World Bank report warns Gaza Strip economy is in ‘free fall’
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World Bank report warns Gaza Strip economy is in ‘free fall’

Unemployment rate has passed 50 percent in Palestinian coastal enclave and increased tensions are setting back youth development, global financial body warns

Palestinians sell fish at the Fras market in Gaza City on January 21, 2018. (AFP/ MAHMUD HAMS)
Palestinians sell fish at the Fras market in Gaza City on January 21, 2018. (AFP/ MAHMUD HAMS)

The Gaza Strip’s economy is in “free fall,” a report from the World Bank warned Tuesday, calling for urgent action by Israel and the international community to avoid “immediate collapse.”

According to the report, Gaza’s economy contracted by 6 percent in the first quarter of 2018. It said unemployment is now over 50% — and over 70% among Gaza’s youth.

The World Bank cited various factors, starting with Israel’s decade-long blockade against the territory’s Hamas rulers, for the precarious downturn. It also cited budget cuts by the rival Palestinian Authority and a reduction in international aid to the Palestinians, particularly from the United States.

“A combination of war, isolation, and internal rivalries has left Gaza in a crippling economic state and exacerbated the human distress,” said Marina Wes, the World Bank’s director for the region.

Israel says the blockade, also imposed by Egypt, is in place in order to prevent weapons and other military equipment from entering the Strip. Hamas, an Islamist terror group, seized control of Gaza from the PA in 2007.

The report was released ahead of a high level meeting of the bank’s Ad Hoc Liaison Committee, responsible for coordinating development assistance to the Palestinians, on September 27.

Wes said the increasingly dire economic situation in Gaza “has reached a critical point.”

“Increased frustration is feeding into the increased tensions which have already started spilling over into unrest and set back the human development of the region’s large youth population,” she added.

The World Bank called upon Israel to lift restrictions on trade and movement of goods and people to help improve Gaza’s economy, and urged development of “legitimate institutions to govern Gaza in a transparent and efficient manner.”

Palestinian protesters gather during a demonstration along the Israeli border fence east of Gaza City on September 21, 2018 as smoke plumes billow from burning tires in the background. (AFP/Said Khatib)

Gazans have staged near weekly demonstrations along the border with Israel since late March. Hamas has led and organized the violent protests, but turnout has also been driven by growing despair over economic hardship, including lengthy power cuts and soaring unemployment.

The clashes have included rock and Molotov cocktail attacks on troops, as well as attempts to breach the border fence and attack Israeli soldiers.

Gaza’s economic situation is likely to deteriorate further because of failed attempts to negotiate an end to the violence. Hamas leaders said this week that Egypt-mediated efforts to broker a long-term cease-fire with Israel, that would reportedly have included an easing of the blockade, have stalled.

Repeated attempts to broker a reconciliation deal between rival Palestinian factions — Hamas and President Mahmoud Abbas’s Fatah party — have also failed. Abbas now governs just parts of the West Bank.

According to an AP tally at least 136 Palestinians have been killed in the protests since March, including 27 minors. Hamas, which vows to destroy Israel, has admitted that dozens of those who were killed were its members. A Palestinian sniper also fatally shot an Israeli soldier.

Israel contends it’s defending its border and accuses Hamas of using the protests as a screen for attempts to breach the border fence to attack civilians and soldiers. Human rights groups have accused Israel of excessive and unlawful use of force against unarmed protesters.

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