Posted on: September 2006
The Gaza disengagement implemented by Israel in September, 2005 and all its ramifications have proven to be detrimental to Palestinian industrial capacity, trade and economic activity.
Israel’s continued control of Palestinian border crossings to Jordan and Egypt, as well as the unpredictable and poorly managed crossings between Israel and the Palestinian territory (initially in the Gaza Strip and more currently being applied to the West Bank as a result of the Separation Wall) have proven to be detrimental to the competitive capacity of the Palestinian economy, as a whole, and to Palestinian industry, specifically.
This has materialized in the tremendous increase in transaction costs both in obtaining production inputs, as well as, in movement of products out of the factory and into targeted markets. “With the ability to guarantee delivery dates a vital part of securing export markets, speed and reliability are mandatory, particularly for agricultural products. As things stand, today’s regime represents an overwhelming obstacle to investment and growth…”
The forced separation between the West Bank and the Gaza markets, as well as, the chaotic state of West Bank movement have steadily reduced the Palestinian market size and minimized the competitive edge of Palestinian products in the local market. Thus, the only outlet for Palestinian industry became external markets. These, however were also constrained due to the lack of Palestinian access to alternative trade routes independent of Israel.
For instance, the closure of the Karni commercial border crossing between Gaza and Israel for nearly 60% of the first quarter of 2006, served to severely curtail the potential of exporting goods out of the Gaza Strip to European Markets via Israeli ports and airport.
It is quite evident the extents to which opening the Rafah border crossing with Egypt and the Alenby and Damiah Bridges to Jordan are critical. In so doing, the needed alternative trade routes to the outside world would be afforded to Palestinian industries. However, such efforts should not detract from the parallel importance of eliminating internal closures with the West Bank and opening the West Bank and Gaza Strip to each other.
The following study will assess the impact of Israeli closures and movement Impediments / restrictions on the competitive capacity of Palestinian industries both locally and in external markets. It will also quantify the potential benefits of functional alternative trade routes.
Background
The last few years, and especially the year 2005 has seen some serious changes in the terms of trade arrangements and Palestinian channels of trade. After the success of Kadima in the recent Israeli elections, the spirit of unilateralism, which was the main reason for the changes that took place in 2005, will continue. Thus, unilateral disengagement will be transferred to the West Bank. Coupled with the separation wall and the existing closure regime within the West Bank, this will ultimately lead to further deterioration in the potential for any type of economic recovery. ” The Bank estimates that internal closures accounted for approximately half of the decline in real GDP (perhaps some 15 percent) observed between 2000 and 2002.”
The 2004 World Bank Report to the AHLC, the Roadmap and all international parties and observers without exception have been calling on Israel to ease and eliminate the countless restrictions on internal Palestinian movement, which not only make the banalities of everyday life a challenging experience but also make economic recovery an impossible task, adding prohibitive transaction costs to all but the most localized economic activities. Israel, in turn has consistently not reduced but increased these obstacles. According to the World Bank, “there are now more than 540 checkpoints and fixed impediments compared to 376 in August 2005” within the West Bank.
Palestinian industries have suffered the most as a result of these restrictions on movement. The negative effect of the current situation is seen in three layers:
(1) Impact on attaining the required production inputs (2) inability of workers to get to their workplaces and (3) the difficulties arising from the current situation, which negatively affect the distribution and marketing of products both in the internal and export markets. “The combined impact of these impediments, coupled with complex permit restrictions, has been a fragmentation of the socioeconomic space in the West Bank into a northern, a central and a southern economic zone, bounded on three sides by the separation barrier and to the west by a Jordan Valley that is increasingly difficult for Palestinians to access.
As a result of this fracturing process, transportation costs have increased by 67- times along some routes.”
The following is a description of the movement restrictions, which had dire effects on the Palestinian industrial sector:
The Closure System:
The closure system is a primary cause of poverty and the humanitarian crisis in the West Bank and the Gaza Strip5 and restricts Palestinian access to health and education services, employment, markets and social and religious networks. The types of obstacles include permanent and partially manned checkpoints, roadblocks (consisting of rows of 1-meter concrete blocks), metal gates, earth mounds, earth walls (a long series of earth mounds), trenches, road barriers and permit restrictions.
The West Bank Closure System:
The Closure system in the West Bank comprises 540 physical obstacles placed by the Israeli Occupation Forces on roads to control and restrict Palestinian vehicle traffic, compared to 376 physical obstacles, in August 2005 – an increase of 164 closure obstacles or a 30% increase. The number of manned checkpoints reached 68 permanently-manned and eight partially-manned checkpoints around the West Bank. The increase has occurred in unmanned physical obstacles.
