The Palestinian economy in East Jerusalem has been progressively isolated and constricted and now wields less than half of the economic influence that it had in 1993, a new UNCTAD report says. A disabling economic environment, high and rising rates of poverty, faltering industry and services, restricted investment, housing shortages, and inferior social and municipal services all combine to create hardship for the city's Palestinian inhabitants and to stifle their economy's potential, the report contends.
The study, entitled The Palestinian Economy in East Jerusalem: Enduring Annexation, Isolation and Disintegration, was released today.
The East Jerusalem economy constituted 15 per cent of the Palestinian economy prior to the signing of the 1993 Oslo Accords, but has shrunk to an estimated 7 per cent in recent years. While the GDP of East Jerusalem (around US$600 million in 2010) has increased, albeit marginally, since 2001, its relative size has fallen because growth in East Jerusalem has lagged behind that of the remaining Occupied Palestinian Territory (OPT). It has been estimated that the Israeli separation barrier has imposed over $1 billion in direct losses to the economy of East Jerusalem since its construction began in 2003, the report says. Its adverse impact in terms of lost trade and employment opportunities endures, and is estimated at around $200 million per year, according to the study.
UNCTAD economists note that Jerusalem - of significance to people and faiths from around the world - has been gradually detached from the Palestinian economy, despite its historic role as the Palestinian people's commercial, cultural and spiritual centre. The economy of East Jerusalem is not only constrained by Israeli impediments affecting the OPT generally. Many of the obstacles to the city's development are specific to the status of East Jerusalem as an occupied territory subsequently unilaterally annexed to Israel, the report says.
UNCTAD notes that Palestinian poverty in Jerusalem has risen steadily over the last decade, as the city's isolation from its Palestinian hinterland has continued to increase since the second intifada and the construction of the Israeli separation barrier. In the space of one year alone, the poverty rate of Palestinian households rose from 68 per cent (in 2009) to 77 per cent (in 2010). By comparison, only 25 per cent of Israeli households in (both East and West) Jerusalem were classified as poor in 2010. The available data indicate that 82 per cent of Palestinian children in East Jerusalem were living in poverty in 2010, compared to 45 per cent of Israeli children living in Jerusalem.