The human costs of modern-day occupations are widely known. What have remained shrouded in mystery are the economic costs. A new report released on Thursday has taken a lead to do just that - quantify the annual cost of the occupation to the Palestinian economy.
The report - compiled by a Jerusalem-based independent thinktank Applied Research Institute and Palestine’s economy ministry – has drawn wide attention from economists with interest in conflict economies. The report sums up saying Israel's occupation of the West Bank and Gaza deprives the Palestinian economy of almost £4.4bn a year, (Rs 33,700 crore) - equivalent to about 85% of Palestine’s nominal gross domestic product (GDP).
The majority of these costs, the report says, come from the heavy restrictions imposed on the Palestinians in the access to their own natural resources, many of which are exploited by Israel itself, including water, minerals, salts, stones and land.
It also says that the occupation prevents Palestinian people from achieving their exact economic potential, insisting that “the occupation has created conditions which allow the state of Israel and commercial firms to profit from Palestinian natural resources and tourist potential.”
The report also highlights Israel’s benefits from tourism to areas where Palestinians are barred access. It says restrictions on Palestinian access to the Dead Sea were depriving them from income from the extraction of minerals and salts, and from tourism - which Israel was exploiting. Dead Sea beauty and skin care products, manufactured and marketed by Israeli companies, would earn them $150m a year, the report said.
The report also goes to quantify the profits Israeli businesses make from mining and quarrying in the West Bank. It reminds about water resources too – saying West Bank water resources were diverted to Israeli settlements, industry and agriculture.
One key issue usually debated among development economists dealing with conflict economies relate to people’s restricted access to global markets and availability of capital for investment in natural resources. This report argues that the current situation “prevents Palestinians from accessing much of their land and from exploiting most of their natural resources; it isolates Palestinians from global markets, and fragments their territory.”
Gaza and West Bank largely depend on services and value added and precious agricultural products like olive oil. The territories lack in a manufacturing base which could take care of their internal demand.
The report establishes a strong occupation-ecology-economics link, arguing that around 2.5 million (25 lakh) trees, including olive groves, had been uprooted since 1967 for settlements, etc., depriving economic benefits to Palestinians of significant nature. The report also mentions about the dwindling agricultural land for the Palestinian farmers due to the expansion of settlements.
One important aspect that the report touches is Palestine’s dependence on donor funding from the international community. It argues that without the occupation the Palestinian economy would be “almost twice as large as it is and would be able to reduce its dependence on donor funding from the international community.”
The report gives an interesting breakup of the $6.9bn figure – which, it says, includes water restrictions ($1.9bn), natural resource restrictions ($1.8bn), the blockade on Gaza ($1.9bn), import and export limits ($288m), restrictions on movement ($184m) and tourism to the Dead Sea ($143m).
The report furthers says that electricity and water production was unable to meet demand from industry and agriculture owing to damaged infrastructure and a shortage of parts and materials in Gaza. It also highlights the grim fact about the blockade of Gaza – which, it reminds, placed severe restrictions on imports and exports, on which the economy was highly dependent.
What seem to dent Palestine’s agriculture and manufacturing are the restrictions on the import to both the West Bank and Gaza of goods deemed as "dual use", such as chemicals and fertilisers which Israel says could be used in the manufacture of weapons.
It also analyses the costs of limits on movement for both goods and labour within the West Bank through roadblocks, checkpoints and diversions. 
These restrictions, Palestinians argue, do not help to build a sustainable and viable Palestinian state “which is economically feasible, environmentally sound and socially legitimate.” With these restrictions on access, mobility and resource availability, a viable Palestine is impossible, Palestinian economy minister was quoted as saying.
The columnist is presently an advisor in international development and based overseas

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