IMPACT OF ISRAELI PALETINIAN CRISIS ON THE ECONOMIC STABILITY OF THE GAZA STRIPE

CHAPTER ONE:

INTRODUCTION

1.1 Background of the study

Since June 2007, the Gaza Strip has been subjected to a comprehensive closure and various limitations, including land, sea, and air access. These measures effectively constitute a blockade, impacting the daily lives of about 2 million people living inside an area of 365 square kilometres. In June 2007, Israel implemented more stringent measures regarding the mobility of individuals and the flow of products into and out of the Gaza Strip. The importation of products was significantly limited, while the exportation of goods was prohibited (Gisha, 2019). Furthermore, with the implementation of closures and limitations, a series of three significant episodes of hostilities have occurred within a space of six years. The first military action took place in December 2008. Although there has been a minor easing of restrictions on the movement of people and products in and out of Gaza throughout the years, it is important to note that such mobility continues to be subject to significant limitations and lacks predictability. This has resulted in an unparalleled and enduring humanitarian calamity. The examination of microeconomic data reveals a noticeable decline in the living circumstances in Gaza from 2007 to 2017. By using conventional statistical techniques that integrate survey and census data, the research reveals that the proportion of individuals living in poverty, as measured by the poverty headcount, amounted to 40 percent of the total population in 2007. However, this figure saw an increase to 56 percent in 2017. Simultaneously, it was observed that the poverty disparity in Gaza saw a rise from 13.95 percent to 19.87 percent, as reported by UNCTAD in 2015. When support is not provided, the poverty indicators exhibit higher values. The data analysis reveals that there was an upward trend in the poverty headcount, rising from 44.45 percent in 2007 to 63.66 percent in 2017. Additionally, the poverty gap also saw an increase, going from 17.36 percent to 26.06 percent during the same period. The use of poverty gap estimations facilitates the computation of the comprehensive minimum yearly expenditure required for poverty eradication. According to the World Bank (2018), this expenditure saw a fourfold increase during the period of 2007 to 2017, escalating from $209 million to $838 million. The aforementioned figures correspond to 8.7 and 28.7 percent of the Gross Domestic Product (GDP) of Gaza in the years 2007 and 2017, respectively. The disparity of $629 million between the minimum expenditures in 2007 and 2017 serves as a representation of the economic impact resulting from the implementation of closure measures and limitations, particularly in relation to poverty. In 2017, the proportion of the Gross Domestic Product (GDP) in Gaza was calculated to be 22.3 percent, while it accounted for 4 percent of the GDP in the Occupied Palestinian Territory. These figures are based on constant 2015 dollars and were obtained from the Palestinian Central Bureau of Statistics (PCBS, 2019). The integration of macro-level development scenarios with household-level data enables a more precise assessment of the financial implications associated with occupation. The implementation of Israel's "Separation Barrier" is already exerting a detrimental influence on the economy of the northern region of the West Bank. The communities that have the most severe impact are those situated in the vicinity of the barrier and the Green Line. The primary concern is on the concept of isolation. The construction of the barrier has resulted in the isolation of communities, so impeding their access to key sources of income, both inside the West Bank and in Israel (Al-Haq, 2017). The possibility for separation of Palestinian villages, as well as their agricultural fields, assets, and markets, arises when the path of the barrier diverges from the Green Line. In conjunction with the projected decline in revenue, particularly in the agricultural sector, and the depletion of income-generating assets, the obstacle may engender additional economic disruptions. These disruptions may manifest as alterations in production patterns, shifts in domestic and local consumption behaviours, and conceivably, the promotion of a shift away from a currency-driven economic system towards a barter-based system.

The economic challenges encountered by these border villages are not novel in nature. The relative affluence of the affected population has seen a gradual erosion over the last two years due to the imposition of curfew measures and the closure of various businesses. The availability of employment opportunities in Israel, which once served as the principal source of income for several border villages, has seen a significant decline. The decline in income derived from commerce and industry may be attributed to a significant decrease in consumer spending by those who were previously working in Israel. The imposition of travel restrictions within the West Bank and between the West Bank and Israel has resulted in a diminished capacity for individuals residing outside these regions to engage with alternative markets. Furthermore, agricultural producers and manufacturers have encountered difficulties in consistently transporting their goods to markets located in other areas within the West Bank. The fertile area has seen a shift towards agriculture as a significant means of living due to the decrease in job opportunities in other industries (Molina, Rao, & Datta, 2015). Nevertheless, the building of the barrier poses a significant danger to the agricultural sector's capacity to flourish. A significant proportion, over 40 percent, of private-sector enterprises in the agricultural sector inside the West Bank are concentrated in the governorates of Jenin, Tulkarm, and Qalqiliya. In a similar vein, the distribution of wells and irrigation networks throughout these governorates does not align proportionately with their 25 percent representation of the West Bank population.Furthermore, there is a notable overrepresentation of enterprises involved in wholesale or retail commerce, including vehicle maintenance, within the territory. This particular sector accounts for more than 50% of all private establishments in the area. The primary factor contributing to this phenomenon is the geographical closeness of the territory to Israel and the Green Line. Nevertheless, the number of workers at these enterprises is restricted, often amounting to just one or two individuals, given that the majority of them are characterised by their small-scale operations and familial management. Manufacturing businesses, after commercial companies, exhibit the highest employment rates among inhabitants in the aforementioned governorates, with around 12,000 individuals. However, these manufacturing firms are characterised by their relatively modest size, employing an average of four individuals per company (Arcand & Al-Azzeh, 2020).

