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Palestinians: Economic Situation

Volume 474: debated on Thursday 3 April 2008

To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of (a) progress on implementation of the Palestinian Reform and Development Plan and (b) the effect of Hamas' control of Gaza on the overall development of the Palestinian economy. (196849)

I have been asked to reply.

The Palestinian National Authority (PNA) is shortly due to finalise its budget for 2008 and the list of Palestinian Reform and Development Plan (PROP) projects and recurrent costs for donor support. Progress in implementing the PROP will be reported at the Ad Hoc Liaison Committee (AHLC) meeting in London on 2 May. The World Bank and European Commission have established funding mechanisms to co-ordinate donor financial support for the PROP.

The takeover of Gaza by Hamas in June 2007 led to severe Israeli restrictions on imports into Gaza and a near complete-ban on exports. This has had a profound impact on the Gazan economy. The Palestinian Trade Centre (PalTrade) states that 95 per cent. of industrial working establishments in Gaza closed between July 2007 and February 2008, with the construction, export agriculture, furniture and garment sectors hardest hit. PalTrade estimates that in the construction sector alone, 42,000 workers have been laid off since January 2007.

The impact of the Hamas takeover and closure of Gaza by Israel on the whole Palestinian economy is more difficult to assess. The Occupied Palestinian Territories' economy was stagnant in 2007 despite large donor inflows. It is likely that without the closure of Gaza, GDP would have grown slightly. According to the World Bank, real GDP per head in the OPTs is now 40 per cent. lower than in 1999.