Contents

• the Shelta land case historical background international law
• Israeli methods of land seizure and acquisition military orders Israeli settlement
• conclusion

• land use planning
• international law
• Israeli planning policies
• the `transfer' of power
• the structure of the `legal' system
• house demolitions
• land use restrictions
• planning and land use for Israeli settlers
• effects on the Palestinian population
• conclusion

• total water supplies
• international consensus
• military orders
• effects of Israeli policies
• conclusion

• military orders
• effects of Israeli policies
• marketing Palestinian produce
• Gazan fishing industry
• conclusion

• problems of industrial development
• industry in the Gaza Strip
• production and marketing restrictions
• prospects for the future
• conclusion

• legal obstacles
• trade in the West Bank and Gaza Strip
• Palestinian trade with Israel
• trade with Jordan and other Arab states
• the Gazan citrus trade
• taxes
• imports
• conclusion

• employment conditions
• trade union harassment
• `there is no place for Arabs'
• Palestinian women in the wage labour force
• child labour
• migratory labour: the `right' to work in Israel
• unemployment
• magnetic cards
• the extent of `dependency'
• the effects of the Gulf War
• emigration
• conclusion

• international law
• Israeli taxation policy
• tax collection practices
• military orders
• the case of Beit Sahour
• conclusion

• military orders
• the closure of the banking system
• the informal financial sector
• insurance market
• the effects of Israeli financial policies
• restrictions on foreign aid
• conclusion

There have been no positive economic developments in the Occupied Palestinian Territory (OPT) since we published the first edition of this report. Despite the peace talks and the signing of two major agreements between Israel and the PLO, Israel has not lifted its restrictions against the Palestinian economy, and the one-year closure of the OPT is speeding up the economic decline.

Two developments have, however, taken place which will probably have an impact on the future Palestinian economy. The first was the signing of the Oslo Agreement and its economic appendices, as well as the ongoing economic multilateral negotiations and the Continuing Committee for Economic Cooperation. The Oslo Agreement's appendix, `Protocol on Israeli-Palestinian Cooperation in Economic and Development Programs,' nonetheless, did not define the Palestinian National Authority's control over the economy during the transitional period. It merely identified the areas of cooperation with Israel, for example, in water, electricity and energy.

The second development was the World Bank and International Monetary Fund missions to the OPT in 1993. These missions--commissioned by the countries who pledged US$ 2.5 billion to the OPT--conducted studies for future development plans, and the funds are expected to target Palestinian development projects over the next five years. The World Bank's study concluded that the main weaknesses in the Palestinian economy lie in the `structural imbalances and distortions' resulting from `heavy dependence on outside sources of employment for the Occupied Palestinian Territory, the unusually low degree of industrialization, a trade structure heavily dominated by trading links with Israel and with a large trade deficit, and inadequacies in the provision of public infrastructure and services.'

The Israeli closure and `cantonisation' of the OPT, the isolation of East Jerusalem, and frequent curfews, have in fact devastated the economy. Lost earnings amount to millions of dollars as thousands of workers are prohibited from working in East Jerusalem and inside Israel, and Palestinian agriculture and internal trade is being severely restricted.

Through 25 years of military occupation, Israel has created in the occupied Palestinian territories an economy dependent on, and subservient to, its own. In the predominantly land-based economy of the West Bank and Gaza Strip, control of land and water resources is the basis for political and economic control, and vice versa. The Israeli-Palestinian conflict is, above all, territorial. With the failure of the international community to pressurise Israel to implement the host of international resolutions adopted by the United Nations (UN) Security Council, and other international bodies, governing the conduct of a belligerent occupying power, the visible and `invisible' consequences of the Israeli military occupation have gone largely unchecked and unhindered for the past 25 years.

This report, coming as it does during the latest peace negotiations, details the effects and consequences of the Israeli military occupation on economic development in the occupied Palestinian territories. We have attempted to make the connection between the Israeli occupiers laws, the military orders, and the consequent underdevelopment and `de-development' of the Palestinian economy. The report, although covering the West Bank, Gaza Strip and East Jerusalem, concentrates on the West Bank where most available information and current research comes from.

We have not included information on the other territories occupied by Israel--the Syrian Golan Heights (illegally annexed in 1981) and parts of southern Lebanon.

What marks Israel's occupation of the West Bank and Gaza Strip as arguably unique is its methodical attention to `legal' justifications for what are blatantly illegal acts and clear violations of international law. The result is a status novel under international law; Israel considers itself the `administrator' as opposed to a `belligerent occupier', with `sovereign' powers without formally annexing the occupied territories. The system of Israeli military orders has created a structure which is an obstacle for any significant future development. Most of these military orders are illegal under international law and were developed to serve the purposes of occupation. They create dependency and subserviency, they facilitate the appropriation of vast amounts of Palestinian land, and are designed to serve the interests of Israeli settlers at the expense of indigenous Palestinian interests.

