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French Version

UN trade body sounds alarm on Palestinian economy

The Palestinian economy is declining to a level not seen for a generation amid an international freeze on aid, the UN's trade and development agency said Tuesday. In a report, the UN Conference on Trade and Development (UNCTAD) said the Palestinians' average per capita annual income next year was not expected to exceed $1,000.

"The Palestinian economy in 2006 is highly vulnerable, being subjected to a process of de-development that recent events have only accelerated and deepened," said UNCTAD.

The income figure would be the lowest since the start of the 1980s, UNCTAD said.

"The economy of the occupied Palestinian territory is on the verge of collapse," it warned. "Projections point to unprecedented unemployment, poverty and social tensions."

The forecast economic slide next year hinges on a 50 percent cut over 2006-2008 in international support to the Palestinians, whose aid-dependent areas have been facing a squeeze by donors since the start of the year.

The decline would lead to an estimated 530,000 job losses, UNCTAD said.

The cash-strapped Palestinian Authority has long relied on donors, but Western governments slapped restrictions on aid after the radical Islamist group Hamas, which they consider a terrorist movement, came to power earlier this year following an election victory.

The West froze all direct aid to the Palestinian government, demanding that Hamas renounce violence, recognize Israel and agree to honor past Israeli-Palestinian agreements.

In 2005, before the donor freeze, the Palestinians' average per capita income was $1,450.

"The overall household poverty rate soared from 61 percent in the last quarter of 2004 to 66 percent at the end of the second quarter of 2006," said UNCTAD.

Unemployment, which currently stands at around 35 percent, is expected to climb to 50 percent by the end of the year, it said. Before the freeze, international aid stood at around $1.3 billion a year.

Monday's announcement of the formation of a government of national unity between Hamas and the former Palestinian ruling movement Fatah could help ease the aid deadlock, said Raja Khalidi, the UNCTAD official responsible for the region.

But even a continued 30 percent decline in aid over 2006-2008 would drive average per capita income down to $1,200 and lead to the loss of 328,000 jobs, said UNCTAD.

Amman,09 20 2006
The Daily Star
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