Palestinian economy paralysed

Palestinians see the blockade as collective punishment

By Mike Donkin in the Palestinian Territories

When the Palestinians began their uprising in mid-September, the economy of their would-be state in the separated territories of the West Bank and Gaza was in a fragile enough condition. Now it is catastrophic.

As the violence continues, Israeli security gets tougher. Goods cannot be moved to market and people cannot move to work.

Gaza is virtually sealed off from the outside world

The United Nations reports that the Palestinians have lost $500m in wages and sales of goods, unemployment has tripled, and three years of progress have been wiped out by the past few weeks of conflict.

Dr Mohammad Shtayyeh, who runs the Palestinian Economic Council for Development, says the Palestinian economy is "paralysed" at every level.

"Internal trade is not there, tourism is not there, there has been damage to agricultural produce," he says.

Sweet turns to sour

A whistle-stop tour of the crisis might start at the Silvana chocolate factory in the West Bank town of Ramallah. One small corner of the production line is operating - few can afford chocolates right now.

Economic crisis

Palestinian losses put at $500m

Destruction of property in violence

Unemployment up from about 11% to about 30%

For the management. the tight cordon drawn up around the West Bank by Israeli troops has brought a downward spiral of lay-offs and losses.

"We face soldiers in the checkpoints, stop and turn back. We are losing money," says one factory manager.

"The workers have taken vacations because we face a financial problem here in the factory, so we can't move."

And for the few workers still employed, getting to the chocolate factory is a nightmare in itself.

Bethlehem expects far fewer tourists this Christmas

"We suffer every day to come to work because the roads are closed," says one worker. "Today I've had to change taxis four times. The situation is really bad.

"I have a lot of children and I have to feed them. If it was up to me I wouldn't go through this terrible journey to get to work."

In Bethlehem, major repairs are being carried out at the best restaurant in town. But, its owner concedes, the restaurant is in the worst location.

"We are right where the clashes are, so we have had a lot of damage done by stones and by bullets," he says.

Room at the inn

"We just don't know when we will be able to open normally again."

Christmas is coming to Bethlehem, of course, and with it normally come tens of thousands of tourists. But there is room enough this year at every inn in town, including the Paradise Hotel.

"We used to have over-booking at this time - October, November and December," the hotel's manager says.

"But because of the problems and because of the siege, all the groups cancelled, so we are empty - nothing, zero."

If things are tough in the West Bank, they are much tougher in Gaza - the one strip of land that the Palestinians should be able to claim as wholly in their control.

There is nothing left, and now I haven't any source of living

Palestinian farmer

For a start, Gaza is virtually sealed off from the outside world. Palestinians who work in Israel cannot get there and imports and exports are frozen.

And even within Gaza there are a score of Israeli settlements whose security Israel's army must ensure. One method is to flatten anything anywhere near them which might provide cover.

I picked my way through the flattened greenhouse frames and spoilt crops of one farmer.

Poverty and despair fuel the intifada

"The Israeli army broke into this field with two heavy bulldozers, protected by tanks," the farmer said.

"They swept over all these plastic sheets and damaged all my vegetables and my palm trees. There is nothing left, and now I haven't any source of living."

Israel would say that to prosper again Palestinians need only stop their violence.

But here they see the economic crisis as a collective punishment by Israel. With half the population now below the UN's Palestinian poverty rate of $2 a day, it is a punishment that is hurting.

The whole idea is to put the intifada down, of course - this will backfire on them

Dr Mohammad Shtayyeh

But Dr Shtayyeh of the Economic Council says it is not a punishment that will even eventually succeed.

"The whole idea is to put the intifada down, of course," he says.

"This will backfire on them. Most of these workers eat if they work and don't eat if they don't work.

"So if they have no other choice but to throw stones, I think they will be added to those who throw stones and consequently the intifada will escalate."