When, for example, in 1983 the then Israeli PM Menachem Begin claimed that Israel was not confiscating any `Arab' land in the West Bank, this was, legally-speaking correct, but according to Palestinian attorney, Raja Shehadeh, `it was nevertheless taking it by other methods'. By 1991,

Israel had expropriated an estimated 65 percent of the West Bank and nearly 50 percent of the Gaza Strip. Most importantly, the military orders are intended to prevent independent economic activity and development since this may lead to political independence.

An estimated 1,500 military orders to date, some unnumbered, regulate all aspects of Palestinian life in the West Bank. A similar set with its own numbering system has been issued for the Gaza Strip.

These orders amend existing Jordanian law in the West Bank and Egyptian law in the Gaza Strip. They have the force of law and are rarely successfully challenged in the Israeli Courts. The Israeli Military Area Commander is endowed with all legislative, executive and judicial powers previously held under the jurisdiction of the Jordanian and Egyptian governments between 1948 to 1967; the

Area Commander also has control over the appointment of all Israeli officials in the occupied Palestinian territories. `The law' was transferred to `the person responsible' who became, in effect, a dictator who held nearly absolute power. In addition, the host of military orders relating to `security' (in the wide definition given to this term by the Israeli authorities), allow the use and abuse of the military orders for political reasons, including punishment and reward through economic restrictions and collective punishment.

 Although Israel refuses to acknowledge the application of the Fourth Geneva Convention (1949) and the Hague Regulations (1907) to its occupation of the West Bank, Gaza Strip and East Jerusalem (illegally annexed in 1981), it has said it complies with the `humanitarian' conditions of these regulations. However, Israeli policies and practices in the occupied territories are clear violations of international law. The continuing process of Israeli settlement on Palestinian land, for example, illustrates that Israel is not complying with this `humanitarian' spirit; as the new Israeli PM Yitzhak Rabin said during his 1992 election campaign: `I was always for the principle that it is permissible to build settlements even beyond the Green Line.'

Nowhere is Israel's control more pervasive than in the sphere of the Palestinian economy and economic development precisely because economic independence would fuel political independence. `Security' reasons have provided the Israeli authorities with a convenient excuse to refuse anything form planting tomatoes to not publishing a budget for the occupied territories in 25 years. Discriminatory practices abound, from prohibiting picking wild thyme to restrictions on setting up a business, export to Europe and registering every single tractor. Israel's attitude towards development in the occupied Palestinian territories is clear; as Israeli PM Rabin commented during his last premiership: `There will be no development [in the occupied territories] initiated by the Israeli government, and no permits will be given for expanding agriculture or industry which may compete with the State of Israel'.

 To provide an overviewof the obstacles to economic development, we look at the different sectors of the economy, the major military orders, the relevant clauses in international law, examples of the effects of Israeli military policies, and offer our conclusions and policy recommendations for each sector. We have attempted to illustrate the dependency on Israel created in each sector; the exploitation of the trapped Palestinian market to provide a dumping ground for surplus Israeli products, the exploitation of cheap Palestinian labour, and the host of economic and legal restrictions faced by Palestinians in daily economic life.

 In addition, the Palestinian economy has been severely affected as a result of the Gulf War and unprecedented 2-month blanket curfew imposed throughout the occupied territories during the war. And, while Israel continues to receive substantial amounts of foreign aid, aid to the Palestinians has fallen dramatically. Remittances from the Gulf States have all but dried up and aid from the United States (US) was cut from $14 million to $12 million in 1991. One exception has been aid from the European Economic Community (EEC) which has increased during the past few years.

 As a result of 25 years of occupation, the Palestinian economy has `de-developed'. The result is an inward-looking economy, producing, under heavy restrictions, for the local market. That foreign export is permitted on a small scale is largely insignificant because the current system forces production for local demand and effectively prohibits Palestinian industrialists and farmers from utilising any benefits from foreign trade.

 One major constraint we have faced in writing this report has been the lack of accurate data. There is no source of accurate data; even the published Israeli Central Statistical Bureau's figures are based on `estimates' for 1988-1991. This illustrates the extent to which Israel's military occupation is secret; no budget has ever been published for the occupied territories, figures for population, water resources, land acquisitions, etc., are all secret and access is consistently denied to Palestinians. We have used data from a number of sources: academic reports, periodicals and magazines, the West Bank Data Base Project (a now defunct Israeli research body which had access to figures from the Civil Administration), books, newspapers, the JMCC database, interviews and field work. In most cases, the figures published and collected vary and sometimes contradict each other, often dramatically, and so are only included to illustrate points rather than provide accurate statistical information. This is one of the major constraints facing all researchers and policy analysts working in the occupied Palestinian territories. Israeli restrictions are designed to prevent accurate data collection. When, on occassion, the Israeli authorities have been approached to provide certain data or information, they invariably refuse to release the information.

 Our conclusion is that unless the legal structure and other economic restrictions imposed on the Palestinian economy and society in general are removed, there will be no significant economic development in the West Bank, Gaza Strip and East Jerusalem. Real change, improvement and significant economic development will only come about when the fundamental territorial conflict is resolved and there is an independent Palestinian state with its own economic and legal structures. The issue of economic development cannot be separated from political independence, and until the fundamental political question is resolved, economic development will continue to be used as a weapon and tool against the struggle for Palestinian self- determination.