UN: Israel’s “discriminatory policies” blocking Palestinian economic growth

A new report by the United Nations Conference on Trade and Development (UNCTAD) made headlines last week for its grim forecast that the Gaza Strip could be “uninhabitable” by 2020.

It is vital, however, especially for Western policymakers, not to overlook what the report had to say about the West Bank.

The title of the report’s press release stated that “[Israel’s] discriminatory policies lie behind new recession in the Occupied Palestinian Territory.” UNCTAD has made it clear that Israel is stifling the Palestinian economy in the West Bank in three main ways.

The first, and a major focus of the report, is the ability and willingness of Israel to withhold Palestinian “clearance revenue”, which “comes from taxes on imports into the Occupied Palestinian Territory [OPT].”

For the first four months of 2015, and as a punitive measure following the State of Palestine’s application for membership in the International Criminal Court, Israel withheld almost $700 million of tax revenue.

According to UNCTAD, this suspension “aggravated the [Palestinian] Authority’s already tenuous fiscal situation and resulted in a GDP slowdown, which will most likely lead to weakened growth performance in 2015.”

The report documents how this was the sixth time since 1997 that Israel has unilaterally decided to withhold Palestinian tax revenue, amounting to a total suspension period of four years and a month. Nor does Israel pay interest on the money it is withholding.

In 2014, this tax made up 75 percent of all Palestinian revenue. This is therefore another way for Israel to apply political pressure; previous suspensions followed developments such as Palestinian national reconciliation efforts, legislative elections, and non-member observer state recognition.

The second obstacle to economic growth is exactly that – obstacles. The report describes how in 2014, “the movement of Palestinian people and goods in the West Bank was hindered by 490 barriers installed by Israel, including checkpoints, roadblocks, trenches and the Separation Barrier.”

In addition, there are the Israel-imposed restrictions on movement between Gaza and the West Bank, and the OPT and the rest of the world.

These “multiple constraints” on internal movement, with associated “high costs and unpredictability”, undermine the potential of “export-oriented firms, as well as firms making and growing products for the domestic market.”

The third block on the Palestinian economy is the Israeli colonisation of Area C – around 60 percent of the West Ban – where, in the words of the report, the “growing number of Israeli settlements” are “contributing to Palestinian economic decline.”

The number of settlers has “quadrupled since 1994” in Area C: with 341,000 settlers living in 235 settlements and outposts – compared to around 300,000 Palestinians – Area C is becoming de-facto annexed by Israel. The same area “includes the most valuable Palestinian natural resources.”

UNCTAD’s findings are echoed in a different report, launched on Monday by the UN Office for the Coordination of Humanitarian Affairs (OCHA).

Focusing on Israel’s demolition of Palestinian-owned structures, OCHA state that “due to the lack of adequate planning and discriminatory allocation of public land, it is nearly impossible for Palestinians to obtain building permits in most of Area C.”

The message of the UNCTAD report for Western governments is clear. “Contrary to the claims of some observers”, it states, “the efficacy of donor support has been undermined by occupation, not by the inadequacy of Palestinian National Authority policies or poor donor coordination.”

In other words, Israel’s well-documented discriminatory policies are impairing Palestinian economic growth. Yet the European Union and others continue to prefer subsidizing the unsustainable, instead of pressuring Israel to abide by international law and basic human rights norms.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.