Author of study: There will be an immediate 10% reduction in "deep poverty" rate if international aid were restored to PA.
By HILARY LEILA KRIEGERpalestinian money 298.88(photo credit: AP)
The report of a UN body released Wednesday attacked international sanctions against the Palestinian Authority as hurting the weakest Palestinians and making the poor even poorer.
The overview also said that the period since the outbreak of the second intifada in late 2000 has seen "unprecedented" contraction of the economy, declining incomes and high rates of unemployment and poverty.
The study on the socioeconomic impact of the financial crisis in Palestinian areas, authored by American-raised economist Salem Ajluni, was sponsored by the United Nations Relief and Works Agency for Palestine Refugees in the Near East.
Ajluni projected that there would be an immediate 10 percent reduction in the "deep poverty" rate if international aid were restored to the PA. He also said that politics generally play a key role in the Palestinian economy. "As political circumstances improve, growth increases," he explained.
Since Hamas came into office this spring, international funding to the PA has been all but halted. According to Ajluni, the PA's 165,000 civil servants, of whom about 70,000 are in the security forces, received only around 40% of their salaries in the first half of 2006.
Since the beginning of the year, there has been an increase of 64.3% of the number of Palestinian deep poor, defined by the report as below $2 a day in consumption of goods, now totalling 22% of all households. Overall, household income in Gaza and the West Bank was estimated to have declined by more than $500 million. Since 2000, unemployment has doubled to 24%, while per capita income fell by about 33%.
"This is an induced crisis, and these are the consequences," said UNWRA Deputy Commissioner-General Filippo Grandi at Wednesday‚s press conference on the report. 'The pressure on the Palestinian Authority has been mainly a policy choice of the international community."
He described the context of the deepening crisis as one of continued work on the separation barrier, further closures and road blocks in the West Bank and Israel military incursions into Gaza, though he made no mention of Palestinian attacks on Israel during this period.
Aljuni said that the situation facing the Palestinians was unique in their history, in that both international aid and Israeli transfers of customs and VAT collected on behalf of the PA were cut off at the same time. Previously, when Israel withheld these funds, the international community filled the gap.
The report pointed out that this action has reversed the trend whereby the Palestinians were one of the highest per capita recipients of international aid. Aljumi said that historically, the Palestinians have received the second-highest level of international aid, with Israel receiving the first.
Aljuni added that if the withheld customs and VAT were taken out of the equation, GDP would actually have risen 1.6% in the first half of 2006. He attributed that to continued growth in the public sector and a 15 to 20% raise in salaries of civil servants - even if they have yet to see most of that money. But that, he said, has created such a relatively large public sector that it would be "unsustainable" even under better financial conditions.
In the meantime, he said that Palestinians had to turn to whatever sources of non-government funding they could for aid, such as UNWRA, Arab charities and their extended families.
"That includes Hamas," he added. "Hamas built its reputation in Gaza by [setting up] fairly efficient and effective social welfare organizations."
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