Crisis-hit Palestinian economy battered further: UN

Geneva (AFP) - The already faltering Palestinian economy further shrank in 2013 and 2014, even without taking into account devastation caused by the recent conflict with Israel, a UN development agency said Wednesday.

Economic growth slumped from 11 percent in 2010 and 2011 to just 1.5 percent last year, and was set to shrink further, said the UN Conference on Trade and Development (UNCTAD).

"The deterioration of the Palestinian economy, largely rooted in the territory's occupied status, has resulted in weak growth, a precarious fiscal position, forced dependence on the Israeli economy, mass unemployment, wider and deeper poverty and greater food insecurity," UNCTAD said.

The agency, which produces regular studies of the Palestinian economy, underlined that its latest edition did not take into account the impact of the latest Gaza conflict.

But UNCTAD's coordinator for the Palestinian territories, Mahmoud Elkhafif, told reporters that $4.0 billion was a "very conservative estimate" for the cost of rebuilding Gaza.

According to the UN, Israeli military operations in Gaza destroyed or damaged 40,000 homes, 141 schools, 29 hospitals, dozens of factories and vast swathes of farmland in the densely-population territory.

Unemployment is sky-high, at 36 percent in Gaza and 22 percent in the West Bank, and one family in four struggles to feed itself, said Elkhafif.

UNCTAD said Gaza's economy was in a "state of total collapse" even before the summer's fighting.

It blamed the a seven-year blockade on the territory and previous Israeli operations in November 2012 and December 2008

"Exports from Gaza are almost completely banned, imports are severely restricted and the flow of all but the most basic humanitarian goods has been suspended for years," it said.

"Gaza's local economy has been further suppressed by restrictions on the transfer of cash, including dollars and Jordanian dinars, which have stunted its banking sector," it added.

UNCTAD warned of "grave consequences" if the Palestinian economy was not brought back on its feet fast.

Foreign aid alone is not enough, it said, calling for "renewed development efforts through investing in productive sectors and crucial infrastructure so that the productive base is rebuilt."

But a lasting recovery of the Palestinian economy in general will be impossible without a sustained international effort to end restrictions on movement in and access to the West Bank, UNCTAD said.

It also called for the "complete lifting of the Gaza blockade, which has been smothering Gaza's local economy and isolating 1.8 million people from the outside world," it said.

UNCTAD warned of the ongoing "de-development" of the Palestinian economy, reinforced by recurring military campaigns.

It also criticised Israel's total control of the resource-rich "Area C", which covers almost two-thirds percent of the West Bank.

Israel has an effective ban on Palestinian construction in 70 percent of Area C and imposes limits in 29 percent, leaving just one percent for Palestinian development, UNCTAD said.

"Israeli policies in Area C and the ongoing construction and expansion of illegal settlements have altered the West Bank's landscape into an archipelago of disconnected islands," it said.

The number of colonists in the West Bank topped 360,000 in 2012, compared with 800 in 1972, the report underlined.