Gaza Strip and The West Bank Economy

Economy

High population density, limited land access, and strict internal and external controls have kept economic conditions in the Gaza Strip - the smaller of the two areas under the Palestinian Authority - even more degraded than in the West Bank. An anticipated Israeli withdrawal from the Gaza Strip in 2005 may offer some medium-term opportunities for economic growth. The beginning of the second intifadah in September 2000 sparked an economic downturn, largely the result of Israeli closure policies; these policies, which were imposed in response to security interests in Israel, disrupted labor and commodity relationships with the Gaza Strip. In 2001, and even more severely in 2003, Israeli military measures in Palestinian Authority areas resulted in the destruction of much capital plant, the disruption of administrative structure, and widespread business closures. Including the West Bank, the UN estimates that more than 100,000 Palestinians out of the 125,000 who used to work in Israel or in joint industrial zones have lost their jobs. International aid of $2 billion to Gaza Strip and the West Bank in 2004 prevented the complete collapse of the economy and allowed some reforms in the government's financial operations. Meanwhile unemployment has continued at half the labor force. ARAFAT's death in 2004 leaves open more political options that could affect the economy.