Source: AFP
The war in Gaza is speeding up Israel’s “annexation” of the Palestinian economy, analysts say, which has been stymied for decades by deals that followed the Oslo peace accords.
While the Israel-Hamas war raging since October 7 has devastated parts of Gaza, it has also hit public finances and the wider economy of the Israeli-occupied West Bank.
Israel is clamping down on the Palestinian Authority, which rules parts of the West Bank, by withholding tax revenue it collects on its behalf, economist Adel Samara told AFP.
Palestinian livelihoods have also been hit by bans on workers crossing into Israel and a sharp decline in tourism to the violence-plagued region, including during the quiet Christmas season in Bethlehem.
Source: AFP
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Samara said that “technically, there is no Palestinian economy under Israeli occupation — our economy has effectively been annexed by Israel’s economy.”
The Palestinian economy is largely governed by the 1994 Paris Protocol, which gave Israel sole control of the territories’ borders and with it the right to collect import duties and value-added tax for the Palestinian Authority.
Israel has repeatedly exploited this power to deprive the government of much-needed revenue.
But the war in Gaza has further tightened Israel’s control, Samara said, with most of the customs duties withheld since Gaza’s rulers sparked the war with the Oct. 7 attack on Israel.
Source: AFP
“Without these funds, the Palestinian Authority is struggling to pay the salaries of its civil servants and its operating costs,” said Taher al-Labadi, a researcher at the French Near East Institute.
In February, Norway reportedly transferred about $115 million from Israel to the Palestinian Authority following an agreement to release some of the frozen taxes.
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Almost all Palestinian workers have also been banned from entering Israel to work, increasing unemployment across the territories.
Palestinian Prime Minister Mohammed Mustafa lamented an “unprecedented economic crisis” in which his government’s deficit had ballooned to $7 billion, more than a third of the territory’s GDP according to the latest fiscal figures.
“Collective Punishment”
Source: AFP
The Paris Protocol, like the 1993 and 1995 Oslo accords to which they were signed, was intended to last for five years, until the creation of a Palestinian state.
But the absence of a long-term peace deal means it still rules nearly all aspects of the Palestinian economy.
Investments are also stifled by the protocol, said Samara, who explained that Israel “controls the land, resources and water sources” of the Palestinian territories.
Before any factory or store requiring access to these resources in the West Bank can be built, Israel must grant a permit, he said.
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Israel’s stance has become even tougher under far-right Security Minister Itamar Ben Gvir and Finance Minister Bezalel Smotrich, he said, who are both West Bank settlers.
Critics accuse them of holding Prime Minister Benjamin Netanyahu to ransom by threatening to withdraw support given him by a slim governing majority.
Israeli political analyst Michael Milshtein echoed his view.
Source: AFP
“By not allowing Palestinian workers to enter Israel and withholding Palestinian tax revenue, Ben Gvir and Smotrich aim to overthrow the Palestinian Authority because they see it as the enemy,” he said.
“It’s a way of collectively punishing the Palestinians, who they also see as enemies.”
Milstein said that before Oct. 7, nearly a third of the West Bank’s income came from the earnings of the 193,000 Palestinians working in Israel, according to Israeli figures.
Today, the number of Palestinians working in Israel has fallen to between 8,000 and 9,000, he said.
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“To live with dignity”
But Milstein also pointed to another strand of Israeli opinion, held by centrist minister Benny Gantz and conservative lawmaker Gideon Saar.
Source: AFP
They want to allow the workers to return to Israel to avoid anger that would spark an uprising in the West Bank at a time when Israeli forces are already stretched between Gaza and the Lebanese border, where they are exchanging fire with Hezbollah-backed Iran.
Milstein said he thinks Netanyahu is probably closer to Gantz’s view.
Nasr Abdel Kareem, an economics professor at the Arab American University in the West Bank, argued that the Israeli prime minister is playing a power game.
“Netanyahu is putting pressure on the Palestinians and signaling at the outset that the levers of the Palestinian economy are in (Israel’s) hands,” he said.
“Netanyahu believes he will weaken the authority and make it accept political concessions” when a peace deal is finally to be reached, he said.
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Source: AFP
That strategy may be flawed, Nasr said, because it is based on the premise that letting the Palestinian economy flourish would automatically bring peace to the West Bank.
“Historically, previous uprisings broke out” when times were not hard economically, he said, adding that ultimately Palestinians want a state as much as a healthy economy.
“Palestinians want to live with dignity, but for them this also means liberation and the establishment of a Palestinian state.”
Source: AFP