Physical Obstacles:
The addition of physical obstacles was most noticeable in Hebron governorate and in the northern West Bank around Nablus governorate, Salfit governorate and Tulkarm governorate.
The number of physical obstacles in the central region has remained stable.
However, the internationally illegal separation wall is increasingly causing access problems around Ramallah governorate and East Jerusalem. Approximately 299 km (45% of the Barrier’s total length) has been constructed. Of this, 53 km have been constructed since October 2005. A further 124 km is under construction (19% of the Barrier’s total length).
There has been an increase in road barriers – consisting of long stretches of fencing or concrete barriers along road verges – on main West Bank roads.
Some obstacles that were imposed immediately prior to Israeli disengagement have remained in place and are hampering Palestinian Access.
Prior to disengagement, north-south traffic was able to bypass Nablus city because the Shave Shomeron checkpoint was removed. However, during disengagement (from 15 August 2005) this section of road was completely blocked and it remains closed until today.9 The result is that the northern West Bank is closed off from the central and southern regions and travelers need to pass through Nablus.
Two gates originally installed to secure the evacuation of two settlements remain in place and now hamper movement for Palestinians between Jenin and Tulkarm governorates, specifically on Road 585.
The IDF10 states the reason for the rise in the number of physical obstacles is an increase in Palestinian violence. At the same time, they acknowledge that some of the physical obstacles and restrictions are unrelated to security needs.
Road Barriers:
Road Barriers are a more common feature within the West Bank. The Israeli
Occupation Force states that they have two functions: to protect Israeli settlers traveling in roads bordered by Palestinian communities and road safety.
Nevertheless, these obstacles block access for Palestinian communities onto and across main West Bank roads and cause problems for residents to access emergency and other services, markets and jobs. Palestinians are required to travel longer distances to reach openings in the road barrier, where movement is often controlled by an IDF gate or flying checkpoint.
Tunnels and Bridges:
As of January 2006, there were 27 tunnels and bridges constructed and 19 planned or under construction. These tunnels link Palestinian Areas A and B to each other, most commonly under roads that are limited for Israeli use that run through Area C and the Barrier. The trend is that Palestinian traffic is funneled onto fewer roads that lead to and from the tunnels. These roads may not have the capacity to absorb a greater traffic load.
The network of tunnels together with the roads leading to and from them which remain separate from Israeli restricted roads makes it difficult to envision any possible return to the situation pre-2000 as laid out in the Road map. The
Roadmap requires that: “Israel withdraws from Palestinian areas occupied from September 28, 2000 and the two sides restore the status quo that existed at that time, as security performance and cooperation progress.”
This increase in obstacles, coupled with the election of a Hamas dominated Palestinian Legislative Council and therefore government has not only eliminated any potential for Palestinian – Israeli official contacts, but has also minimized the potential for donor assistance in the process of the badly needed economic recovery. Currently, Palestinian unemployment has increased dramatically, and donor assistance to cover the Palestinian Authority’s salary bill, which formulated an important component in maintaining the running wheels of the economy, has stopped. Israeli transfers of VAT and Import taxes have also stopped, thereby closing any potential for operations of the Palestinian Authority.
The starting point in creating the makings for economic recovery, is to recognize that economic recovery can only start with increasing potential for Palestinian trade, both internally and externally. Hence, dealing with structural unemployment, poverty and economic degeneration is dependent on the creation of a systemized, efficient and secure border regime which would be conducive to trade and movement of goods. According to the World Bank, “It has been widely acknowledged that the future economic viability of the Palestinian economy depends on the creation of a trade logistics system which permits the safe, reliable and competitively-priced movement of people and cargo”
As a result of the closure system, which includes, but is not limited to blocks, checkpoints, permits, restricted roads and the Barrier, the following trends have been observed:
- Interregional movement in hampered by the east – west lines, which split the West Bank. The effect of these is a trisection of the area.
- The West Bank has been narrowed due to tight access restrictions on movement:
- on the east side, to the Jordan Valley;
- On the west Side due to “closed areas’ between the Green Line and the Wall, including East Jerusalem.
Israel has stated that the closure system is a security measure to protect Israeli citizens from Palestinian attacks. This justification does not always appear consistent with developments on the ground. For example, the new road barriers on Roads 317 and 60 in southern Hebron governorate are explained by the Israelis as a traffic safety measure instituted by the civilian (rather than military) authorities.5 In the Jordan Valley, which has witnessed the recent tightening of access restrictions, the reason remains unclear given the absence of Palestinian attacks emanating from the area in the past several years.
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