Chinmaya asked: What is Palestine’s economic and strategic standing in West Asia?

Md. Muddassir Quamar replies: With time, the Palestinian issue has lost some of its strategic importance. Historically, the question of Palestine occupied centrality in West Asian politics and was the primary issue during the heydays of Pan-Arabism in the 1950s and 1960s. The Arab defeat in 1967 significantly changed the regional geopolitical dynamics. The 1978 Camp David Accords and the subsequent signing of a peace treaty between Israel and Egypt in 1979 resulted in Palestine losing an important regional supporter. While the Palestine Liberation Organisation (PLO) was eventually recognised as the “sole and legitimate representative” of the Palestinian people in 1974 by the United Nations, it was only during the 1991 Madrid Conference that the United States (US) and Israel recognised the PLO. This kindled a hope for peace.

The failure of Oslo Peace Process and the eruption of Second Intifada, however, aggravated the problem but kept the Palestinian issue alive. The eruption of regional conflicts including the Iran-Iraq War (1980-88), the Kuwait Crisis and the First Gulf War (1990-91), rise of al Qaeda, September 11, 2001 attacks in the US and the consequent “war on terror” shifted the focus away from Palestine. The outbreak of popular protests and uprisings in late-2010, initially referred to as Arab Spring, followed by rise of the Islamic State of Iraq and Syria (ISIS) and civil wars in Iraq, Syria, Libya and Yemen have further pushed the Palestinian issue into the background. Nonetheless, it remains a regional and global issue and in the last decade has often led to conflicts among the adversaries, especially Israel and Hamas.

As far as its economic standing is concerned, Palestine is dependent on international and regional aid for survival. The United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), the United Nations Development Programme (UNDP), Arab League, European Union, the US, the United Kingdom, Gulf countries and Japan are the major donors to Palestine. Statelessness, Israeli occupation, and continuing cycle of violence and intra-Palestinian conflicts have kept the local economy in poor shape.

According to the World Bank estimates, as of 2016, the Palestinian economy was worth US$ 13 billion. It had a foreign trade of $6.29 billion, with $5.36 billion imports and $926 million worth of exports. Its major trading partners are Israel, Jordan, Saudi Arabia, the United Arab Emirates, Qatar, Turkey, China and Germany. Electricity, petroleum, automobile, cement and animal feed are the major items it imports, while it exports building stone, furniture, plastic, olive oil and tobacco. Remittances contributed nearly 14 per cent of the Palestinian GDP in 2017, amounting to about US$ 32 million; mainly received from the Palestinian expats living in Gulf countries, the US and Europe. The economic situation has remained dismal especially in the Gaza Strip with high rate of unemployment and shortage of essential commodities. Without resolution of the Israeli-Palestinian conflict and peace, the Palestinian economy will remain rudimentary and dependent on external support.

Posted on September 24, 2018