as 50%.

"Increasing donor money from $1bn to $2bn can reduce poverty levels by 5-6%," says Mr Roberts.

Over the same period, relaxing security measures "with the same money inflows can reduce poverty by some 20%".

Evaluate, not compensate

On the question of the Jewish settlements in Gaza set to be evacuated, the World Bank denied reports that it would compensate Israel.

Some Israeli media reports have suggested the World Bank might buy the settlements and sell them on to the Palestinians.

"It is not in our mandate," said Mr Roberts, saying this was a political not economic issue.

"What we can do is help the Palestinian Authority evaluate the economic potential of the assets and what is needed for a smooth transfer."

Should the border closures be eased in the future, the Palestinian economy in Gaza may benefit relatively quickly.

"The Palestinians do have several things going for them," says Mr Roberts.

"There are reasonably high levels of education, there is an excellent tradition of entrepreneurship and a lot of the population has a good understanding of the outside world.

"Plus there is enormous good will towards them among the international community."