Magazine article Washington Report on Middle East Affairs

Economic Costs of the Intifada Grow

Magazine article Washington Report on Middle East Affairs

Economic Costs of the Intifada Grow

Article excerpt

Economic Costs of the Intifada Grow

Colin MacKinnon is a country analyst with the Syracuse, New York-based PRS Group.

We all remember Muhammad al-Durra, the little boy shot dead in Gaza by Israeli soldiers while cowering behind his father, who himself was gravely wounded. In mid-February, after much delay, the Palestinian Authority sent a check to the al-Durra family as compensation. It bounced.

"We received a check for my brother Jamal, who is injured, and his son, the shahid Muhammad," Nail al-Durra, Muhammad's uncle, told the daily al-Sharq al-Awsat. "We discovered at the bank that the check had no cover."

That bounced check is emblematic of the situation in which the Palestinians now find themselves--their economy is close to ruin and their government, if that is an appropriate term for the PNA, is close to bankruptcy.


The U.N. Special Coordinator's Office has produced a report on the economic effects of the conflict, and in mid-February, about the time the al-Durra family's compensation check bounced, UNSCO published the key findings of the report.

The direct economic losses stemming from the conflict are large. In the four months of October 2000 through January 2001, Palestinian gross domestic product fell by half, $907.3 million, and wages were down by three-quarters, $243.4 million. This loss totals 20 percent of the projected GDP for 2000.

According to UNSCO, from October to the end of January the West Bank and Gaza (WBG) was closed off from Israel 75 percent of the time. Almost the whole time tight restrictions on internal movement in the WBG were in effect as well. That is, travel between Palestinian towns and villages in the WBG was impossible. Travel to and from Jordan via the West Bank was cut 29 percent of the time and travel between Egypt and Gaza was cut 50 percent of the time.

Because of the closures, unemployment in the WBG has risen from 11 percent to 38 percent and per capita income has fallen. Palestinian per capita income for the year 2000 had been projected to rise to $2,000. That did not happen. Instead, income for last year will average around $1,600 per person and, depending on events, may fall well below that level this year.

As a natural consequence, poverty is up. The number of individuals living below the poverty line--that is, trying to subsist on $2.10 a day or less, the World Bank estimate for the WBG poverty level--grew by 50 percent in the period October to January, from 650,000 to 900,000 persons. Now 32 percent of Palestinians are below the poverty level.

And, though UNSCO does not try to put a firm figure on the destruction, let us not forget the material damage caused by the violence. The wreckage of public and private buildings and infrastructure and the crop losses (including the destruction of olive and orange groves) must run into the hundreds of millions.

Terje Roed-Larsen, the U.N. Special Coordinator, worries that further economic decline could lead to a breakdown in institutions in the WBG. "I call on the government of Israel to fully lift the closure," he said when announcing the findings of the report.

The UNSCO report does not deal with the customs and tax receipts the Israeli government owes the PNA but will not pay. The total at the end of February was $56 million--about a month's salary for the 115,000 PNA government employees. …

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