Version : Oct 2023
Background
The establishment of the State of Israel (1948) on the largest part of Palestine left the Palestinian Arab economy in a challenging state. The Nakba or the depopulation of Palestine from 1947 to 1949 had a significant economic impact on Palestinians. The Israeli state’s policies of occupation ensured that Palestinian economic development was limited, with the Palestinian economy becoming dependent on supplying cheap labor. The Israeli occupation also tied the Palestinian economy to its own, undermining industrial development and making Palestinian enterprises highly dependent on Israel as the main outlet for their products and source of supplies.
Israeli Policy and Its Impact
Israeli policy towards economic development in the West Bank and Gaza has been marked by a series of constraints that have significantly impacted the Palestinian economy. These constraints have led to a distorted view of economic development when viewed through the lens of occupation.
Land and Water Resources
Israeli policy has led to the taking over of land and water resources, which are critical for the welfare of the Palestinian community. These resources, instead of being protected and developed for the community, have been denied, leading to significant challenges for the Palestinian economy. Israel’s control over water resources in the Occupied Palestinian Territories (OPT) has been consolidated since the occupation began in 1967. 50 years on, Israel continues to control and restrict Palestinians access to water in the OPT to a level neither meets their needs nor constitutes a fair distribution of shared water resources. Palestinians are unable to drill new water wells, install pumps, or deepen existing wells, and they are denied access to the Jordan River and fresh water springs. Israel even controls the collection of rainwater throughout most of the West Bank, and rainwater harvesting cisterns owned by Palestinian communities are often destroyed by the Israeli army.
Agriculture and Industry
The productive sectors, especially agriculture and industry, have been negatively affected under Israeli policy. Instead of receiving support in the form of publicly funded infrastructure, subsidized credit, and protected markets, these sectors have been left to struggle. Israeli settlement farms in the West Bank have been found to use Palestinian child labor to grow, harvest, and pack agricultural produce, much of it for export. The Palestinian people paid a heavy cumulative cost estimated at $50 billion between 2000 and 2020 due to the additional restrictions imposed by Israel in the part of Area C of the West Bank available for Palestinian development. Area C is richly endowed with natural resources, including most of Palestinian agricultural and grazing land. Israel’s control over water resources has led to a situation where Israelis, including those living in settlements, use three times as much water a day as West Bank Palestinians do. This has made it difficult for Palestinian farmers to cultivate even low yields of crops such as wheat, lentils, and chickpeas.
Education System
The educational system, which is crucial for the developmental needs of society, has been deliberately distorted and made irrelevant under Israeli policy. This has further hindered the development of the Palestinian economy. The Israeli government has imposed restrictions on the operation of schools and universities in the West Bank and Gaza. The Palestinian Authority, which took charge of the Palestinian education system after the Oslo Accords in 1993, is severely restricted by the Israeli occupation and does not have the right to build or renovate schools without Israeli building permits. In Gaza, thousands of college-age students are effectively barred from finishing their education because they’re denied permission to leave Gaza to study.
Policy Recommendations:
- Protect and develop critical resources such as land and water.
- Invest in the education system, with a focus on skills development to boost the productive sectors of the economy.
- Promote and nurture local businesses to drive economic growth.
- Improving domestic access to finance for Palestinians and promoting sectors that show promise under current conditions are also key.
- Advocate for policy changes at the global level to allow for the development of the Palestinian economy.
Conclusion
Addressing the impact of Israeli policy on the Palestinian economy requires a multifaceted approach and a concerted effort from all stakeholders, including the Palestinian community, local businesses, the education sector and global leaders.
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