Effect of restrictions on the economy

Published: 
1 Jan 2011

Despite the many factors affecting the economic situation in the West Bank, it is generally undisputed that the sweeping restrictions on movement since the outbreak of the second intifada are a major reason for the deterioration of the Palestinian economy and the increase in unemployment and poverty.

As a result of the comprehensive closure on the Occupied Territories that Israel imposed at the beginning of the current intifada, tens of thousands of Palestinians lost their jobs in Israel. Before the intifada, some 110,000 Palestinians were employed in Israel and the settlements, some one-quarter of the workforce in the Occupied Territories. Since then, the number of Palestinians entering Israel to work has varied, depending on the number of entry permits Israel issues and the degree to which it enforces the closure. However, the number of Palestinians entering the country to work is much less than it was prior to the intifada.

Within the West Bank, the restrictions make it very hard for Palestinians to get to their jobs and to transport goods from area to area. This has led to an increase in transportation costs and consequently to lower profits. Trade from one section to another in the West Bank has become expensive, uncertain, and inefficient. The economy in the West Bank has been split into smaller, local markets. Restrictions on access of West Bank farmers to their lands in the “seam zone” and in the Jordan Valley have severely harmed the farming sector in these areas. Tourism, which began to flourish after the Oslo Agreements, has also suffered greatly because of the inability of Palestinians to get to the vacation sites.

The restrictions imposed on the commercial crossing points between the West Bank and Israel have critically impaired trade ties carried out by Palestinian importers and exporters with the rest of the world. The restrictions also affect manufacturers who rely on imported raw materials. The harm is especially grave in light of the dependence of the Palestinian economy on foreign trade, which constitutes about 80 percent of its gross domestic product. The closing of the crossings also harms internal trade between the West Bank and the Gaza Strip.

Israel also controls all movement to and from Gaza, including imports and exports. Gaza's foreign trade is almost exclusively with Israel or is conducted via Israeli ports.  Since the takeover of Gaza by Hamas, in June 2007, the Gaza Strip has been under siege. Israel changed the crossing arrangements at the five border crossings under its control (Erez, Karni, Nahal Oz, Suffa, and Kerem Shalom) and, except for a few cases, does not permit persons or goods to cross between Gaza and Israel. The Karni Crossing, “Gaza's lifeline,” through which most of the goods coming into or leaving Gaza pass, is almost completely closed, paralyzing many trade sectors and creating a growing economic crisis.

Most of the restrictions on the movement of workers and goods are sweeping and indefinite in duration. Because of the severe consequences on the local population, this policy breaches a variety of rights that Israel must respect under the Covenant on Economic, Social and Cultural Rights: the right to gain a livelihood, the right to an adequate standard of living, including adequate nutrition, clothing, and housing, and the right to the highest attainable standard of physical and mental health.