Bulletin #28

21 May 2002
Grenoble, France

Dear Colleagues, Friends, and Students of American Studies:

We have just received two articles forwarded to us from our research
associate, Professor Edward Herman, The University of Pennsylvania.

F. Feeley


Dear Francis,

Below is a powerful statement by one of Israel's finest reporters.


Sent: Sunday, May 19, 2002 4:41 PM
Subject: Haartez (fwd)

The real disaster is the closure :
Half the Palestinians in the West Bank are unemployed, half are in dire poverty, and the economy is sliding into barter.


Qalandiyah checkpoint. Nigel Roberts, the World Bank representative in
Israel/Palestine, is convinced Western societies would break down if
confronted with an "economic disaster of such proportions."

When the director general of the Palestinian Finance Ministry, Ataf Alaune,
returned to his office on April 21, a few hours after the army pulled out
of Ramallah, he found that in addition to the hard disks in his computers,
the soldiers had taken all the books, reports, and research studies that
were in his library. Only one document, 133 pages long, remained. Dated
March 18, 2002, it was titled "15 Months: Intifada, Closures, and the
Palestinian Economic Crisis - an Assessment" and was prepared by the World

The document was prepared because in the second half of 2001, the donor
countries to the Palestinian Authority already wanted an estimate the
damage done to the economy during the first months of the intifada, so they
could adjust their allotments to the PA for rehabilitation. The initial
assessments were that the situation would stabilize and improve, so there
were expectations for a quick report. Instead, because of the deterioration
in the security situation and the tightening of the closures and sieges on
all the Palestinian communities in the West Bank and Gaza, the study grew
into a working plan, based on three scenarios:

  1. A continuation of the closures and the restrictions on freedom of
movement for commodities and people

  2. Political rapprochement that would lead to an end to the hostilities
and a lifting of the closure

  3. A pessimistic scenario, in which the military hostilities would grow
even more intense and there would be even more severe disruptions of
freedom of movement for goods and people.

Each scenario has a ceiling on the money that would be available - from
$2.1 to $2.7 billion. A fourth scenario, "the authority collapses," is
depicted separately from the other three. That scenario would require a
total change in the mode of aid to the Palestinians, from rehabilitation to
emergency humanitarian aid, which, in the absence of governing
institutions, would be reduced.

The report was completed in mid-March, two weeks before the Park Hotel
bombing and the military operation in Ramallah and six other Palestinian
cities in the West Bank. Palestinian and foreign economists and researchers
worked on it, and it was written by two senior World Bank officials,
Sebastien Dessus and Nigel Roberts, who has been the World Bank's
representative in the country for the past 11 months.

The silent destruction.
In a conversation with Ha'aretz on March 27, Roberts still hoped that the
optimistic scenario of political rapprochement and calm was possible. But
the next day, on the night of the Seder, 29 people were killed in the Park
Hotel massacre and on March 29, the IDF began Operation Defensive Shield
that lasted a month. On May 9, in another interview with Ha'aretz, Roberts
said the sieges on the Palestinian towns, then being tightened further,
would require the donor countries to consider giving $2 billion instead of the
$1.7 billion that was earmarked in case of the "pessimistic scenario." In
the same interview, Roberts reiterated four axioms that had become clear
during the preparation and writing of the report:

  1. The ongoing damage to the Palestinian economy from the sieges and
closures is much more than the physical damage created by the military
operations, including Operation Defensive Shield. In the first 15 months of
the intifada, from October 2000 to December 2001, the physical damage to
infrastructure and Palestinian institutions was an estimated $503 million.
Last week, an estimate of $360 million was published, referring to the
physical damage resulting from the military actions in March and April this
year. But in the first 15 months of the intifada, at least $2.4 billion in
damage was done to the economy, in terms of lost gross national revenues
because of the mounting restrictions on freedom of movement imposed by
Israel on the Palestinians in, and out, of the territories. Roberts, who is
British, and usually careful with his words, calls the closure policies
"the silent destruction."

  2. The Palestinian public has proved to be very resilient when challenged
by the shocks caused by the economic disaster. Palestinian handling of the
enormous economic and social difficulties is characterized by
intra-community support, family involvement, and mutual help to a degree
that is not known in developed, Western countries. Roberts is convinced
that developed Western societies would have collapsed if confronted with
"an economic disaster of such proportions."

  3. During all the months of the intifada, major institutions in the
Palestinian Authority function "impressively," and dealt well with the
challenges posed. "That's the untold story in the tale of this intifada,"
says Roberts. He says that despite what Palestinians themselves - let alone
Israelis and the rest of the world - may believe, the PA, as a complex of
institutions providing services to its constituencies, not only did not
collapse but rose to the occasion in a number of areas. He makes special
note of the education, health and finance ministries as well as the Public
Works Ministry and the city halls, which he regards as part of the
structure for initiatives during the crisis.