Labour surveys indicate a decrease in employment rates that may be attributed to the Intifada and the implementation of more stringent internal and external restrictions. Nearly half of the total employment losses, amounting to 21,700, experienced between 2000 and 2001 in the three governorates, together with the district of Tubas, may be attributed to the downturn in the construction sector. According to Arcand and Al-Azzeh (2020), the agricultural sector had a significant decline, amounting to 18 percent of the total.

It may be inferred that a significant proportion of the decrease in employment opportunities can be attributed to the fall in jobs located over the Green Line in Israel. The aforementioned result is derived from the notable concentration of job losses in the border governorates. It is observed that over half of the individuals who experienced unemployment in the West Bank during the period of 2000 to 2001 originated from these specific governorates. This percentage exceeds the region's population share. The year 2000 was characterised by a bountiful olive harvest, which therefore resulted in a heightened need for agricultural labour in Israel compared to non-harvest years. As of 2001, the unemployment rate in the regions of Jenin and Tubas was recorded at 36.3 percent, while in Qalqiliya and Tulkarm it remained at 25.4 percent. The unemployment rate in the remaining areas of the West Bank was recorded as 19.1 percent. The World Bank conducted a research in 2001 that focused on poverty in the West Bank and Gaza. This study resulted in the creation of a "poverty map," which provided a geographical representation of poverty levels in the Palestinian territories (World Bank, 2018). The primary variables of household consumption were identified based on Palestinian spending and consumption surveys. The study yielded many significant discoveries, which include the following: The economic well-being of a family is enhanced when one of its members is employed in Israel, as opposed to being employed in the Palestinian territories. Furthermore, inside the West Bank, families with individuals working in the private sector experience greater prosperity compared to those with members engaged in the public sector. The World Bank research conducted in 2001 provided poverty estimates for 39 regions in the West Bank. Phase one of the barrier's development directly affects towns along the Green Line, including a total of seven locations. The survey revealed significant disparities in poverty rates throughout different regions of the West Bank, including variations within specific communities. Therefore, the researcher sought to examine the impact of Israeli Paletinian crisis on the economic stability of the Gaza stripe.

1.2 Statement of the problem

Since June 2007, the Gaza Strip has been subjected to a comprehensive closure and a set of limitations including land, sea, and air, effectively constituting a blockade. This siege affects a population of approximately 2 million people living inside an area of 365 square kilometres. In June 2007, Israel implemented more stringent regulations on the mobility of individuals and the transportation of products to and from the Gaza Strip. The importation of products was significantly curtailed, while the exportation of goods was prohibited. Furthermore, with the implementation of closures and limitations, there have been three significant instances of hostilities occurring within a space of six years. The first operation took place in December 2008. Although there has been a minor easing of restrictions on the movement of individuals and commodities in and out of Gaza throughout the years, it is important to note that such mobility continues to be subject to significant limitations and lacks predictability. This has resulted in an unparalleled and enduring humanitarian calamity. Based on the findings of the International Monetary Fund (2017), it was determined that the extent of destruction resulting from the conflicts occurring between December 2008 and January 2009 amounted to more than 60 percent of the overall capital stock in Gaza. Similarly, the hostilities in 2014 were found to have caused damage equivalent to 85 percent of the capital stock that remained following the preceding conflicts. According to the International Monetary Fund (2018), if the utilisation of production inputs in Gaza had been comparable to that in the West Bank, the growth rates in Gaza might have been three times greater than the rates seen. Hence, the researcher sought to look into the impact of israeli paletinian crisis on the economic stability of the Gaza stripe.

1.3       Objective of the study

The broad objective of the study is to the impact of Israeli Paletinian crisis on the economic stability of the Gaza stripe. The specific obectives is as follows

i.                    Examine the factors responsible for the Israeli Palestinian crisis.

ii.                  Investigate the impact on the israeli palestinian crisis on the welfare of the citizens of Gaza.

iii.                Assess the impact of Israeli Paletinian crisis on the economic stability of the Gaza stripe.

1.4       Research Questions

The following questions have been prepared for the study

i.          What are the factors responsible for the Israeli Palestinian crisis?

ii.        What is the impact on the israeli palestinian crisis on the welfare of the citizens of Gaza?

iii.      What is the impact of Israeli Paletinian crisis on the economic stability of the Gaza stripe?

1.5       Significance of the study

The findings of the study will be significant to both the Israeli and paletinian government as it will reveal the extent to which the crisis between both states have affected their people as lives have been lost and people displaced from their homes and therefore find a compromising ground to resolve the issues between them.

The findings of the study will be significant to the academic community as it will contribute to the existing literature.

1.6       Scope of the study

The study  focuses on impact of israeli paletinian crisis on the economic stability of the Gaza stripe. Hence, the study will examine the factors responsible for the Israeli Palestinian crisis, investigate the impact on the israeli palestinian crisis on the welfare of the citizens of Gaza and assess the impact of Israeli Paletinian crisis on the economic stability of the Gaza stripe.

1.7       Limitation of the study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection (internet, questionnaire, and interview), which is why the researcher resorted to a moderate choice of sample size. More so, the researcher will simultaneously engage in this study with other academic work. As a result, the amount of time spent on research will be reduced

1.8       Definition of terms

Crisis: a time of intense difficulty or danger.

Economy: the state of a country or region in terms of the production and consumption of goods and services and the supply of money

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