The Pol- econ Palestinian Authority: Dependency system

Prepared by the researche : Ahd Ahmad Mohamad Aljardat –PHD Student in International Relations Program. Arab American University in Palestine
Democratic Arabic Center
Journal of Afro-Asian Studies : Twenty-fourth Issue – February 2025
A Periodical International Journal published by the “Democratic Arab Center” Germany – Berlin
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The prevailing social relations between the West Bank and the Gaza Strip in many aspects of life are significantly different from one another. Of particular importance are the differences in general social and cultural developments as well as the differences in economic conditions. These historical factors, which included the division of geography, politics, and society following the Nakba and which the occupation later consolidated and was eager to maintain, combined with negative internal Palestinian factors and practices in the autonomous authority, caused internal conflict in Palestine.
Introduction:
More than five million Palestinians encounter military subjugation; Israel has been engaged in persistent endeavors to incorporate extensive and noteworthy parts of the Palestinian territories with the intention of achieving further territorial expansions for Israel; meanwhile, the Palestinians are among the minority of national entities deprived of fundamental human rights and the opportunity to establish an autonomous sovereign state in their native land following the disintegration of the colonial regime. The Israeli separation barrier, constructed under the guise of “security concerns,” represents merely one of the numerous manifestations of confiscation and deprivation and daily adversities stemming from a precarious economic predicament that the Palestinian populace faces during the period of occupation.[1](Kaminer, 2006, 1-4). To scrutinize the issue of economic policy in Palestine, we will employ Economic dependency theory in this Paper.
Palestinian Economic and Israel State:
A new generation of Palestinians is growing up under Israeli military colonial rule, forced to give up their property and be deprived of their collective right to freedom and independence. This is a result of Israeli capitalism on market rules having control over the conditions necessary, which deprived of the Palestinian people to achieve justice and their national rights. A generation emerged that no longer believed the Oslo Accords could offer economic prosperity to individuals or groups, or guarantee civil rights and high-quality services. The Palestinian people’s social, economic, and political rights all of which the Israeli occupiers have consistently denied must be taken into consideration when redefining the concept of liberation, in line with the new generation of liberation activists that transformed forms of confrontation with exclusion and settler colonial control. Marx contends that the urgent aspirations of the populace to establish a state with national sovereignty cannot be ignored in light of national economic considerations. He also implies that without the state’s economic independence, the political “determination of the nation’s destiny” is impossible.[2] (Khaledi, 2019, 150-154).
A massive ethnic cleansing campaign that resulted in the expulsion of hundreds of thousands of Palestinians from their homeland in 1947–1948, along with hundreds of deaths from attacks on Palestinian villages, was used to establish the state of Israel. Ever since the 1967 war, which saw Israel occupy Gaza permanently and colonize the West Bank, the Palestinian people’s situation has only gotten worse. This is especially true of the economic situation. Because of capitalism, Israel’s ruling class perpetuates poverty and inequality through the use of racism and discrimination in all its forms.[3] (Weston, 2023, 1-5)
Within this extension of the Israeli government in the Occupied Territories are depicted as a discriminatory extension of colonial schemes, sometimes resulting in the displacement of Palestinians from their regions. Considering the significant influence of the Zionist movement in shaping Israeli capitalism, the ongoing conflict between Israel and the Palestinian population can be seen as a coherent of this historical trajectory, aimed at ultimately establishing a Palestinian with limited autonomy. Consequently, a distinctive class hierarchy emerges within Palestinian society, marked by the dominance of the capitalist class reliant on its advantageous ties with Israeli economic interests, while the working class holds minimal influence. This dynamic further solidifies the economic interdependency of the Occupied Territories on the Israeli economic.[4](Hannieh, 2002, 1-2).