  4. The fourth axiom, which Roberts repeated in both meetings with
Ha'aretz, does not derive directly from the report on the damage caused by
the closures, but rather from a "working paper" published by the World Bank
in May 2001 called "Government and the Business Environment in the West
Bank and Gaza." That paper's researchers discovered that, as opposed to
what is commonly believed, the level of corruption (meaning informal
payments to government officials) in the PA territories is much less than
in neighboring countries and in other developing countries, where similar
studies were done at the same time. Progress toward transparency and
accountability, often under international pressure but also as a result of
domestic Palestinian criticism, could reduce the anxiety level of those
Palestinians worried by the phenomenon of corruption, which in large part
is based on the lack of laws guaranteeing equality to all citizens.

Make-work jobs.
The World Bank report opens with the definition of "closure" as "a term
referring to the restriction placed by Israel on the free movement of
Palestinian goods and labor across borders and within the West Bank and
Gaza. Israel asserts that closure is a response to Palestinian violence.
Closure has come to dominate much of Palestinian life over the past 15

The Palestinians, the report says, have been required to carry IDF-issued
authorizations for travel since 1993 (actually, since 1991 - A.H.). Since
October 2000, most of such authorizations for travel into Israel were
canceled, Palestinian freedom of movement for goods and people into Egypt
and Jordan was drastically reduced, and internal closures and sieges around
various Palestinian towns and villages were tightened through physical
blockades. Checkpoints are manned, backed up by tanks and armored personnel
carriers, to reduce to a minimum any movement of people and merchandise
inside the Palestinian territories, between village to village, city to
village or village to city.

Closures cause a chain reaction of damage that ultimately harms all of
Palestinian society. The loss of tens of thousands of jobs inside Israel
meant a drop in purchasing power inside the territories that leads to a
further shrinking of productive economic activity, and a wave of domestic
unemployment paralyzes any possible investment. Thus, in the beginning of
2002, the average real income was 30 percent lower than in 1994, on the eve
of the establishment of the Palestinian Authority. The number of poor,
defined as those living on $2 a day or less, grew from 600,000 (in a
population of some 3 million) to 1.5 million by the end of 2001. Roberts
believes that after the April military operation, three-quarters of the
Palestinian population in the territories is now living under that $2 a day
poverty line.

The gross domestic product dropped 6-7 percent in 2000, as a result of the
dramatic drop in economic activity in the last quarter of that year. In
2001, the GDP dropped another 21 percent. Gross national revenues fell 11.7
percent in 200l and another 18.7 percent in 2001. That comes to $2.4
billion, compared to a gross domestic product of $5.4 billion in 1999.

There are large gaps in food prices in the West Bank, depending on where
the food is purchased, because of limitations on freedom of movement and
the internal closures. In areas where food is produced, prices have fallen
drastically, since the goods can't reach the markets. In non-agricultural
areas, especially the cities, prices have risen dramatically, because of
the shortages in supplies. In Gaza, prices have lowered because of a drop
in demand, as a result of shrinking household income and purchasing power.

Israel takes a cut.
The decline in PA revenues, because of the shrinking economic activity, was
made even worse since December 2000 when Israel ceased transferring to the
PA taxes it collected on goods imported into the PA from Israel, on grounds
the PA was paying terrorists with the money. The World Bank mentions that
fact at least five times in the report, and emphasizes the monies do not
belong to Israel. The current estimate of money Israel owes to the PA, up
to December 2001, is half a billion dollars.

The report comments negatively on a well-known phenomenon in the PA: the
lack of a shared governmental vision of how to manage the crisis. A number
of ministries, especially the Planning Ministry, treasury and PEDCER
(Palestinian Economic Development Council for Economic Rehabilitation)
worked out emergency plans, but they were written separately and were not

No umbrella forum was established to manage the crisis, and inter-ministry
coordination, problematic even before the intifada, did not improve. The
World Bank report is meant to solve that problem and to propose to the
donor countries and the PA an appropriate, coordinated working program for
dealing with the crisis (according to all three scenarios mentioned at the

The PA, for its part, is committed in the document to adopt a series of
steps in the context of internal reforms, both administrative and
financial. Those promises came a long time before Israel and the U.S. began
insisting on reforms. Some of the reforms were implemented, under the
watchful eyes of the International Monetary Fund and the donor countries,
before the intifada. Others were done during the crisis, especially all
those dealing with economic legislation that would encourage the private
sector, as well as a
pension fund for civil servants, to guarantee a social safety net.

On March 27, Roberts still hoped the action plan would help, to some
degree, in reviving the Palestinian economy, on condition the closures,
particularly the internal closures, were lifted. On May 9 he was speaking
differently. All the signs show, he said, that Israel intends to tighten
the internal closures even more, and to limit to an absolute minimum the
movement of people and goods from one Palestinian township or village to
another. People leaving besieged cities need "authorizations for movement
under closure" that only
go to a very narrow category of people. Most of the goods going to the
cities are transported "back to back" meaning a truck full of goods backs
up to an empty truck on the outskirts of the city at the checkpoint, and
the goods are transferred from one to the other. It adds time and costs to
the entire process.

