‘Dire’ economic and fiscal situation in Palestine requires integrated response

Children in Gaza gather at a water truck to fill bottles with clean drinking water.

A piecemeal approach to the current political, economic and security challenges in the Occupied Palestinian Territory (OPT) only risks perpetuating a continuing crisis, according to a new UN report published on Thursday.

“Short-term fixes, focused on stabilizing and managing recent crises are necessary, but not sufficient”, stated UN Special Coordinator for the Middle East Peace Process Tor Wennesland.

Issued by the office of the UN Special Coordinator for the Middle East Peace Process (UNSCO) for next Wednesday’s meeting in Oslo of the Ad Hoc Liaison Committee – the principal policy-level coordination mechanism for OPT development assistance – the report calls for coordinated and integrated response to resolve an increasingly precarious situation for all Palestinians.

Stagnation and decline

Describing the economic and fiscal situation as “dire”, the UNSCO report highlights the urgent need to address it head on.

Years of economic stagnation in the West Bank was followed by a sharp GDP per capita decline in 2020.

And the economy continues its multi-decade decline in the Gaza Strip, with persistently high unemployment – particularly among women.

“It is increasingly difficult for the PA (Palestinian Authority) to cover its minimum expenditures, let alone make critical investments in the economy and the Palestinian people”, said Mr. Wennesland.

Work in concert

Along with other longstanding shortages of public funds, which are contributing to the crisis, Israel continues to deduct and hold a portion of so-called clearance revenues, which the Government unilaterally equates the amount paid by the Palestinians to its prisoners, their families, or the families of those killed or injured during attacks.

Given the severity of the crises endured so far this year, the report calls on the Israeli Government, Palestinian Authority, and international community to work together on an integrated response in the coming months.

It first calls for the immediate economic and fiscal situation facing the PA to be addressed and its institutions to be strengthened, with a near-term focus on delivering public services.

Secondly, the report advocates for the end of hostilities that began on 21 May between Israel and militant groups in Gaza and for economic development support in the Strip.

Finally, it urges a sustainable and inclusive economic recovery that improves the livelihoods of all Palestinians, including women, young people, refugees, and other vulnerable groups.

De-escalate tensions

The report warns that the situation across the OPT remains extraordinarily fragile as tensions continue in East Jerusalem; violence lingers over settlement activity, demolitions and evictions; and Israeli security operations in Area A continue to undermine the PA and Palestinian institutions and diminished prospects for any two-State solution.

To move forward on key political questions and for progress on each of these tracks, Special Coordinator Wennesland upheld the need for governance and socioeconomic reforms along with sustainable, policy changes.

“Action can help unlock international donor support and new sources of public and private finance”, he said while warning that unilateral moves that exacerbate flashpoints or drive the conflict, would risk jeopardizing any progress toward improving the situation in the OPT and further deter extra funding.