Economics Behind the Siege of Ramallah

The ongoing siege of Ramallah by Israeli forces is not just about removing Yasser Arafat, whom Ariel Sharon has accused of siding with terrorists, from power. It is hardly the case that once Arafat is out, Israel will grant the Palestinians whatever they are asking for under their new leader. In fact the current siege is probably much less about “controlling terrorism” and much more about who will have control over natural resources like land and water, and also over human resources.

Control over water and land seems to be the key issue. Ever since the Israelis captured the West Bank and Gaza in the Six-Day War in 1967, they have strictly controlled the water resources in the territories largely because they have become so dependent on Palestinian water emanating from underground aquifers on the West Bank.

West Bank water makes up 30 per cent of the water in Tel Aviv households and is critical to preserving the pressure balance that keeps the salt water of the Mediterranean from invading the coastal aquifers. 50 per cent or more of the water that Israel uses is unilaterally appropriated from water that should fairly go to its Arab neighbours. In Gaza, the Arab population outnumbers approximately 5,000 Israeli settlers by more than 170 to 1. Yet, the Israeli population there enjoys the abundant waters pumped to them while more than one million Palestinians suffer water shortage and are obliged to pump each drop of underground water, polluted by the salty sea waters and the sewage waters. The Israeli government appropriates almost a quarter of Gaza water. Even the New York Times used the word “theft” when in connection with Israel’s appropriation of regional water resources. (“Hurdle to Peace: Parting the Mideast’s Waters” by Alan Cowell; NYT, 10.10.1993 p. 1).

Israel has rarely permitted any new drilling of agricultural wells for water for the Palestinians in the territories and has permitted fewer than a dozen for domestic use. Moreover, the Israelis charge the Palestinians fees that are three times higher what they charge Israelis for water for domestic use (with even higher relative charges in Gaza). In terms of relative GNP per capita, Palestinians pay a minimum of fifteen times more than Israeli consumers.

Israeli farmers have thrived at the expense of their Palestinian counterparts. While Israel has ‘greened the desert’ with citrus orchards, vines and Mediterranean fruits and vegetables, Palestinian farmers have seen their access to water supplies, technology and marketing increasingly being controlled, and land sometimes being expropriated without even any compensation. Since 1967, Israel has confiscated almost 750,000 acres of land from the 1.5 million acres comprising the West Bank and Gaza Strip.

The fresh produce of Palestinian farmers often rots in warehouses because the export permits do not arrive in time or there are restrictions on movements because of security considerations. A few years ago, the European Union became so incensed with the then Israeli government’s obfuscation policy in stalling Palestinian agricultural export access to the European market, that it threatened sanctions against Israeli agricultural exports to the EU. The impediments put by Israel in the way of economic growth of Palestine, by restricting direct Palestinian trade with the rest of the world, have led to increasing dependence of Palestinians on Israel. Palestinian exports to Israel now exceed 80% of the overall Palestinian exports. Similarly the share of Palestinian imports from Israel is 90% of the overall Palestinian imports, making the West Bank and Gaza Strip the second largest market for the Israeli products after the United States.

On the other side, Israel has opened its labour market to the Palestinian workers to exploit their low wages, and control the sources of their livelihood. This enabled Israel to use Palestinian workers as a political card to put pressure on the Palestinian people and its political leadership, the Palestinian Liberation Organization. The percentage of the Palestinian labour working in Israel fluctuates and sometimes reaches as much as 40 per cent of the Palestinian labour force. However, while the Israeli policies have led to reduction of job opportunities in the West Bank and Gaza Strip which has forced huge numbers of Palestinians to work in the Israeli market, since 1993 Israel put restrictions on the Palestinian employment in Israel which consequently led to the fluctuation of the number of Palestinian workers in Israel. To add to the miseries of Arab workers looking for jobs in the region, the Israeli government ratified a decision on February 17, 2002 to bring in 6,000 workers from Thailand to work in agricultural farms.

In addition to all this, Israel has refused to hand over taxes collected on behalf of the Palestinian Authority. The Sharon government also gets billions of dollars as a “stipend” from the US to take care of its war expenses. As a consequent it pays Israel economically to go to war, with peace simply not being profitable enough.

While Israel thrives on its war with Palestine, the Palestinian economy is in shambles. The World Bank estimates the direct physical destruction of Palestine’s public infrastructure by Israel at US $ 600-800 million. The Bank believes most of the US $ 5 billion of investments made possible by international donor aid to the Palestinians over the past eight years has been destroyed. The siege imposed by Israel on the Palestinian territories has cost the Palestinian economy about US $ 5 billion in gross domestic product alone since the eruption of the Intifada. Unemployment in the West Bank has gone up to 35 per cent and in Gaza to 50 per cent. 46 per cent of the Palestinians are now below the poverty line.

The crisis is also taking a heavy toll on social services, with the Palestinian health care system coming under severe strain from the increased burden of caring for thousands of wounded, especially those with debilitating injuries. At the same time, closures have limited access to health care services and impeded the flow of supplies to hospitals.

Education is also hard-hit, with reports indicating that 190 schools have been temporarily closed, while 1,300 students from Gaza have been unable to reach their universities in the West Bank.

Only immediate withdrawal by Israeli forces from Palestinian territory can mark the beginning of the process of recovery of the Palestinian economy.