A new U.N. report finds the economy of Palestinians in the Gaza Strip and West Bank has hit an all-time low.  The report by the U.N. Conference on Trade and Development (UNCTAD) says the economy of the occupied Palestinian Territory faces unprecedented challenges.

The U.N. agency is marking the 25th anniversary of its assistance program for the Palestinian people.  The UNCTAD coordinator of this program, Mahmoud Elkhafif, says this is not a happy occasion.

He notes the program was supposed to be dissolved when the Palestinian question was resolved.  This has not happened. In fact, he says the Palestinian economy has never sunk so low.

"An average Palestinian in the West Bank and Gaza is getting two-thirds of what he or she used to get in 1999 ...  Unemployment touches almost one-third of the Palestinian labor force in the [territories], 10 percent higher than its level in 1999.  Also, the real wage has dropped by 11 percent compared to the level in 1999," said Elkhafif.

The report says nearly 60 percent of Palestinians live in poverty and the trade deficit has reached an unprecedented 79 percent.  It says the trade deficit with Israel alone amounts to more than 140 percent of total international donor support and accounts for more than 70 percent of the overall trade deficit.

UNCTAD economists say the decline is rooted in Israel's closure policy.  They say an already dire situation was made worse by Israel's military incursion into Gaza at the end of last year in response to rocket and mortar attacks by Hamas and other militant groups operating in the strip.  The UNCTAD report says the devastation of Gaza and its economy has plunged 1.5 million Palestinians into unprecedented levels of poverty.

The report calls for a bold shift in the orientation of Palestinian economic development.  Elkhafif says Palestinians must lay the grounds for a future viable state and build new institutions that would develop their economy when a sovereign state emerges.

"One area that we are proposing for the international community and the Palestinians is to consider Palestine, which is the case under the Paris Protocol, as a simple custom territory," Elkhafif said.  This would allow Palestine, or the West Bank and Gaza, either the PLO or the Palestinian Authority ... to join the WTO, either as observership status or a full membership status," he continued.

Elkhafif says becoming part of the World Trade Organization would make a significant and substantial contribution toward Palestinian state building.  He says it also would put the Palestinian territory on an equal footing with Israel as well as with any other trading partner.  

He says about 90 percent of Palestinian trade is with Israel.  So, any dispute that erupts between the two trading partners could be resolved in the WTO arena.