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Economies of West Bank and Gaza Strip, Post Creation of the PNA

1.3 The Palestinian Economy

1.3.2 Economies of West Bank and Gaza Strip, Post Creation of the PNA

The Palestinian economy saw significant development since 1993, when the ‘Oslo Accords’

was signed between the PLO and Israel, signifying and end to occupation of lands taken or confiscated in 1967. Despite the time limit set for the evacuation of the Occupation, it still exists and continues to change the geographical features of Palestine, namely around Jerusalem, by means of confiscation, demolition, sabotage, opening or construction of bypass roads, setting up the ‘apartheid wall’ (Figure No. 28) and constructing settlements, under several guises, in addition to the daily routine of arrests of citizens for arbitrary reasons. All this exposed the Palestinian cause, in general, and the economy in particular, to many dangers and difficulties. These obstacles result from the increasing right restriction imposed on freedom of movement and transit among the areas of the PNA and with the outside world.

Besides, the policy of closure and the complete isolation imposed on the second half of the Palestinians in Gaza Strip, led to the growing limitations on entering of essential goods and services. Above all, the war Israel launched on Gaza Strip in 2008, left behind destruction of the infrastructure of a lot of agricultural, industrial and commercial capital, leading to deterioration of the social and economic situation in the Gaza Strip (Jaradat, 2010).

The Palestinian economy in the West Bank and Gaza Strip suffers from the policy and procedures of the Israel occupation, clearly aimed at subjugating the Palestinian economy to the Israel economy to serve the Zionist scheme. Israel still controls crossings, the import-export process, and overall operation of the economy of Palestine. That constituted major obstacles in the way of the development of the Palestinian economy (The Strategic Report, 2008:307).

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The Palestinian economy is a services economy, in which the basic sectors were undermined.

No longer found is a substantial role for industry, agriculture, and tourism. Moreover, the Palestinian economy is mainly based on international aid and donations. It suffers from a high unemployment rates, and growing poverty, aggravated by the geographic isolation which weakens patterns of normal economic development (Mikdad, 2008).

The situation of the Palestinian economy is summarized thusly:

1. Economic dependency on Israel: Through policies aimed at stifling Palestinian foreign trade, agriculture and industry, Israel has not only prevented the Palestinian market from competing with Israel products but from even producing their own products, making Palestine a consumer market for Israeli goods. Furthermore, the Paris Agreement, which set plans for economic relationships, between Israel and the PNA ensured this dependency to Israel.

2. Infrastructural Weakness: Israel has neglected creating an infrastructure in the Occupied Territories while imposing high taxes on any potential Palestinian industries. Diaspora returnees have not been encouraged or given resources towards the development of the infrastructure of Palestinian Territories. In addition, the systematic destruction of what infrastructure exists, and the inability of the PNA to set up and implement a plan to repair the infrastructure despite large amounts of money assigned for this purpose, has also ensure there was no infrastructure to speak of.

3. High Unemployment and Inflation: Israel policies of closure and blockade, in addition to control on crossing points and boundaries, have kept job creation minimum and prices of goods high, due to high transport costs.

4. Corruption and Cronyism: Financial and administrative corruption, increased after the creation of the PNA, where monopolies were imposed while many investors were extorted into participation in strategic investments, by particular executives. Corruption also came in the form of financial and administrative dishonesty and policies of strategic promotion and employment, while wasting the public money, made easy by the result of lack of transparency and accountability.

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5. Budget Deficit of the Public Sector: The balance of the PNA has witnessed an annual deficit, due to uncontrolled government spending, especially the high increase in the salaries of the public sector reaching some 70%-90%.

6. Unsuitability of Legal and Investment Environment: Because of the large deformities resulting from the Israeli practices, deteriorating security situations, and corruption hampering natural development of the investment sector, there was no adoption of any policy supporting local producers, in addition to the absence of protectionist policies.

These factors contributed to the inability to attract foreign investments.

7. Geographic and Movement Issues: The absence of the freedom of movement and transport, due to the geographical isolation resultant of roadblocks, inspection points, isolation of villages and cities from each other, settlement construction, treacherous roads, and the apartheid wall have ensured a complete lack of mobility and transport.

8. Limitations on the Gazan Economy: Palestinian inabilities to control borders and crossing points, despite the unilateral Israeli withdrawal from the Gaza Strip, at the same time, the Palestinian were prevented from operating seaports and the repairing and operating their airport, which hampered trade and transport of people and capital.

9. Natural Resources: Limited natural resources and inefficiency in its use in, addition to Israel's continued depletion of the resources available deprived the Palestinians of the ability to exploit natural resources.

10. Dependence on the Foreign Finance and Increasing Debt: The Palestinian relied on foreign finance and debt to finance their own government spending. The PNA did not have clear plan for the allocation of foreign finance and aid.

11. The Blockage on Palestinians: Finally, is the continuous economic blockade on the Palestinian areas, especially on Gaza Strip, which has prevented the import of varied raw materials, building materials and the essential needs like food, medicine, and clothes. The blockade has also prevented Palestinians from reaching out to neighbouring Arab and Islamic partners, aggravating the economic hardships and preventing them from living even the minimum standards of quality of life (Ministry of Women's Affairs, 2010:4).

90 1.4 Political culture in the Palestinian society

It is important to analyze and understanding the political culture of Palestine, being that it representing differing attitudes, tendencies, values, and beliefs. The presence of this range is vital to understand as `are an important indicator of the actual behaviour of the citizens towards political life. Moreover, the political culture constitutes a significant factor to realize the influence of individuals of the society on the political process and their role in civil society and expression of interests and political demands. Political culture also is an indicator of the extent of the efficiency of mobilisation of civil society and ways of organizing and framing their action, so that they may ensure their voices are heard and they are able to express their aspirations, defend interests, practise pressures and influence political life (Al-Zubaydi, 2003:9-10).