New UN report is a warning to Israel

Document reveals hugely damaging effects Israel’s curbs have on all aspects of the Palestinian econo

The West Bank and Gaza Strip recorded small signs of economic growth in 2009. But Palestinian economic revival still depends on the lifting of all Israeli restrictions, according to the UN agency Unctad.

The annual Report on Assistance to the Palestinian People report, published today by Unctad -- the main UN body dealing with trade, investment and development issues -- argues that the Palestinian economy is still held back by the fallout from Israel's military operations in Gaza in 2008-2009, and by the costs of Israel's closure policy in the West Bank as well as its continued economic blockade of Gaza.

The Palestinian territories recorded an estimated 6.8 per cent increase in GDP in 2009 -- comprising 8.5 per cent in the West Bank, compared to just 1 per cent in Gaza.

"But this is by no means indicative of recovery," the Unctad report warns.

It said such growth spurts should be viewed cautiously in the context of the slow economic growth in previous years, and the continued isolation of the Palestinian economy from regional and global markets.

The past ten years have coincided with a 30 per cent decline in per-capita GDP, the agency noted. "The productive base has eroded, and Palestinians have shrinking access to land, economic and natural resources."

Dependent on external aid

Roughly four million Palestinians live in the Palestinian territories. There are 2.5 million in the West Bank and 1.5 million in Gaza, according to Palestinian figures. Some more recent estimates put Gaza's current population at 1.7 million. Annual population growth in Gaza is estimated at 3.3 per cent, and in the West Bank at 2.7 per cent.

Both economies are heavily dependent on outside aid, mainly from the west and Arab states.

In 2008, gross domestic product in the West Bank stood at US$3.7bn. In Gaza it was $1.11bn.

Annual per capita GDP in the West Bank is $1,718, compared to $774 for Gaza.

Unemployment is a "grave concern"

The economy has continued to perform well below potential, the Unctad report says:

The unemployment rate declined by 1.6 per cent but is still a grave concern, exceeding the pre-intifada level of 1999 by 9 per cent, with at least 30 per cent of the Palestinian workforce unemployed. Joblessness in Gaza exceeds the national average by 14 per cent.

The report calculates that, had the Gaza blockade been lifted and closures elsewhere in the Palestinian territories been relaxed, the economy should have been able to produce between 60,000 and 80,000 more jobs each year.

The Israeli closure policy in the West Bank, along with the war on Gaza and the continuing blockade, pose major obstacles to a sustainable rehabilitation of the Palestinian economy, in Unctad's view.

Meanwhile, problems with food security "remain widespread and are especially severe in Gaza, where they affect 60 per cent of the population", as well as 25 per cent of the population in the West Bank, the UN agency warns.

Economy would soar with peace -- Abbas adviser

Mohammad Mustafa, head of the Palestinian Authority's main investment fund, is optimistic that the Palestinian economy might grow by 20 per cent annually if there was peace with Israel, helping to wean the territories from dependence on international donors.

"If people see serious negotiations, we can improve the business environment and investment opportunity . . . If they see an agreement, the sky is the limit. We'll talk about 15 to 20 per cent growth easily," Mustafa said in an interview with the US financial news agency Bloomberg in Ramallah on 2 August.

The Israeli prime minister, Binyamin Netanyahu, has suggested that Palestinians should work towards an "economic peace" that would eventually lead to an overall peace treaty.

But the Palestinians' president, Mahmoud Abbas, has rejected a separate economic agreement, saying it would delay an overall settlement.

The Palestinian Authority minister of national economy, Hasan Abu Libda, concedes that the development of the Palestinian economy is dependent on donor countries, and its growth follows the political whims of the region.

In 2009 international donors provided some $1.35bn in budgetary support, accounting for 22 per cent of Palestinian GDP, and an additional $400m for development projects.

"The money received from donor countries is the oxygen for the Palestinian economy," Abu Libda told the Palestinian Ma'an Radio station on 1 August. "However, this money is contingent on the political process, so it in effect acts as a sword hanging over our heads."

His views were echoed by Nasser Abdelkarim, of Bir Zeit University's economics department.

"If for some reason foreign aid should suddenly stop or diminish, government spending would slump and the economy would simply go back to zero," Abdelkarim said in remarks quoted by the French news agency AFP in May this year.

Peter Feuilherade is a freelance writer focusing on Middle East and African media industry, defence and economic issues. In March 2010 he took early retirement from the BBC after more than two decades as a reporter, news editor and media analyst.

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The problems with ending encryption to fight terrorism

Forcing tech firms to create a "backdoor" to access messages would be a gift to cyber-hackers.

The UK has endured its worst terrorist atrocity since 7 July 2005 and the threat level has been raised to "critical" for the first time in a decade. Though election campaigning has been suspended, the debate over potential new powers has already begun.

Today's Sun reports that the Conservatives will seek to force technology companies to hand over encrypted messages to the police and security services. The new Technical Capability Notices were proposed by Amber Rudd following the Westminster terrorist attack and a month-long consultation closed last week. A Tory minister told the Sun: "We will do this as soon as we can after the election, as long as we get back in. The level of threat clearly proves there is no more time to waste now. The social media companies have been laughing in our faces for too long."

Put that way, the plan sounds reasonable (orders would be approved by the home secretary and a senior judge). But there are irrefutable problems. Encryption means tech firms such as WhatsApp and Apple can't simply "hand over" suspect messages - they can't access them at all. The technology is designed precisely so that conversations are genuinely private (unless a suspect's device is obtained or hacked into). Were companies to create an encryption "backdoor", as the government proposes, they would also create new opportunities for criminals and cyberhackers (as in the case of the recent NHS attack).

Ian Levy, the technical director of the National Cyber Security, told the New Statesman's Will Dunn earlier this year: "Nobody in this organisation or our parent organisation will ever ask for a 'back door' in a large-scale encryption system, because it's dumb."

But there is a more profound problem: once created, a technology cannot be uninvented. Should large tech firms end encryption, terrorists will merely turn to other, lesser-known platforms. The only means of barring UK citizens from using the service would be a Chinese-style "great firewall", cutting Britain off from the rest of the internet. In 2015, before entering the cabinet, Brexit Secretary David Davis warned of ending encryption: "Such a move would have had devastating consequences for all financial transactions and online commerce, not to mention the security of all personal data. Its consequences for the City do not bear thinking about."

Labour's manifesto pledged to "provide our security agencies with the resources and the powers they need to protect our country and keep us all safe." But added: "We will also ensure that such powers do not weaken our individual rights or civil liberties". The Liberal Democrats have vowed to "oppose Conservative attempts to undermine encryption."

But with a large Conservative majority inevitable, according to polls, ministers will be confident of winning parliamentary support for the plan. Only a rebellion led by Davis-esque liberals is likely to stop them.

George Eaton is political editor of the New Statesman.

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