The Palestinian economy is entirely reliant on the Israeli economy, being fully integrated into it in the classic colonialist sense. The Palestinian economy cannot establish meaningful trade relations with other countries because Israel controls all of Palestine’s external borders. According to this the low local production and high import dependence, local production do not confer economic power upon the Palestinian capitalist class. The Paris Protocol, a 1995 economic agreement between the PA and Israel, established a framework that characterizes the Palestinian bourgeoisie as being connected to Israeli capital.[5]( Hanieh, 2002, 4-7).
The current Palestinian PA government is still closed to outside trade. Furthermore, there is no indication that the Oslo Accords’ guarantee of safe transit for people, cars, and goods between the WB and the GS would be reinstated. The political, security, and economic border system that divides Israel and the PA inside the Palestinian Territories restricts development efforts, raises production costs, and lowers competitiveness in terms of transportation and logistics. Therefore, the macroeconomic development of Palestine is unstable. A World Bank statistic states that real per capita income dropped to two thirds of what it was in 1999 by 2002 (World Bank 2010). The Palestinian National Authority is not entity with the authority to manage natural resources and foreign relations, including trade, as evidenced by the picture of Palestinian dependency economic trends, which include stagnation, depression, and a lack of inspiring private entrepreneurship.[6](Hofmann, 2010, 2-6).
Because of the Paris Protocol’s and its direct effects on Palestinian economic activity which increasing dependence and association with Israel, will obstruct the recovery of the Palestinian economy, any weakness in the Israeli economy, which will also cause a recession in the Palestinian economy. For Palestinian citizens, the agreement remains expensive in spite of the significant disparity in living standards between Israel and the Palestinian territories. Palestine’s economy is therefore unable to develop.[7] (Injass,etal, 2017, 23).
The Palestinian Authority created its National Policy Agenda which includes priority targets in a variety of sectors like agricultural resources, tourism, trade facilitation, and transportation. In
2017, the Palestinian Authority carried out its ambitious plans to lay the groundwork for a viable, independent Palestinian State. However, significant donor support is required for this development agenda, and the project is currently unavailable due to Israel’s restrictions on Palestinian trade and productive activities, as well as the ongoing decline in donor support. Moreover, the policy of continuing wars, especially against the Gaza Strip. Thus, reduced government spending as a result of reduced aid will further impede economic growth, a stagnant or weaker economy will make things worse financially and increase the amount of debt.[8](United Nations Report, 2017, 9-10).
Israeli restrictions on Palestinian economic activity and resource use persisted in a systematic manner. As a result, there were “de-development” and a decrease in the potential for local production, as well as the administration of “economic rent” and greater non-production services. The Palestinian labor force had fewer opportunities for local employment as a result. As a result of consumer spending, these limitations also led to an uneven expansion of the economy, increasing its reliance on imports. It also increased the Palestinians’ dependence on Israel by creating an unsuitable environment for local investment and production. Increased unemployment and poverty were caused by the focus on “economic rent” in the region. For example, the unemployment rate in the Gaza Strip reached its highest point in 1998 at 32%, and it rose again to 30% in 2007. Similarly, from 33 percent in 1998 to 52 percent in 2007, the Gaza Strip saw an increase in poverty according to (PCBS[9]).[10](Al-Ajaleh, 2020, 2-3).
There was still dependence on the Israeli labor and goods markets after the Oslo Accord was signed in 1993; many aspects of this dependency were outlined in economic agreements. The Israeli cost structure forced the Palestinian economy to continue operating within it, despite the fact that levels and per capita income were entirely different, there wouldn’t be enough money for the PA to pay for its costs and advancement. Although the Oslo Agreement saw Israel relinquish control over the Palestinian population to the PA, the Israeli government continued to maintain authority over its borders, natural resources, and monetary policy. Twenty-five percent of workers were unemployed and twenty-five percent of people were poor in 1996. International aid was present, but it was discovered to only offer a temporary boost and was unable to deal with the structural distortions brought about by dependence on the Israeli economy. The political system or outside help could not ameliorate the dire economic conditions.[11](Shikaki, 2023, 4-6).
