Analysis: Twenty-five percent of the Palestinian economy is dependent on Israel . Without the commercial ties with Israel, the Economy of the West Bank would collapse , and West Bank will turn into a second Gaza.
There is an important risk that the waves of terror of these last weeks, push the Palestinian Authority, who is surviving only thanks to external aids and “donations”, to dissolve, and to proclaim new elections in the West Bank. The disappearance of the Palestinian Authority (PA) would be catastrophic for Israel , from a security perspective.
In the case that the PA loose control of the West bank , the civil administrations , the security and the economic burden will have to be assumed by the State of Israel. This would clearly put Israel as a occupying power and thus legitimize the defamatory campaigns of pro-Palestinians groups such as BDS.
20 years ago, when the Israeli government gave the control of a great part of the West bank to the PA, there were less than 10,000 people working in Palestinians Governmental Institutions. Most of them were workers in the fields of education and health, they were logically trained and supervised by few Israeli experts.
Today more than 150,000 people are working for in the administration of the Palestinian Authority. To this number it is important to add the officials and the retired people that still receive a pension from the PA, which makes around 1 millions people. The budget of the Palestinian Government is around 3.52 billion euros, and an important part of it is coming from donations coming from various countries around the world.
If the PA is dismantled , who will pay for all of this? Who will administrate the offices and administrative services? Without to mention the enormous cost for security, because of the Army deployment in these zones.
The dependence to Israel , is for the moment the main reasons , why Mahmoud Abbas and most of the Palestinians living in the West Bank are reluctant to renounce to the Oslo Agreements and to establish unilaterally “A Palestinian State under Occupation”, which will significant the dissolution of the AP.
The reasons why this situation did not happen yet is well known among many experts of the Middle East : “The Palestinian Economy , especially in the West Bank rely mostly on Israel. Israel is the no.1 partner of the Palestinians concerning economic trade , and many Palestinians are working in Israel”. Without Israel, the West bank would transform very easily into a second Gaza Strip , without clear leadership and with one of the unemployment rate among the highest in the world. All of this would inevitably conduct to an aggravation of the Security Situation.
A good example of the Palestinian economic dependence to Israel , could be found on the database of the Israeli-Palestinian Economic Chamber. There are more than 1,000 Israelis factories operating in the West Bank, divided in more than 14 Industrial zones. The most famous one is the one of Mishor Adumim, close to Jericho, which possess more than 330 factories. Other important zones are the ones of Barkan in Samaria (160 factories), Atarot , located on the route between Jerusalem and Ramallah and small ones close to Jewish Settlements in the Jerusalem Area.
All these factories, without exceptions are low-tech factories that uses the advantages of the West Bank : cheap labor and many advantageous financial conditions such as low taxes, and loans at an interesting rate. These factories include food processing and textile factories, garages, printing houses, furniture manufacturers, metal and plastic factories and suppliers of construction materials.
The Israeli economy has evolved these last years : progressively the High-Tech products and the industries specialized in High-Tech services , especially financial platforms have replace the traditional industries such as the one of the textile.
The Cities specialized in textiles such as Ofakim and Dimona in the South of Israel , have seen their factories of textile outsourced in Neighboring Arab countries and then later in China and South-East Asia. The reason for that is that the cost of labor was way cheaper in other countries. Nowadays , even Palestinians are favoring the Chinese products rather than Palestinians one , because they are much cheaper.
Still , Traditional industries remains the main the keystone of the Palestinian Economy. There are around 30,000 Palestinians that works in the Israeli Industrial Zones in the West Bank, while 20,000 others are directly working in the construction, transport or agricultures in Israeli communities.
An industry of subcontracts
There is also indirect Israeli-Palestinian trade which provides employment to many people in the West Bank, especially in the textile and furniture industries. A considerable part of the furniture displayed in Israeli stores, for example, was actually produced in West Bank under full supervision of Israeli companies.
It is stored in factories and warehouses in the settlements in order to avoid the security checks at crossings and the trouble of transferring the goods from Palestinian trucks to Israeli trucks
There is also an entire industry of subcontract work performed by Palestinians for Israel. If we add the 100,000 Palestinians who work in , we will find that at least 200,000 Palestinians makes a living from their connection to Israel. According to the Israeli-Palestinian commerce chamber, they make up more than 25 percent of the Palestinian workforce and produce about 20 percent of the Palestinian Gross Domestic Product.
Most of these Palestinian workers don’t have an alternative if they lost their job and the current wave of violence may cause the security arrangements in the West Bank to collapse and lead Israel to cancel Working Permit into Israel, and to “block” the Palestinians enclaves. The result will be a destruction of the West Bank's shaky economy and inevitably the region would turn into a second Gaza, with an important deterioration of the Security Situation.