JERUSALEM — Suppose a miracle takes place, and Israelis and Palestinians stop shooting and resume talking. Even then, the Palestinian economy will need at least three years to recover, according to economic experts at Israel’s Defense Ministry.
“It is not a matter of just saying, ‘OK, let’s return to the good old days,'” Lt. Col. Isaac Gurvich, head of the economic branch of government activities in the West Bank and Gaza Strip, said this week. “It is a much more complex process. The wheels will have to start rolling again, and it will take time.”
It may also take some time before Israeli employers try their luck again with Palestinian workers due to uncertainty over whether they will be able to make it to daily jobs — and because of the security risk they represent.
“As the intifada continues, more and more foreign workers replace Palestinians,” Gurvich explained. “Even if the security situation stabilizes, you can’t send them back to Thailand and Romania overnight. It will take time before Palestinian laborers can return.”
It also will take time before the tourism industry recovers, before Israeli shoppers return to Palestinian towns, and before Israelis return to gamble at the Jericho casino in the West Bank.
“The situation is worse then ever,” agreed Reserve Col. Shalom Harari, a former Arab affairs adviser at the Defense Ministry. “There are almost no trade contacts.”
Whatever contacts could develop likely would be vetoed by Palestinian militants. Few dare challenge the semi-official boycott the Palestinians have imposed on Israeli products, even though the Palestinian population pays the price.
The figures are shocking. According to Israeli estimates, in the past year the Palestinians have lost an estimated 28 million work days, the equivalent of $650 million in income.
The volume of trade between Israel and the Palestinian Authority has shrunk from $3 billion prior to the intifada to $2.5 billion in the last year.
“This is unbelievable — half a billion dollars have disappeared,” Gurvich said. “Some 120,000 Palestinian families have lost their main source of income.”
Some 40 percent of Palestinians now live beneath the internationally accepted poverty line of $2.10 daily income per person.
Palestinian economists are worried. They know that Palestinians desperately need the Israeli market, at least in the foreseeable future. According to a recent Palestinian poll quoted by the Associated Press, only 44 percent of Palestinians — down from 67 percent just six months ago — advocate a Palestinian state that does not have economic ties to Israel.
Two weeks ago, 14 Israeli economists and four Palestinians met at a conference center of Germany’s Konrad Adenauer Foundation, located in northern Italy, to try to renew the economic dialogue.
But it appears there is little the sides can do beyond talk. Of the 300,000 Palestinians that the Oslo accords envisioned working in Israel, hardly 12,000 presently have jobs — and 3,000 of those are in the Erez industrial park on the border between the Gaza Strip and Israel.
It is estimated that Israel is holding at least $250 million due the Palestinians. Foreign Minister Shimon Peres recently explained why, saying that Israel would not finance the salaries of the Palestinian policemen who have led attacks on Israelis.
The level of cooperation between Israel and the Palestinians has shrunk to the essential. After many Palestinian business-owners defaulted on their Israeli business partners — and Israel had little recourse — Israeli banks no longer give them credit beyond a limited overdraft.
The Palestinians also depend on Israel for gasoline supply, through the Israeli company Dor Energy. As soon as a gasoline tanker reaches the Gaza border checkpoint, the local authorities pay cash for the oil.
Oil supply is one of the few forms of cooperation that still exists — for the simple reason that Israel is not willing to break all economic ties with the Palestinian Authority, both for economic and political reasons.
Although the Palestinians receive most of their water from local resources — wells, springs and the central aquifer — at the end of 2000 they received from Israel some 31.3 million cubic meters of water.
The Palestinians get all their power supply from the Israel Electric Company. Even maintenance work is often carried out by electric company workers, under heavy protection of Palestinian security.
The Palestinian Authority owes the company about $20 million. Energy Minister Avigdor Lieberman recently suggested halting the power supply until the Palestinians pay up, but the government rejected the proposal.
But the overall economic situation in the territories is gloomy. On the eve of the intifada, which began in September 2000, the Palestinian GNP stood at $2,000 per capita. At the end of this year, it will be only $1,100, and even less than that in neighboring Jordan.
The Israeli GNP is $16,000 per capita.