Middle Eastern regional economic development schemes now include Palestine in future plans for co-operation, integration, and development. But what is the situation of the Palestinian economy? The Palestinian economy has suffered more than twenty years of stagnation under administrative policies that have been effectively anti-developmental. Further economic declines occurred as a result of the Intifada and the Gulf war (1990-91), and, most recently by the ongoing Israeli closure policy of the West Bank and Gaza. Therefore, the Palestinian economy is an underdeveloped, low performance, dependent, subsistence economy, dominated in all spheres by Israel. The same is more or less true for single economic sectors, and no sector is progressing significantly either in terms of numbers employed or their contribution to the Gross Domestic Product, although there are some differentiation’s to be made. The agricultural sector, which formed the economic base in Palestinian society, has been almost completely devastated by Israeli policies. As well as restricting Palestinian agriculture on paper, huge amounts of agricultural land have been confiscated and there has been a considerable amount of agricultural sabotage - hundreds of thousands of trees uprooted and orchards and vineyards burned. Consequently, there is no longer a strong Palestinian agricultural base from which economic recovery could have been built.
Economic growth and development in the Occupied Territories is restricted through the lack of infrastructure and investment, the restriction and control of Palestinian trade, the absence of authorities promoting development, the domination of the Occupied Territories’ markets by subsidized Israeli products and the absence of an adequate monetary system. All of these factors have had disastrous effects on the Palestinian economy and have also created economic hardships that induce emigration and the exploitation of human as well as natural resources in the West Bank and Gaza.
Industry consists of primarily small-scale enterprises, and since the Israeli occupation, no significant changes in productive output, number and size of establishments, their contribution to the GDP, or the rate of employment are noticeable. The industrial sector has suffered with downturns in the Israeli economy but has not benefited when there have been upswings and expansion. Consequently, there can be no implementation of comprehensive development plans in which the growth of the industrial sector would be used to stimulate other sectors and promote stable development.
Trade is restricted from the Occupied Territories into Israel despite the fact that the West Bank and Gaza currently provide a market for Israeli products which is second only to the US. Tourism is one of the few areas in the Palestinian economy which still has a solid base but which will need to be further developed and made more efficient in the future. In the larger regional picture, the Occupied Territories are vulnerable to external economic shocks, in particular those originating in the Arab countries which have large Palestinian communities and through which income transfers and remittances back home have often kept living standards tolerable in the West Bank and Gaza. At the same time, all are aware that the economic price of the Arab-Israeli confrontation has been high and that a real solution of the conflict will bring with it significant potential for future development. The future economic conditions and development in the Occupied Territories will be determined by both economic and political factors. With the continuation of the peace process and the numerous difficulties, many Israelis and Palestinians remain skeptical about the future. While the Israeli side fears a Palestinian state and military attacks against Israel, the Palestinians are worried that the talks will lead to nothing more than a modified form of occupation.
Palestinians desire developing their infrastructure and economy as independently as possible. Self reliance has a high priority and once a degree of independent development has taken place, the potential for development and co-operation on a regional basis will increase. The West Bank has more chance of independent success than Gaza, which, because of its infrastructure weakness, seems to have little choice in the immediate future but to remain highly dependent on Israel and international financial support.
The Palestinian literature on the economy produced in the 1980s was very much influenced by the notion of sumud or ‘steadfastness’ which was regarded as the key element characterizing Palestinian resistance to occupation during that time.
Since the Intlfada, and particularly since the events of 1993, the literature has become much more concerned with future potential and the possibilities of co-operation and development.
A considerable amount of material is also available on education and the future. Researchers have expressed the need for further research in this area to investigate what the needs of the future are and how educational programs can begin to prepare sectors of the population to fulfill these needs.
The most recent period has witnessed a plethora of research and feasibility studies on future economic prospects, development potential, regional co-operation potential, restructuring of the economy and the need for adequate planning. Future plans are clearly for increased co-operation and expansion of economic sectors in whatever way feasible; however, more activity is needed to promote co-operation and integration in different areas. One suggestions for this is that there should be an increase in economic workshops and consultation.
Palestine has to deal not only with the building and development of its economy, but also with would be returning refugees and their absorption into local markets. In addition, the special difficulties facing the Palestinian economy must be considered. No other country in the area lacks the experience of trade and even local co-operation as does Palestine. As all other Middle East nations, Palestine must ultimately find specialized economic niches and develop them to create a competitive economy and to play its role in Middle East regional co-operation.