The continued de-development of the Palestinian economy in the post-Oslo period

Abstract

The de-development of the Palestinian economy began in 1967, following Israel's occupation of the West Bank and Gaza Strip (WBGS). Following the Oslo Accords of 1993, this de-development has continued. The WBGS remained dependent on the Israeli labor market for jobs until 2000, when Israel curtailed the flow of Palestinian labor to Israel following the 2000 intifada. This curtailment has resulted in sharp increases in unemployment and poverty rates in the WBGS. Closures and other actions taken by the Israeli government since 2000 have led to further de-development of the Palestinian economy. Although the WBGS has received substantial foreign aid in the post-Oslo period, the positive economic impact of such aid has been more than offset by the punitive measures taken by Israel in this period. It is highly unlikely that the Israeli government will allow the number of WBGS workers in Israel to return to its pre-2000 level. Hence, the revitalization of the Palestinian economy will require huge private investment. Such investment cannot be expected without a permanent settlement of the Palestinian-Israeli conflict that includes a Palestinian state with control over its borders and a strong link with diaspora Palestinians.