Washington Report on Middle East Affairs, October/November 1998, pages 87, 114

Trade and Finance

Economic Figures Tell Us the True Purpose of Israel’s Impoverishment of the West Bank and Gaza

By Colin MacKinnon

Last May my wife, Diane, and I were driven around Jerusalem and Ramallah by a Palestinian economist (I’ll call him Saeed). As we were passing through Beit Hanina headed for the Ramallah line, Saeed pointed to the pale gray, stony hilltops stretching away on each side of the road. “There are paths all through these places,” Saeed said. “You want to get into Israel from the West Bank, you can. I could avoid inspection even with a car.”

We’d been talking about Palestinian laborers working in Israel and Saeed’s point was that though concrete barriers and checks by the Israeli border police on the main roads can slow traffic down and catch the odd illegal, the way into Israel for a West Banker willing to do some walking really isn’t that hard.

Estimates vary, but it’s likely that some 10,000 to 20,000 undocumented Palestinians work in Israel every day, either walking in in the morning through the country’s porous borders and leaving at night or finding some place to stay in Israel for longer periods.

Urban Ramallah, when we got there, and later Bethlehem, where I went alone, seemed relatively well off; not prosperous, but, unlike refugee camps, having a tolerable economic existence. This impression underscores a truth that has emerged recently about the West Bank and Gaza (WBG): there is increasing inequality in income, not just between the two areas, but within the West Bank itself.

We know this thanks to the work of the Palestinian National Authority’s Central Bureau of Statistics. The PCBS has been collecting economic data on WBG since 1995 and we now have, among other things, detailed data on consumption patterns there.

PCBS data as analyzed by the World Bank reveal the geographical inequities. The so-called “middle West Bank”—that is, the area stretching around Jerusalem from Ramallah down to Bethlehem—is far better off than other parts of WBG. Household consumption here is one-third higher than the Palestinian average. Communities in the northern West Bank—Tulkarm, Jenin—consume 10 percent below the average; Gaza as a whole consumes 15 percent below average. (Households contain more persons in Gaza, as well, 7.9 members compared to the West Bank average of 6.7; this means that per capita consumption in Gaza is even lower than the per household figures show.)

Inequality Growing

PCBS figures also show that inequality is growing. From 1995 to 1997, overall growth in consumption in WBG was 1 percent, but most of this occurred in the areas around Jerusalem (6 percent). The south increased its consumption 2 percent; in the north consumption fell by 4 percent; in Gaza consumption was stagnant.

It’s not surprising that the denser Palestinian population areas around Jerusalem are relatively prosperous since Jerusalem is the urban center closest to them and it’s to urban areas that Palestinian workers—legal or illegal—head to find employment. (Illegal trade probably plays a role, too.) It’s also not surprising that Gaza, which is sealed off from Israel by electronic fences and other controls not found in the West Bank, should have the greatest unemployment and lowest income. You can’t just stroll into Israel from Gaza.

As a result of Israeli policy, Palestinians are increasingly impoverished. The World Bank estimates that in 1995 20 percent of the 2.7 million Palestinians were living in poverty, with 35 percent of those living in camps in that category. By the end of 1997, those figures had climbed to 30 percent and 40 percent respectively.

Even with Palestinian illegals skirting Israeli checks on a daily basis, the Bank reports that Israeli closures reduced Palestinian employment in Israel from 116,000 persons a day in 1992 (more than a third of the Palestinian work force) to 22,000 in 1996 and 35,000 in 1997. The loss of earnings has cut consumption and consumer demand in WBG and, the World Bank says, has diverted some 25 percent of donor resources away from investment and into budget support and emergency employment schemes.

During periods of “heightened” closure, in the second quarter of 1996 and the third quarter of 1997, the overall unemployment rate soared, then returned to the “normal” 18 to 20 percent. There is, as you would expect, inequality here as well: Gaza’s normal unemployment rate is 24 to 26 percent; the West Bank’s 16 to 18. How unemployment in the West Bank breaks down isn’t known, but it’s a good guess that those areas farthest from Jerusalem, particularly the north, suffer higher unemployment than the “middle West Bank.”

Closure Not the Only Obstacle

But closure isn’t the only obstacle facing Palestinians who want to work in Israel. At least as important a factor is foreign competition for jobs. By issuing entry permits to foreign workers Israel effectively reduces Palestinian employment.

Speaking at a conference in August sponsored by the Israel-Palestine Center for Research and Information, Saed Bamya, of the PNA Ministry of Economics and Trade, said: “Israel controls the entrance of Palestinians into its labor market……through the licensing or the permits it issues to Rumanians, Thais, Chinese, Serbs, whoever you want. There are about 80,000 such working people in Israel with permits and about 120,000 without permits.” Such large numbers of foreigners compete with Palestinians and sop up jobs.

Bamya and others estimate the value of the Israeli market for foreign labor at $1 billion to $1.5 billion a year in areas—agriculture and construction—where Palestinians traditionally worked. No matter how many Palestinians are willing to enter Israel illegally, if available jobs there are scarce, fewer Palestinians will do so.

Still, Palestinian employment in Israel is up somewhat in 1998. At the beginning of the year, according to a World Bank analysis, Palestinian workers in Israel constituted 21 percent of the Palestinian labor force, their highest level since 1995. Unemployment had fallen from 32 percent to 21 percent in Gaza and 18 to 13 percent in the West Bank. Overall Palestinian unemployment had fallen to 16 percent, the lowest figure since the PCBS started compiling data in 1995.

Bogus Security Concerns

How many Palestinians work in Israel, though, is at the discretion of Israel. Of course, any country has a right to regulate its labor markets. But what’s troubling here is that the police checks, the permanent closure, the welcome given to foreign labor are all part of Israeli policy to keep economic pressure on the Palestinian areas and to do so using bogus security concerns as an excuse.

Those paths over the hills around Jerusalem that Saeed pointed out are well-trodden. If upward of 10,000 illegal Palestinian workers get into Israel daily unbeknownst to Israeli authorities, how difficult can it be to smuggle a bomb from the West Bank to Jewish areas of Jerusalem or to Tel Aviv? None of the suicide bombers of 1996 was a documented worker.

PCBS figures don’t say it, but Israeli employment policy is not based on Israeli security needs. The dominant factor in Israeli policy is to put economic and political pressure on WBG, in hopes of reducing the Palestinian population through permanent emigration abroad.