How much does terrorism cost the Palestinian economy?

In a recent edition of the Guardian’s data blog – where facts are evidently “sacred” – contributor Mona Chalabi focused on history’s refugees and naturally managed to include the Palestinian “Nakba” while failing to mention the more than 800,000 Jewish refugees from Arab lands in the two decades following 1948.


So, when we saw Chalabi’s byline in a new data blog entry on the Palestinian economy, (How does Palestine’s economy work?, Oct. 14), we weren’t expecting much.

Chalabi begins her piece, thus:

These days, the economic health of any country relies on that of others – but the Palestinian Territories are exceptionally dependent on factors outside of them. On what do Palestinian economic fortunes rely on and how does the future look?

Whilst she notes the role played by Palestinian corruption, Egyptian restrictions and a few other factors, her focus, accounting for a large majority of the text in the story, is naturally on Israel.

She writes:

Israeli occupation in Palestinian territories, the barrier it has constructed along and within the West Bank as well as its land, air and sea blockades in the Gaza strip have placed severe limitations on the success of Palestinian economic policies.

A complex web of checkpoints and roadblocks make it difficult for Palestinians to travel within the Palestinian Territories for jobs, to bank or to trade. Farmers whose land is now behind the barrier are required to apply for ‘visitor permits’ which Israel regularly rejects – in Akkaba it approved 49% of applications in 2011, and just 20% by 2012. More recently, a report from the World Bank found that Israeli restrictions in the West Bank alone cost the Palestinian economy $3.4bn (£2.1bn) a year, or 35% of its GDP.

Israel’s reach in the Palestinian Territories means it can exert enormous power over Palestinian livelihoods. Oxfam estimates that 800,000 olive trees have been uprooted by Israeli authorities since 1967. As a result, the 80,000 Palestinian families that the UN claims are economically reliant on the olive harvest lose £12.3m each year To show the impact of this, Visualizing Palestine showed what an area with a third the amount of trees – Central Park – would look like if it were destroyed.

Israel may have policies that hamper the Palestinian economy, but it is also a major source of Palestinian livelihoods. Unemployment is exceptionally high in the West Bank and the Gaza strip where almost 1 in 4 adults are jobless. According to the latest report from the International Labour Office, some 87,000 Palestinians aged over 15 (around 10% of all those with jobs) are employed in Israel and its settlements.

The majority of these Palestinians are employed in the construction sector, followed by manufacturing and agriculture – all of which tend to be characterised by insecurity. A survey by Palestine’s main trade union found that only 11% of workers in Israeli settlements said they had job security, over half received less than the minimum wage and 65% had been exposed to toxic substances.

Though you can read our posts in response to the World Bank report mentioned by Chalabi here and herethe remarkable thing about her claim regarding the harmful effects of Israeli checkpoints and security fences on the Palestinian economy is that she doesn’t say a word about the Palestinian violence which prompted them.  You’d almost be forgiven for believing that Israel enacted these defensive security measures for no reason whatsoever, or for the purpose of choking the Palestinian economy.  Indeed, words such as “terrorism”, “rocket”, “militant” and “violence” are nowhere to be found in her post.

To get a sense of how extraordinarily misleading this is, imagine a media report about the injurious effects of economic sanctions on Iran which didn’t even mention that the sanctions were enacted to influence Tehran into complying with U.N. Security Council demands that it halt its nuclear weapons development.

Similarly, Chalabi – as with most Guardian Left narratives about the economic toll of Israeli defensive measures on the Palestinian economy – is conflating cause with effect.  It ignores the fact that the Israeli blockade of Gaza was prompted by thousands of rockets targeting Israeli civilians, and that the security fence was constructed in response to waves of deadly suicide bombings in the early 2000s which targeted cafes, markets, bus stops and other public areas where families and children congregate.  

One can of course debate the particular costs and benefits of specific checkpoints, or question whether the route of the security fence can be altered to improve Palestinians’ quality of life while continuing to protect Israeli civilians.  But, to completely ignore that these measures were undertaken to carry out the most fundamental mission of government – to protect its citizens from harm – represents a glaring obfuscation.

Just once, we’d love to see an analysis of the economic impact of terrorism on the Palestinian economy.  To those so inclined, here are a few dynamics worth attempting to quantify:

  • The cost to the Palestinian economy by Israeli security measures necessitated by Palestinian terror
  • The cost of procurement, production, maintenance and deployment of nearly 13,000 rockets launched by terrorists in Gaza since 2001
  • The cost of terrorist tunnels in Gaza, both in terms of the government funds used to build them as well as the diversion of concrete and other construction materials which would otherwise be used to improve their infrastructure 
  • The costs of guns, ammunition, suicide belts, explosive devices (and training of ‘militants’ to use such arms) in the West Bank and Gaza since the First Intifada
  • The related cost to the Palestinian economy of thousands of Palestinians involved in the terror industry who could otherwise be employed in more productive enterprises
  • The cost to the Palestinian Authority of paying salaries to Palestinian terrorists in Israeli prisons
  • The cost to the Palestinian economy of their leaders’ glorification of terror and Zionist scapegoating and related failure to nurture a national ethos of education, hard work and innovation

The World Bank report on the Palestinian economy optimistically predicted a $3.5 billion windfall as the result of Israeli withdrawal from the West Bank. But, even leaving aside the question of which party is to blame for the economic impact caused by the failure to reach a peace agreement, it seems reasonable to take into account the cost of Palestinian values, habits and cultural norms which are inimical to economic prosperity.

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