UN study: Israeli military control costs Palestinians $2.5b each year

Report: Israel deprives PA of control over financial resources after failing to implement Paris Protocol

Construction near Efrat in the West Bank (photo credit: REUTERS)
Construction near Efrat in the West Bank
(photo credit: REUTERS)
Israeli military control of the West Bank between 2000 and 2017 cost the Palestinian people approximately $47.7 billion, or more than $2.5 billion annually, according to a United Nations Conference on Trade and Development report published on December 2.
The report, titled “Economic cost of the Israeli occupation for the Palestinian people: Fiscal aspects,” says that if these sums were invested in the Palestinian economy, they would have created two million jobs.
Khaled al-Osaily, the Palestinian Authority’s minister of national economy, told The Media Line that the real figure was probably much higher.
“This figure isn’t accurate, where there are indirect costs of the Israeli occupation that simply can’t be measured,” he said. “Israel views its illegal occupation of the West Bank as a source of income. It’s a profitable project that generates great revenues for Israel.”
Osaily added that the UN and various countries were making tremendous diplomatic efforts to limit Israeli “violations,” saying the Palestinian leadership was engaged in “certain legal preparations” as well.
“I believe the government is working with the International Criminal Court,” Osaily said.
The $47.7 billion cited in the UN report consists of estimated lost public revenues and interest payments over the 18 years in question. It also includes $28.2 billion in estimated accrued interest and $6.6 billion in fiscal revenues lost to Israel.
Nasr Abd al-Kareem, a professor of finance and banking science at the American University in Ramallah, told The Media Line that although the report had great significance, it was not the first time the issue had been brought to light, with the World Bank estimating in 2014 that the Palestinians were losing $3.4 billion annually due to their lack of control over Area C of the West Bank, which is under full Israeli control according to the 1993 Oslo Accords.
Israel, Abd al-Kareem said, “is the main hindrance to Palestinian economic growth, as it controls the main connections of the economy. It blockades the Gaza Strip and impedes trade and the movement of people in the West Bank.”
He added that Israel had undermined water and land resources, destroying farming, the Palestinians’ fundamental profession.
“After [losing] water and land, nothing has been left for agriculture,” he said.
He stressed that based on international estimates, the Palestinian economy would be three times larger if Israel did not control the West Bank militarily.
Abd al-Kareem urged the UN and Palestinian Authority donor countries to act.
“Aid money comes to compensate the Palestinians for the cost of the Israeli occupation, and also to help the PA deal with the budget shortfall it causes,” he said. “The continuation of the occupation means the continuation of the aid money. If they end the occupation, this [need for] aid will end.”
He added that Israel benefits from the aid money, as most consumer products in the Palestinian market came from or through Israel.
“We don’t produce, but we consume,” he stated. “All of this aid money goes back to the Israeli economy or to other economies,” but not to the Palestinian economy.
“The US has to stop its annual $3-4 billion military aid to the Israeli occupation, and it should take its hands off the Palestinians’ national project,” he went on. Yet he does not believe the US leadership’s position on the Palestinian-Israeli conflict will change unless the balance of power changes, “wherein American strategic interests in the region are secured by Arab oil and Arab economies, all while [the US] protects Israel.”
The UN report studied the period beginning in 2000, as that year marked what was supposed to be the end of the transitional period of the Palestinian Authority. The PA was formed as an interim governing body under the Oslo Accords and was meant to be dissolved after no more than five years as part of a final peace agreement.
The so-called Oslo II Accord, signed in September 1995, divided the West Bank into three zones: Area A was to be administered by the PA. Area B was to be administered by both the PA and Israel, with the former overseeing civil affairs, and the latter security. Area C, which contains the Israeli settlements, was to be administered by Israel.
The report attributes the Palestinian financial losses chiefly to the failure to implement the Paris Protocol, which was meant to govern economic relations between Israel and the Palestinian Authority. It was signed in 1994 and incorporated into the Oslo II Accord the following year.
Azmy Abd al-Rahman, spokesperson for the PA’s Ministry of National Economy, told The Media Line that due to this failure, Palestinians have not been able to take advantage of the rich resources in Area C, which, he said, should have been under Palestinian control since 1999. He also cited the 2014 World Bank study regarding Palestinian losses from its lack of control over the area.
“Without the occupation, Palestine would be among the world’s economically developed countries, as its resources are rich and sufficient. We have good economic potential,” Abd al-Rahman said.
“Israel is the reason behind our economic downturn,” he added. “It controls the Dead Sea and also the Jordan Valley, which are very rich in resources.”
The UN report emphasizes that the occupation’s estimated $47.7 billion cumulative cost to the Palestinians would not only have eliminated a PA budget deficit of some $17.7 billion during the same period, but would have generated a surplus nearly twice the size.
Alternatively, it would have enabled the Palestinian government to increase more than tenfold its development spending, pegged at $4.5 billion during the 18 years under review.