Territories’ Dependence on Israel Poses Challenge for Autonomy Plan
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Territories’ Dependence on Israel Poses Challenge for Autonomy Plan

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A new study done by Tel Aviv University has shown that the infrastructure of the West Bank and the Gaza Strip is too underdeveloped to independently sustain the residents’ current standard of living.

Economic studies of the territories, such as the present one, have taken on added importance as policy-makers try to project what type of autonomy arrangements for Palestinians might be feasible.

The economic life of Palestinians in the territories is highly dependent and intertwined with the more modernized economy of Israel proper, said the study by Yihai Dror. It was recently published by Tel Aviv University’s Armand Hammer Fund for Economic Cooperation in the Middle East.

Dror said it would cost $10 billion to develop the territories’ infrastructure to a level close to Israel’s own.

According to the latest data available, per capita gross domestic product in the Gaza Strip reached $700 in 1990. However, per capita consumption was $870 in the same year.

In general terms, this means that more money is spent in Gaza than is made. The difference is made up with money earned by Palestinian laborers who work in Israel proper.

The same is true of the West Bank. The per capita gross domestic product in the West Bank was $1,335 in 1987, the last year for which reliable data are available. However, that was $130 less than the per capita consumption during the same year.

For the territories to develop a more solid, independent industrial and economic base, the electrical infrastructure would require a major overhaul.


Dror’s report noted that the Arab-owned East Jerusalem Electric Company is capable of producing only 5 percent of the electricity it provides. The company buys the rest from the Israel Electric Company.

In addition, the stations that relay the electricity are already operating at maximum capability.

Within the West Bank, many villages are not connected to the electric grid, and elsewhere the electrical lines are poor.

It would cost $1.5 billion to add 1,000 megawatts of electricity and improve the network in the territories, the report says.

Communication systems in the territories are also poor. The telephone system in the Gaza Strip is in poor condition, being operated manually and lacking spare parts.

The West Bank’s telephone system is automatic, but neither modern nor sophisticated.

Finally, both the West Bank and the Gaza Strip suffer from a shortage of water. The shortage in the Gaza Strip is particularly acute because the area is densely populated.

The report calculates that a per capita investment of $6,000 is needed to raise the local infrastructure to Israel’s level. But that is roughly four times the per capita gross domestic product.

Hence, several years and much foreign aid will be needed to raise the territories’ infrastructure to that of Israel, Dror concludes.

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