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UN Report: Palestinian Economy Could Improve If Israeli Controls Were Lifted

A new U.N. report says lifting the Israeli closure policy and movement restrictions in Gaza and the West Bank is not enough to revive the Palestinian economy. A study by the U.N. Conference on Trade and Development finds the Palestinian Authority must be able to set and implement its own economic development policies. Lisa Schlein reports for VOA from UNCTAD headquarters in Geneva.

The report says Palestinian policy makers must have the full range of fiscal, monetary, trade and labor policy tools available to other countries. Without this, it says, there will be little or no chance of achieving economic recovery and sustained growth.

The report says its economic growth model will not come into fruition until peace between Israel and Palestine is achieved. But, it says some of the measures could be formulated now and be ready for discussion when economic negotiations between the two entities begin.

Mahmoud Elkhafif is UNCTAD Officer in charge of the Assistance to the Palestinian People. He says there is a lot that can be done under present circumstance that could move the Palestinian economy forward.

"Also, we are asking the International Community to provide the Palestinian Authority with the International financial support on a predictable basis," said Mahmoud Elkhafif. "Also, the International Community could try to negotiate with the Israeli Authority to make the transfer of Palestinian public revenue that Israel collects on the part of Palestine on a more predictable manner. Also, we are asking the International Community to start working towards rehabilitating the infrastructure, a necessary condition to reduce the cost of production within the West Bank and Gaza."

The study presents a grim view of the Palestinian economy, which last year had a zero growth rate. It says real per-capita GDP is about 60 percent lower than in 1999.

It says unemployment reached 29 percent in 2007, six out of 10 Palestinians live below the poverty line and 62 percent of households are earning half as much now as they did in 2000.

Elkhafif says the Palestinian economy will remain in the doldrums until political stability is achieved. But, even in these trying times, he says measures can be taken to improve conditions.

"What we are trying to say, even under the present circumstances, with more policy tools, with less closure policy, the economy could be revived," he said. "Of course, we would like to move to full employment. Is this feasible or not, that is another story. But, any improvement under present circumstances would have an impact."

Elkhafif says even reducing the Israeli closure policy by 25 percent would have a great impact on the economy.

The report urges an end to the isolation of the Palestinian economy. At the same time, it says economic recovery also requires greater consistency and predictability in foreign aid.