Palestinians faced more direct dispossession because of the political context of the region; the preference of Palestinian peasants for wage labor in Israel was purely an economic phenomenon brought about by land confiscations for Israeli settlements in the West Bank, which peaked in the mid-1980s. This shift in the labor market from self-employed to wage laborers was brought about by the decline of the petty bourgeoisie. Between 1975 and 1985, there was a 35 percent increase in the number of Palestinians employed in Israel. By flooding the Palestinian market with their products at low prices, Israeli corporations were able to undercut Palestinian producers. Palestinian petty bourgeoisie class was forced to look for wage labor when the Israeli market opened. As a result, the process of proletarianization accelerated and the rate of self-employment decreased.[12]( Shikak, 2023, 7-9).
The term “bourgeois class,” as it is used in capitalist nations, does not refer to the idea of the bourgeoisie in the West Bank and the Gaza Strip. Instead, it fits the definition of a “shabby bourgeoisie” as developed by Andre Frank during his research in Latin America. The bourgeoisie who prioritizes easy and quick profit over development interests is known as the “shabby bourgeoisie.” The Integration of local capital with Israel played roles in solidifying the roots of economic dependency, the Oslo bourgeoisie is, in fact, a shabby bourgeoisie that developed within the framework of the Political social transformations of Palestinian reality, giving these groups characteristics and formative characteristics that distinguish them. Thus, the conditions were set up for the emergence of Palestinian capitalism, also referred to as the “brokerage bourgeoisie,” which is closely associated with the PA bureaucracy and is known as the “comprador bourgeoisie.[13](Alsorany, 2016, 1-2).
Due to a lack of funding and the need to provide public services and salaries, PA faces enormous obstacles in securing basic operations. This poses risks to the state’s ability to maintain its fiscal stability. Even though Gaza’s poverty and vulnerability will rise significantly, the West Bank as a whole will also likely experience negative welfare effects, that poverty in the Palestinian territories would increase by the end of 2025 compared to 2020 and that all welfare gains made in the region would be lost.[14] ((The World Bank, 2023, 1).
Because of the stalled peace process, there are few financing options available, which contribute to the depth of the fiscal crisis. Additionally, the absence of traditional economic policy tools marks the context of the situation. Due to limitations on its ability to borrow money internally and externally, as well as the lack of significant reserves, the PA’s only option for filling budget gaps is through international aid. Extreme budgetary austerity that follows is expected to further restrict growth. The Ministry of Finance in Palestine took extreme measures, such as delaying the payment of public salaries. The GDP[15] is predicted to shrink, as is the fiscal deficit (including grants). It is also important to note that, for structural reasons, clearance revenues are expected to naturally decline over time as trade and economic activity remain muted.[16] (The world bank, 2023, 6-7).
The agreements pertaining to the transitional phase upheld Israeli sovereignty over approximately 60% of the West Bank and Gaza Strip’s land, as well as over international crossings with both Jordan and Egypt. These agreements severed the Palestinian economy’s link to the outside world and impeded the progress of vital projects like ports, airports, communications infrastructure, and secure transportation between the West Bank and Gaza Strip. In an effort to reduce economic activity, the Israeli government has employed military force to destroy economic facilities. It has also imposed closure and siege measures to obstruct Palestinian trade both inside and outside the country and to restrict citizen movement.
The Israeli occupation policies created a number of structural distortions in the Palestinian economy, the most notable of which were the chronic resource gap that resulted from private consumption surpassing gross product and the deterioration of the infrastructure. In addition to the lack of industrial diversity, the predominance of traditional industries over the industrial structure, and the absence of services and development to meet business sector needs, Palestine’s dependence on the Israeli labor market has weakened the country’s relationship with local production.[17] (Palestine Economic Policy Research Institute (MAS), 2005, 31-32).
Even though the Palestinian socio-economic structure changed over the years from 1967 to the present, Israeli policies toward the Palestinian economy and other external factors prevented the semi-capitalist production relations from disappearing; rather, they strengthened and perpetuated them. The prevailing pattern in this context can be described as one governed by the mechanisms of “crony capitalism,” which is connected to the alliance between the bureaucracy and businessmen in the West Bank and Gaza Strip.
