The World Bank says the Palestinian economy has been devastated by more than two years of conflict with Israel.
In a report issued Tuesday, the World Bank said more than half of the 3.5 million Palestinians in the West Bank and Gaza Strip are living in poverty.
The report says the majority of Palestinians are now earning less than two dollars a day and that only massive foreign aid is preventing full economic collapse.
The World Bank estimates that the Palestinian intifada, or uprising, that began in September 2000 has now cost the Palestinian economy more than $5 billion. This is equal to the entire wealth generated by Palestinians, in the year before the violence began.
The World Bank says that the main cause of this situation has been Israel's sealing off of the territories and the imposition of curfews and other restrictions on Palestinian towns and villages.
The report says that such measures have been imposed in a discriminatory fashion. The World Bank says the restrictions are applied in such a way that they hurt Palestinian exporters, but have less impact on Palestinian imports from Israel.
The World Bank acknowledges that Israel has publicly expressed regret for the need to impose such measures in the name of security, including stopping Palestinian suicide bombers and gunmen from attacking its citizens.
The World Bank says the challenge for Israel is to "find ways" to protect its citizens "without destroying the Palestinian economy and livelihoods of ordinary Palestinians."
The challenge for Palestinians, the report says, is to diversify its economic base and reduce its dependence on Israel. But the World Bank stresses that for such a strategy to succeed it would itself require the active cooperation of Israel.