UNCTAD criticises international pressure on Palestinian government

The UN Conference on Trade and Development (UNCTAD) has criticised the pressure on the Palestinian government to reduce spending, warning that inappropriate austerities may lead to serious consequences.

UNCTAD said in its latest annual report on the Palestinian economy that it saw no evidence that the budget deficit causes the Palestinian trade deficit. It noted that the two deficits are signs of a shortfall in resources underpinned by the Israeli occupation, which enhances reliance on external aid and forces the Palestinians to seek work outside the occupied territories.

The report warned that inappropriate austerity measures could curtail growth and raise unemployment without affecting the trade deficit, putting additional pressure on the already fragile social, economic and political conditions in Palestine.

Read: Israeli president pledges ‘harsher’ offensive against Gaza

With Palestinian unemployment already at 27 per cent, the highest rate in the world, the authors of the report pointed out that this year’s production shrank by 11 per cent. The situation worsened due to the decline in international aid.

The UN body held Israel responsible for the rapid weakening of the Palestinian economy. The negative effect is caused by, inter alia, the acceleration of Israel’s annexation of Palestinian land and expansion of illegal settlements in the occupied West Bank; the continued economic deterioration in the Gaza Strip as a result of the Israeli-led blockade; and the existence of a customs union with Israel that the report described as “flawed” and “detrimental to development”.