January 21, 2012


The slow economic collapse being witnessed across the occupied territories, while worsening now, is inevitable so long as Palestinians languish under occupation, writes Khaled Amayreh in Hebron

With high consumer prices, static or dwindling salaries, rising unemployment and over-taxation, many ordinary Palestinians are no longer able to make ends meet.

The situation has been described as both explosive as well as potentially destabilising as the Palestinian Authority (PA) stands virtually powerless to overcome or even mitigate the harshest economic crisis hitting the occupied territories since the PA's founding in 1994.

Some families have been forced to take their children out of college because they can no longer afford to pay tuition fees amounting to a thousand dollars per semester.

During Yasser Arafat's era, somewhat generous subsidies were paid to universities, enabling poor students to pursue college education even if they didn't pay tuition. However, nearly all subsidies and student loans have now ceased, leaving a crippling effect on the financial wellbeing of many institutions of higher learning.

An official from Al-Quds University at Abu Dis near Jerusalem told Al-Ahram Weekly last week that, "only the rich can now afford to get a college education; if you don't have the money, you simply can't register in college, even if you happen to be brilliant and have high scores."

The situation becomes even harsher when a given family has two, or three, or even four who want a college education. In this case, the choices become stark and harsh, as the family is forced to choose between putting food on the table on the one hand and having their children educated on the other.

Traditionally, Palestinians attached enormous importance to education, viewing it as a secure investment for the future. Hence the frustration and desperateness exuded by poor families unable to pay rising tuition fees for their children.

What is especially sad is the fact that those students who are refused entry to college because they can't afford tuition often seek employment in Jewish settlements. They say they have no choice and the PA seems to silently agree with them.

This is especially disturbing as the expansion of Jewish colonies is considered the single biggest threat to Palestinian dreams for a viable independent state on the West Bank and Gaza.

But if one can survive without receiving a college degree, one definitely can't survive without food. According to consumer prices data, food prices in the occupied Palestinian territories are amongst the highest in the world. And when one combines high food prices with ever-soaring inflation, the situation becomes untenable.

For example, a kilogramme of rice is sold at a dollar and a half in the West Bank, while a kilo of sugar is sold at nearly two dollars.

Similarly, a standard cooking gas (butane) cylinder (12 kilogrammes) is sold at 75 Shekels or $21. As to fuel, a litre of unleaded gasoline is sold at $1.80 while a litre of diesel has reached $1.70. The overall outlook becomes ever bleaker if we remember that the average monthly salary for most Palestinian civil servants doesn't exceed $600-700. In comparison, the annual per capita income in Israel reaches $20,000.

So no matter how hard one would try to tighten one's belt and adopt the severest austerity measures, one would still be at loss as to how to make ends meet.

This week, Palestinian Prime Minister Salam Fayyad appeared on television to explain to the public the financial plight besetting the PA. He said his government was trying to do the utmost to keep the situation under control. He vowed to help the "weakest sectors of society," saying he won't allow electricity and water supplies to be cut off from those who can't pay the bills.

The problem, however, is that his "utmost" and best efforts may not be sufficient or good enough to bring solace to tens of thousands of families, thoroughly crushed, even to the point of starvation, by the present economic crisis.

Fayyad said his government would soon impose taxes on those untaxed or under-taxed, stressing that the new taxes wouldn't hurt the poor. However, some economists have already dismissed the new taxation plans as "deformed and inequitable".

"These are basically deformed plans which will make our taxation system even more deformed and more unjust," said Nasser Abdel-Karim, professor of economics at Birzeit University.

Many PA officials go to great lengths to justify the current policy outlook, giving economic data and explaining how the Palestinian economy can't stand on its own feet. However, only few would be honest enough to face the fact that a truly viable and prosperous economy is impossible under foreign military occupation. The two are simply an oxymoron.

Such an economy inherently lacks the oxygen to grow and prosper, which means that Palestinians, including Prime Minister Fayyad, would be deceiving and cheating themselves if they thought they could attain their economic goals while nearly every aspect of their life, economic and otherwise, is still tightly controlled by Israel.

Another relevant issue that should be kept in mind is the fact that the financial survival of the PA depends to a very large extent on politically motivated donations or aid from Western countries, especially the United States. Many pundits understand that Western aid to the PA, that prevents the Ramallah regime from reaching complete financial collapse, is inextricably tied to political conditions that keep the PA in a perpetual state of subservience to Israel.

This, some commentators argue, suggests that the PA should ask itself some really hard questions regarding the wisdom of its very existence under current circumstances whereby it is burdened with the task of catering for five million people while being utterly deprived of basic financial and economic freedoms that would enable it to carry out this task properly.

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