Another reason that the Israel security fence will be bad for the Palestinians - it will increase their already high unemployment. I noted that the Egyptians are reacting with alarm to the proposed closing of the Gaza settlements, as the Gush Katif industrial park is one of the few big employers in Gaza. The Egyptians don't want unemployed Gazans heading their way. It would all be funny if it weren't so sad.
This article discusses details and mentions the many ways in which the PA could have developed the Pal economy during Oslo but chose not to.
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The unemployment fence
By Danny Rubinstein
During the Palestinian Authority's very first years of existence (1994-97), it failed to invest any effort in creating sources of employment in the West Bank and Gaza, meaning Palestinian dependence on the Israeli labor market had to continue. This is the principal conclusion of a study by Ziyonit Fattal Kuperwasser of Bar-Ilan University's Middle East studies department.
So why did this happen? It is doubtful that PA Chairman Yasser Arafat and his people actually wanted continuing dependence on Israel. But even if they did not want it, continued dependence was nonetheless very convenient in many respects for the Palestinian political and economic leadership.
Around 45,000 Palestinians presently work in Israel, 30,000 of them illegally. Prime Minister Ariel Sharon's disengagement plan will sharply cut this number - and also the amount of work that factories in the territories do for Israeli companies. All this spells another serious blow to the Palestinian Authority after those years of failure to reduce economic dependence on Israel
The economic study, which was completed a few months ago, did not address Sharon's disengagement or the separation fence. But anyone who reads it will emerge with some grim conclusions about the economic future of the territories after disengagement.
Fattal Kuperwasser divides economic trends in the West Bank and Gaza prior to the PA's establishment into two main periods. In the first, which lasted from the Six Day War in 1967 through the outbreak of the first intifada in 1987, the ruling concept was economic integration between the territories and Israel.
This period was noteworthy for the complete freedom of movement for West Bank and Gaza residents throughout Israel and the territories. In addition, many Palestinians left the territories during this period (mainly from the West Bank, less from Gaza) to work in the oil-producing Arab states.
In the second period, which began with the first intifada (1987-1991), the first signs of separation between Israel and the territories emerged. That intifada was characterized by repeated strikes and curfews in the West Bank and Gaza that seriously disrupted the regular flow of workers from the territories to their jobs in Israel.
These disruptions worsened during the Gulf War - the winter of 1990-91. That was when the first closures were imposed on the territories, ending the freedom of movement of the Arab residents. It was also when the groundwork was laid for importing foreign workers to Israel to replace Palestinian laborers.
Job places
From the beginning, it was clear that separation and restrictions on the entry of Palestinian workers into Israel would hurt the Palestinian economy far more than it would the Israeli one.
During the period in which there was freedom of movement from the territories into Israel, about one-third of the Palestinian labor force worked in Israel - and since detailed records of entries into Israel were not kept at that time, some estimates put the figure as high as 50 percent. Thus job places in Israel played a decisive role in the territories' economy.
Palestinian workers, however, played a relatively minor role in Israel's economy. Even when Palestinian employment in Israel was at its peak, residents of the territories were only about 6 percent of all workers in Israel. And when they stopped coming, foreigners soon replaced them.
The Palestinian economy on the other hand had no replacement for job places lost in Israel.
According to Fattal Kuperwasser, when the Palestinian Authority was established in 1994, it was faced with a long list of economic challenges, mainly to do with employment. At the time, the Palestinian labor force numbered 500,000 people, but it was growing at the rate of 30,000 a year. The export of Palestinian laborers to the oil states had halted in the mid-1980s, and the Gulf War led to the expulsion of 250,000 Palestinians from Kuwait, some of whom returned to the West Bank and Gaza.
The unemployment rate in the territories, which had been low in the 1980s, began to rise in the 1990s. Unemployment in the West Bank and Gaza stood at about 15 percent in 1992 and 18 percent in 1995 - today, according to the Palestinian Bureau of Statistics, the unemployment rate is about 30 percent.
The PA's establishment created substantial job opportunities for educated residents of the West Bank and Gaza. The PA set up government agencies and public institutions that provided employment for college and university graduates, who had previously had no options other than manual labor in Israel. During the years when Israel governed the territories, the public administration numbered less than 40,000 workers. Following the PA's establishment, this figure skyrocketed. By 1997, it had reached 82,000, and today, 140,000 people are employed by the PA bureaucracy.
But though this bureaucracy provides employment for many educated Palestinians, including women, whose job options in Israel were very limited, the bloated public administration also has many negative consequences - waste, corruption and nepotism.
The study's main criticism of the PA is that the Palestinian leadership lacked an economic strategy focused on developing sources of employment. The industrial parks that were planned were never built; the legal and organizational infrastructure for organizing the labor market was never laid; measures needed to encourage investments were never implemented.
One sometimes gets the impression that the PA's economic leadership devoted its principal efforts to organizing economic monopolies, which controlled, among other things, gasoline, flour, sugar, cigarettes, cement and steel. These monopolies made money for the PA and people affiliated with it.
In addition, the PA's economic leadership devoted great efforts to pleasing donor states so that it would be able to milk them for more money for projects that were not always properly planned and thought out. The PA preferred projects that involved symbols of sovereignty and prestige, such as the airport, power plant and a port in Gaza, which was never completed. The result of all this was that the Palestinian labor market remained largely dependent on the Israeli economy - and that, of course, has many implications for what is happening today.
As noted, this study deals with the early years of the PA, and does not include, for instance, the massive investments in the tourism infrastructure made to prepare for the year 2000. It also does not cover the reforms implemented by Palestinian Finance Minister Salam Fayad. But none of this changes the overall picture of a lack of job opportunities in the PA territory.
According to data published by the Palestinian Bureau of Statistics, which were not included in Fattal Kuperwasser's study, there are currently some 15,000 Palestinians working in Israel legally and about 30,000 working here illegally - in total, 7 percent of the Palestinian labor force. The prevailing view among the Palestinians is that once the separation fence is completed and Sharon's disengagement plan is implemented, these figures will decline sharply.
Palestinians will no longer be able to enter Israel illegally, and there will also be a decline in the amount of subcontracting done by factories in the territories for Israeli companies - mainly in the clothing and shoe industries.
In other words, the Palestinian economy, and especially its labor market that has remained dependent on Israel, is liable to be dealt another severe blow by the Israeli disengagement. It's a blow it might not be able to absorb.
haaretz.com |