On the other hand, there are internal Palestinian factors represented by traditional and new parasitic class interest keen to preserve old relations and not go beyond them (in quasi-family industrial establishments, and family production, and prevailing pattern is often a dependent and distorted capitalist pattern). After analyzing the data, it is clear that this pattern is parasitic and capitalist in nature. It is also dependent and backward, meaning that it is not conducive to the advancement of economic, social, or class development because of internal and external factors that also obstruct the emergence of democratic civil society mechanisms and the ability to bring the West Bank and Gaza Strip together politically.[18](AlSorany, 2018, 5-7).
Conclusion:
The political orientations and what was built upon them after Oslo did not establish an independent Palestinian economy capable of continuing, and perhaps the Authority’s assumption of power contributed to increasing the ability of Israel to control the economy and link it to security aspects. The Palestinian economy was not among the priorities of the files that the Palestinian Authority was waiting for to be discussed under the Oslo understandings. Israel began to consider it a key to any future solution in light of the worsening financial obligations of the Palestinian Authority. Therefore, the Palestinian economy remained subject to Israel, which controls most resources and controls the movement of exports and imports through its control of the borders, crossings, and prevents the establishment of a Palestinian airport. International aid and grants have become tools of pressure on the Palestinian Authority as pillars of the living reality of the Palestinians, and have been linked to the Authority’s security obligations with Israel. Thus, the Palestinian economy is tied to Israel and the donor countries, which prevents the establishment of a clear-cut economic entity for the Palestinian Authority.
References:
- Shikak ,Ibrahim. (2023). “A Structuralist Model of the Palestinian Economy: Who Bears the Economic Burden of the Israeli Occupation?” Review of Political Economy Journal. https://www.tandfonline.com/doi/full/10.1080/09538259.2022.2156733
- The world Bank. (2023). “Impacts of the Conflict in the Middle East on the Palestinian Economy”.https://documents1.worldbank.org/curated/en/099721412142313834/pdf/IDU043992ccb0c283048bd0941e073dbfc46633b.pdf
- Weston, Fred. (2023). Marxists and the call for Intifada: what it really means. https://www.marxist.com/marxists-and-the-call-for-intifada-what-it-really-means.htm
- Al-Ajaleh, (2020). “The Socio-Economic Transformations in the Gaza Strip (in the period of 2007-2018). ROSA PAPERS. https://www.rosaluxemburg.ps/wp-content/uploads/2020/01/English-Rosa-Paper-January-2020-copy.pdf
- Alkhalidi, Raja. ( 2019). “Homeland and Class: Generations of Palestinian Liberation”. Journal of Palestinian Studies: 118. 150-154P. https://www.palestine-studies.org/sites/default/files/mdf-articles/149-177.pdf
- Alsorany, Gazy. (2018). “Social conditions (class) in the West Bank and Gaza Strip”. Alhadaf News.https://hadfnews.ps/post/47119/8
- Injass, Raghad, et al. (2017). “THE PARIS PROTOCOL AND THE PALESTINIAN ECONOMY: NEW EVIDENCE”. South East Asia Journal of Contemporary Business, Economics and Law: 12. https://seajbel.com/wp-content/uploads/2017/05/ECON-301.pdf
- (2017). Report on UNCTAD Assistance to the Palestinian People: Developments in the Economy of the Occupied Palestinian Territory. Geneva. https://unctad.org/system/files/official-document/tdb64d4_embargoed_en.pdf
- Alsorany, Gazy. (2016). “Social structure (class) in the West Bank and Gaza Strip”. AhewarMotamaden Journal: 5194. https://www.ahewar.org/debat/show.art.asp?aid=520717
- Hofmann, Sabine. (2010). Palestinian Economy From Asymmetrical Dependency to Regional Cooperation?. The Green Political Foundation. Berlin. Germany. https://www.boell.de/en/2010/03/08/palestinian-economy-asymmetrical-dependency-regional-cooperation
- Kaminer, Reuben. (2006). the Palestine question analyzed in the light of Marxist politics. https://www.marxists.org/subject/jewish/kaminer.pdf
- Palestine Economic Policy Research Institute (MAS). (2005). Towards formulating a Palestinian development vision!. https://library.palestineeconomy.ps/public/files/server/20151305171017-2.pdf
- HanIeh, Adam. (2002). Class, Economy, and the Second Intifada. https://monthlyreview.org/2002/10/01/class-economy-and-the-second-intifada/
[1] Kaminer, Reuben. (2006). the Palestine question analyzed in the light of Marxist politics.
