Palestinian-Israeli trade looks up
By Mel Frykberg
RAMALLAH - Business between the Palestinian Authority and Israel is growing
despite the political impasse over Israel's refusal to cease illegal settlement
building in East Jerusalem and the Palestinian West Bank.
Trade between Israel and the Palestinian Authority (PA) rose 17% to US$3.9
billion in 2008, according to the Israeli Tax Authority (ITA). In 2007, it was
$3.3 billion, and in 2006, $3 billion.
Palestinian imports and exports through Israeli ports rose 5% to $1.2 billion
last year, up marginally from earlier years.
"Trade is something that facilitates trust and political relations," Ofir
Gendelman, head of the Israeli-Palestinian Chamber of Commerce told Inter Press
Service (IPS). "We expect trade
figures to rise next year to about 20 billion New Israeli shekels [NIS, or
US$5.3 billion]. The sky is the limit should there be peace.
"Even with the blockade on Gaza we did NIS 2 billion business with the coastal
territory last year, and our chamber is only six months old."
It appeared business as usual last week when PA National Economy Minister
Bassem Khoury met with Israeli Deputy Prime Minister Silvan Shalom in Jerusalem
in the Israel-Palestinian joint economic committee.
Among the issues taken up were the granting of Israeli visas to Palestinian
businessmen and investors, import of larger quantities of meat and milk
products for the Ramadan period, and marketing Palestinian milk products from
the West Bank in East Jerusalem.
Following the meeting, the two sides decided to meet once a month.
Sub-committees were established on tourism, industry, agriculture and health.
"I believe that the Palestinians finally understood that there is no point in
waiting, that waiting only harms themselves," Shalom said, referring to the
PA's freeze on negotiations.
Palestinian President Mahmoud Abbas has repeatedly spoken of his refusal to
hold peace negotiations with Israel over the settlement issue. Israeli Prime
Minister Benjamin Netanyahu has said he would at most consider a "temporary
freeze" on settlement building in the West Bank, and that construction in East
Jerusalem would continue.
Khoury said the business meeting was not a sign of the PA backing down on its
refusal to negotiate. "We did not discuss anything political because the
political file requires a settlement freeze in the West Bank and East
Jerusalem, and Israeli recognition of the two-state solution."
According to a report by the Tel Aviv-based Peres Center for Peace, 90% of
Palestinian exports go to Israel, and account for 65% of Palestinian gross
domestic product (GDP). The Palestinian territories are also a major market for
Israeli goods.
"The two economies have always been heavily connected," Salah Awdi,
director-general of the Ramallah-El Bireh Chamber of Commerce said. Ramallah,
de facto capital of the West Bank, is the business center of Palestinian
territories. "But we face heavy taxes from the Israelis on importing goods from
both abroad and from Israel."
Under the Paris Protocol of 1994, a part of the Oslo agreement, Israel controls
a customs union comprising Gaza and the West Bank. It collects a duty on
imports into the West Bank and Gaza, and additionally collects a value added
tax (VAT) on goods and services from Israel destined for the Palestinian
territories.
The Israelis have often withheld these taxes as a political tool, as when Hamas
won the 2006 legislative elections.
"The Protocol perpetuates Palestinian economic dependence on the Israeli
economy, and preserves Israeli control over the Palestinian economy," said
Israeli rights group B'tselem.
Israel has sole control over the occupied territories, and this enables it to
unilaterally stop movement of Palestinian imports and exports. The protocol
gives Israel sole control over collecting taxes for the Palestinian Authority
for imported goods, which enables it to stop or suspend transfer of payments as
a means of pressure or punishment.
The protocol also enables Israel to unilaterally establish taxes on imported
goods, giving preference to its own economic interests.
Israel has now drastically limited the number of Palestinian laborers who can
enter Israel for desperately needed jobs amidst high unemployment and poverty
in the West Bank.
Tens of thousands of Palestinians lost their livelihoods when Israel limited
the number of security permits for entry following a series of suicide bombings
several years ago.
According to the World Bank, in 2000 the Palestinian economy was one of the
most remittance-dependent economies, with income outside the territories
comprising 21% of gross national income.
"We also face long delays and security checks at border crossings and ports,
which increase our transportation costs," said Awdi.
According to the UN Office for the Coordination of Humanitarian Affairs, Israel
has set up more than 600 roadblocks, checkpoints and barriers throughout the
West Bank.
"Goods often get spoilt or are damaged when they are transported," said Awdi.
"This involves an Israeli vehicle through Israeli territory to the Palestinian
border and then another security check and delay as the goods are loaded onto
Palestinian vehicles."
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