All through history, colonization, as well as occupations, have had economic dimensions. The Occupied Palestinian Territory is not an exceptional case. In fact, occupation imposes heavy economic costs on the Palestinian people and their economy (United Nations, 2016). The Israeli occupation of Palestine (the West Bank including the East Jerusalem and the Gaza Strip) is now in its fifth decade. The occupation has been characterized by an undercurrent of violence coupled with inherent abuses of fundamental human rights. According to International Labor Organization (2019), Palestinians in the occupied regions have continued to suffer owing to the occupation that has "jeopardized the attainment of their basic human rights and human security, as well as meaningful progress in human development." The continued occupation and divide between the West Bank and Gaza has led to stagnating economic growth, persistent fiscal crises accompanied by high inflation, and higher unemployment rates.
Gross Domestic Product in Occupied Palestine
The gross domestic product (GDP) is a measure of the entire value of products and services in a country. It determines the value final products produced in a country and is used to gauge the progress a country makes after every quarter in regard to economic development. GDP data informs the governments whether the country's economy is growing or not, and at what rate.
In Palestine, the economy of the Occupied Territory was viable and thriving before the onset of occupation in June 1967. The economy used to generate significant production and incomes that sustained an estimated growing population of 1 million people and generated a GDP per capita of about $1, 349 in 2004 prices. This was sufficient for the territory to be considered a lower-middle-income economy at that time (United Nations, 2016).
However, since the onset of the occupation by Israel military, Occupied Palestinian Territory has become a land on the verge of humanitarian and economic collapse. In 2014, the GDP growth rate for the territory had turned negative. This was the first time something like that happened since 2006 (United Nations, 2016). The Gaza Strip, for instance, is increasingly becoming unlivable and is projected to be totally unlivable by 2020 (United Nations, 2016). The GDP had increased between 2008 and 2011 owing to the upsurge in construction activity attributed to the tunnel economy in Gaza, but the growth stagnated thereafter (United Nations, 2016).
Historically, military occupations have consistently presented with economic objectives that appear to take various forms and shapes but typically engross impoverishment and exploitation of the occupied territory. For instance, the occupier alters the economic balance in the occupied territory in its favor and that of the settler population (Roy, 2001). The occupier appropriates the resources of formally belonging to the occupied people leading to displacement, replacement, impoverishment, and marginalization of the natives.
From an economic dimension, the occupier takes actions and measures that when interpreted appear to mean appropriation of natural resources, assets, and economic benefits that belonged to the natives for itself. As this happens, the capacity of the natives is undermined as they are denied access to the use of the resources in conducting normal trade, social and economic transactions that would generate value and add to the GDP.
The relationship between Israel and Palestine depicts a scenario where a dominant economy exercises policies that keep the small economy weak and dependent. For instance, immediately after the 1967 occupation, low skilled Palestinians were employed in Israel (United Nations, 2016). This lead to two things that further undermined GDP of occupied territory. First, the labor that would produce products was exported meaning none is left to produce for the country. This was evidenced by the decline in the contribution of the tradable goods sector to GDP from 1975 to 2014 from 37% to 18% (United Nations, 2016). Second, income from exported labor was used for paying for imports into the country in terms of products that come to compensate for lack of production. Instead of the returns being used to make investments to enhance the country's production, they are used to pay imports channeling back the money to where it came from. This is weakening and impoverishing the economy of occupied Palestine.
Inflation, in the simplest terms, refers to an overall increase in prices of goods and services in an economy. It is a representation of scarcity of products in an economy such that demand exceeds supply leading to skyrocketing prices, and also increase the purchasing power of the citizens leading to increased consumption. High inflation is met by an increase in interest rates to reduce the supply of money and correct inflation.
The occupation of Palestine and the consequent export of labor to Israel was the beginning of inflation. The labor flows to Israel had consequences both on the supply and the demand sides. On the supply side, it induced higher wages in the economy of the occupied territory. The higher wages were first deleterious as they did not emerge from increased domestic production. Increased wages shot up the cost of production, reduced local production profitability and made prices go up (United Nations, 2016). Similarly, on the demand side, the labor flows it increased incomes for workers in Israel who increased aggregate demand without a matching increase in production. The result increased in demand for tradable goods which would be primarily imported and met with an increase in prices leading to high inflation (United Nations, 2016).
Unemployment has been a major issue in the Occupied Palestinian Territory. The absence of any further easing of Israeli-imposed restrictions on economic activity increased political instability, and the Israeli's 2012 military operation in Gaza have all caused an upsurge in unemployment rates from 21% in 2011 to 24.5% in 2013 (International Labor Organization, 2019).
In 2014, unemployment in Gaza had doubled. According to the Palestinian Central Bureau of Statistics, the unemployment rate for Gaza was 45% in 2014, with 63% of the unemployed being the youth representing the highest rate in the world (United Nations, 2016). Female rate of unemployment was at 40%. Consequently, nearly 40% of the people lived below the poverty line (United Nations, 2016). With 60% of the youth living without employment, the future of that country is doomed since that productive people are unutilized and may convert to crime.
Occupation of a country comes with the inherent objective of exploitation which leads to economic destruction that is reflected in declining GDP, inflation, and high unemployment rates. The Israel occupation in Palestine denied natives access to the resources and also led to a flow of labor (export) leading to a decline in production and GDP collapsed. Export of labor contributed to supply and demand related inflationary pressures in the country. Also, the political instability and restrictive policies implemented by Israel in Palestine contributed to rising rates of unemployment which has affected the youth and women most.
International Labor Organization. (2019). Occupied Palestinian Territory. Retrieved from https://www.ilo.org/beirut/countries/occupied-palestinian-territory/WCMS_532917/lang--en/index.htm
Roy, S. (2001). Palestinian society and economy: The continued denial of possibility. Journal of Palestine Studies, 30(4), 5-20.
United Nations. (2016). Economic costs of the Israeli occupation for the Palestinian people. General Assembly.
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