https://www.marxists.org/subject/jewish/kaminer.pdf
[2]Alkhalidi, Raja. ( 2019). “Homeland and Class: Generations of Palestinian Liberation”. Journal of Palestinian Studies: 118. 150-154P.
https://www.palestine-studies.org/sites/default/files/mdf-articles/149-177.pdf
[3] Weston, Fred. (2023). Marxists and the call for Intifada: what it really means.
https://www.marxist.com/marxists-and-the-call-for-intifada-what-it-really-means.htm
[4] Haneh, Adam. (2002). Class, Economy, and the Second Intifada.
https://monthlyreview.org/2002/10/01/class-economy-and-the-second-intifada/
[5],Hanieh ,Adam. ( 2002). Last recourse.
https://monthlyreview.org/2002/10/01/class-economy-and-the-second-intifada/
[6] Hofmann, Sabine. (2010). Palestinian Economy From Asymmetrical Dependency to Regional Cooperation?. The Green Political Foundation. Berlin. Germany.
https://www.boell.de/en/2010/03/08/palestinian-economy-asymmetrical-dependency-regional-cooperation
[7] Injass, Raghad, et al. (2017). “THE PARIS PROTOCOL AND THE PALESTINIAN ECONOMY: NEW EVIDENCE”. South East Asia Journal of Contemporary Business, Economics and Law: 12. 23P. https://seajbel.com/wp-content/uploads/2017/05/ECON-301.pdf
[8] UNCTAD. (2017). Report on UNCTAD Assistance to the Palestinian People: Developments in the Economy of the Occupied Palestinian Territory. Geneva. https://unctad.org/system/files/official-document/tdb64d4_embargoed_en.pdf
[9] The Palestinian Central Bureau of Statistics
[10] Al-Ajaleh, Mazen. (2020). “The Socio-Economic Transformations in the Gaza Strip (in the period of 2007-2018). ROSA PAPERS.
https://www.rosaluxemburg.ps/wp-content/uploads/2020/01/English-Rosa-Paper-January-2020-copy.pdf
[11] Shikak ,Ibrahim. (2023). “A Structuralist Model of the Palestinian Economy: Who Bears the Economic Burden of the Israeli Occupation?”. Review of Political Economy Journal. https://www.tandfonline.com/doi/full/10.1080/09538259.2022.2156733
[12] Shikak ,Ibrahim. (2023) same
Resource.https://www.tandfonline.com/doi/full/10.1080/09538259.2022.2156733
[13] Alsorany, Gazy. (2016). “Social structure (class) in the West Bank and Gaza Strip”. AhewarMotamaden Journal: 5194. https://www.ahewar.org/debat/show.art.asp?aid=520717
[14] The world Bank, (2023). “Impacts of the Conflict in the Middle East on the Palestinian Economy”.
[15] The Gross domestic product
[16] The world Bank, (2023). Last resource.
[17] Palestine Economic Policy Research Institute (MAS). Towards formulating a Palestinian development vision!. Ramallah.
https://library.palestineeconomy.ps/public/files/server/20151305171017-2.pdf
[18] Alsorany, (2018). “Social conditions (class) in the West Bank and Gaza Strip”. Alhadaf News https://hadfnews.ps/post/47119/8