The damage caused by the closures to the Palestinian economy, says Roberts,
creates a barter economy that is not appropriate for the private sector and
for any vision of economic development. Under such circumstances, he adds,
the donor countries are forced - against their will - to become charitable
organizations to an impoverished population, without any political
framework. Roberts allows himself to say that the closure policy "is more
damaging to security in the long run" and says he finds it difficult to be
that a process that is impoverishing the entire Palestinian society -
causing damage to stability in the long run - can lead to rapprochement in
the future. "Militarily, I have no opinion on the effectiveness of the

But strategically, it is clear they are creating an atmosphere that is not
conducive to the security of Israel."

A lot of pieces fall into place: "Making the blooms desert"
by Jessica McCallin

Many people wonder why Israel won't give back the occupied territories in
return for peace. One reason is that more than half of Israel's water
supplies now come from the Mountain Aquifer and Jordan river basin, which
are situated deep within them.

Jericho used to be one of Palestine's prime agricultural spots. An
abundance of springs made the fertile land surrounding the ancient town
famous for its oranges, bananas and strawberries. Now, all that is
changing. Fields are drying up, crops are dying and farmers are being put
out of work. The reason is simple: water. Israeli settlements get priority
access to water and as they expand and new ones are built, the amount of
water available to Palestinians decreases. Because of its strategic
location between Jerusalem and Jordan, the Jericho region has been
particularly affected.

It helps Israel divide the north and south of the West Bank from each
other, and creates "facts on the ground" that preclude the establishment of
a viable Palestinian state. But its water crises are repeated across the
Palestinian Territories.

Since seizing the West Bank in 1967, Israel has illegally exploited the
Mountain Aquifer and Jordan river basin. Many historians believe this has
been the underlying reason for the invasion and occupation of the West Bank.

One of the first military orders of the occupation was the confiscation of
almost all West Bank wells. Since then, drilling for new wells has been
banned and quotas have been imposed on the existing ones. The amount of
water allocated to Palestinians has been capped at 1967 levels, despite the
subsequent growth in population.

Water has always been a source of conflict in the Middle East. Israeli
attempts to divert water from the Jordan-Yarmouk river basin into the Negev
were a key source of the 1967 war. And the Golan Heights, which Israel
still refuses to give back to Syria, are also water rich.

Today, Israel uses 79% of the Mountain Aquifer and all of the Jordan River
Basin -- bar a small quantity that it sells to Palestinians in Gaza. The
result is apartheid in all but name. Israelis get 350 litres of water per
person per day, Palestinians get just 70 litres. The minimal quantity of
water recommended by the World Health Organisation is 100 litres.

When supplies run low during the summer months, the Israeli water company,
Mekorot, simply shuts off the valves that supply Palestinian towns. This
means settlers get their swimming pools topped up while Palestinian
villages a few miles away run out of drinking water.

When tensions are high -- as they are now -- the situation becomes
unbearable, especially for the 25 per cent of Palestinian villages that
were never connected to a water supply.

Since the start of the Intifada, Israel has made it almost impossible for
water tankers to enter Palestinian areas -- or for villagers to get to
nearby wells. B'Tselem, the Israeli human rights group says Israeli
soldiers sometimes beat and humiliate tanker drivers or deliberately spill
their water.

Yunis Muhammed 'Abd Tim Jabarin, a father of eight from a village in
southern Hebron described how, in hot weather, "often we don't have water
for ten to twenty days. In such situations, my wife and daughters ask the
neighbours for water, but they can only give enough for drinking and
cooking. As for washing, we have got used to showering once every five to
seven days. The situation is intolerable, especially in the summer."

But towns with connections also face problems, according to Ayman Rabi,
of  the Palestinian Hydrological Group. "Settlers attack the Palestinians'
water supply, severing pipes and switching off valves," he said. "They dump
untreated sewage on Palestinian land, polluting wells and aquifers." The
Israeli army has also routinely destroyed water supplies, an activity
defined as a war crime.

Part of the problem is that the Oslo peace process tried to
institutionalise Israel's theft of Palestinian water, and its
discriminatory allocation system. Yehezkel Lein of B'Tselem
said,  "Comments from Israeli offices give the impression that Oslo
transferred responsibility (for water supplies) to the Palestinian Authority."

"However, Israel continues to maintain almost total control over water in
the occupied territories. Every new project, from drilling a well to laying
pipes or building a reservoir, requires Israel's consent."

Israeli reluctance to relinquish control of West Bank water is not
surprising. More than a quarter of its water supplies now come from the
West Bank aquifer -- and over a third comes from the Jordan Basin. But it
has no legal right to the water -- and it's not using it sustainably.
Private swimming pools and green lawns are not a priority in desert areas.

Over-extraction from the Jordan river is the main reason the river flow has
dropped nearly 90 per cent in the last 50 years. It is now just a small
stream, too small to replenish the Dead Sea, which is also fast
disappearing. Many hydrologists predict that it won't exist in 50 years. So
how will the population of Israel and Palestine -- predicted to double in
25 years -- survive?

Israel likes to boast about how it made the desert bloom, how the original
inhabitants of Palestine were "wasting" the land. But far from wasting the
land, the Arabs lived within its constraints, in harmony with it. By making
parts of its desert bloom, Israel has simply turned parts of Arab land into
desert, unable to provide its inhabitants with water, the most fundamental
pre-requisite for human life.