- The Washington Times - Monday, March 12, 2001

NEW YORK A 5-month-old uprising has cost the struggling Palestinian economy more than $1.2 billion in lost wages, construction and manufacturing, according to U.N. estimates, on top of the incalculable losses to the Middle East peace process and of human life.
Since late September, when the Palestinian rioting began after a provocative visit to the Temple Mount by Ariel Sharon, now Israel's prime minister, the territories have lost as much as $8.6 million a day, much of that in the wages of Palestinians who are no longer able to attend their jobs in Israel.
The U.N. agency that cares for Palestinian refugees has issued emergency appeals for nearly $80 million in recent months, and the World Food Program has begun a $4 million feeding campaign.
The noose around the Palestinians has only tightened since the election as prime minister of Mr. Sharon, prompting Palestinian leaders to complain yesterday that their cities have been turned into prison camps.
Israeli troops have dug trenches and put up hills of sand near the West Bank cities of Ramallah, Jenin and Jericho and placed tanks near Ramallah, sealing the Palestinian-ruled cities off from other parts of the West Bank.
Even before the latest restrictions, U.N. officials were asking for direct contributions to shore up the Palestinian Authority, warning that without aid, the government led by Yasser Arafat will collapse.
"The volatility of the situation contains within it the very real potential for an even bigger explosion," U.S. Ambassador to Israel Martin Indyk told Israeli businessmen in Tel Aviv this month.
"The Palestinian economy is on the brink of collapse, the Palestinian Authority is beginning to disintegrate. A state of semianarchy and gang rule is engulfing the West Bank and Gaza," he said.
The Israeli economy, by comparison, remains robust with 5.7 percent growth last year, zero inflation and a booming high-tech sector that easily offsets the economic costs of closing its borders with the Palestinian territories.
Israel's trade and investment representative in New York acknowledges slight dips in tourism, agriculture and manufacturing sectors heavily dependent on cheap Palestinian day labor but says the downturns are hardly worth measuring.
"Despite the ups and downs on the political side in the Middle East, Israel's economy is strong, stable and stands on its own," said Ron Chaimovski, Israel's New York-based official responsible for boosting trade and investment from North America.
He said the blockade was necessary "to combat acts of terrorism." He also defended Israel's decision not to release more than $60 million in taxes and duties collected on behalf of the Palestinian Authority.
Secretary of State Colin Powell and officials from many Western nations have appealed to Israel to release the funds, which Mr. Arafat's government needs to pay its civil service employees.
However, Israel has shown no interest in transferring the money as long as it believes Mr. Arafat is approving and orchestrating a wave of attacks on Israeli settlers in the territories and turning a blind eye to car-bomb attacks in Israel.
Ordinary Palestinians are paying a high price for the violence.
The United Nations estimates that Israel's border closings have cost the Palestinians as much as $1.15 billion for the four months ending Jan. 31. With as many as two-thirds of Palestinian workers unable to reach their jobs in Israel, many frustrated laborers are finding themselves with too much time and too little money.
The expanding rate of unemployment, now 50 percent in Gaza, is giving people more time to dwell on their hardships and losses, said Terje Roed-Larsen, the chief U.N. official in the area. He also has said it is hardening opposition to the peace process.
Compounding the economic problems are mounting anger with the ever-present Israeli military, mourning for the more than 300 Palestinians who have been killed since October, and increasing frustration with the Palestinian leadership, which has kept a low profile since the uprising began.
"After the Oslo agreement [in 1993], the Palestinian Authority more or less normalized the economic and commercial relations with the occupying power," said Clovis Maksoud, director of American University's Center for the Global South.
"Now the economy is hostage to Israeli policy decisions in the area. And as a result of the intifada, they are using an economic weapon to punish the people," said Mr. Maksoud, himself a Palestinian.
Before October, an average of 130,000 Palestinian laborers worked in Israel, largely in unskilled and manual jobs. These workers comprised as much as half the labor force in construction and agriculture, and accounted for a substantial portion of the textile and tourism workers.
But Mr. Chaimovski said these industries combined account for less than 14 percent of Israel's gross domestic product.
"Our high-tech industry … is almost untouched [by the violence], and that is 18 percent of our economy," Mr. Chaimovski said. Foreign investment has continued to climb, he said, topping $11 billion last year.
Mr. Chaimovski conceded that trade with neighbors Egypt and Jordan had suffered, but not as badly as the rhetoric from those countries would indicate. Trade with the Palestinian Authority before the uprising accounted for less than 5 percent of Israel's GDP, he said.
But the longer the blockade grinds on, the more likely it is that Israel will begin to the feel the effects. Israel has long relied on the Palestinians, who earn an average of $27 a day, as a source of cheap labor in an increasingly educated and affluent society.


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