Collapse of Palestinian industry if Israeli restrictions continue
Palestine, Economics, 10/4/2002

The Palestinian industry is expected to totally collapse in the coming months if Israel does not lift closure and trade restrictions that have been strictly imposed on the occupied territories over the last two years.

These findings came as a result of a survey conducted by the Palestinian Federation of Industry (PFI), the Palestine Trade Center (Pal Trade), and USAID's Market Access Program (MAP/DAI) to assess the impact of the Israeli measures on the Palestinian industrial sector.

The survey covered 600 manufacturing outlets in the West Bank and Gaza during the months of June and July 2002.

The survey has shown serious damage inflicted upon the sector and a rapid rise in unemployment in the local industrial sector where 46 percent of the Palestinian labor force in the sector have lost their jobs over the last two years. It is expected that another 32.7 percent of those currently employed will lose their jobs in the near future if Israel does not lift restrictions.

Nearly 30 percent of the surveyed industrial outlets have been physically damaged, including loses to buildings, machinery, office equipment, and inventory, and 90 percent of the surveyed outlets reported trading loses such as the loss of sales, decreased productivity, and increased costs of transportation. As a result, 50 percent of Palestinian manufacturers are in default or arrears to lenders.

Palestinian manufacturers are now extremely dependent on the local markets in the small cantons being created as a result of the Israeli military restrictions. This together with ongoing movement and security restrictions fuels a rapid increase in the prices of Palestinian products making them less competitive as the supply of the raw materials is inconsistent.

"The industrial sector, like all productive sectors in the West Bank and Gaza, is under considerable stress due to the current circumstances. Decreased demand, as more and more Palestinians are without income; increased production and distribution costs; and loss of domestic and international markets due to internal and external closure have all conspired to reduce a vibrant, dynamic Palestinian private sector to shadow of its former self," said John Wetter, senior country economist, Word Bank Resident Mission, Palestinian Territories.

Following the signing of the peace accords in 1993, over 65 percent of the existing manufacturing outlets in the West Bank were established. After the eruption of Al-Aqsa Intifada on Sept. 28, 2000, no new businesses were established and 17 percent of existing businesses closed down operations. This report comes at a time when other reports of hunger, malnutrition and massive rates of unemployment are creating a humanitarian crisis of significant proportions in the occupied territories.

Previous Stories:
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