Assistance to the Palestinian People

GROUP OF 77
GENEVA

STATEMENT DELIVERED BY THE REPUBLIC OF INDONESIA ON BEHALF OF THE GROUP OF 77 AND CHINA AT THE 59TH SESSION OF THE TRADE AND DEVELOPMENT BOARD ON AGENDA ITEM 11 (B): REPORT ON UNCTAD'S ASSISTANCE TO THE PALESTINIAN PEOPLE
(Geneva, 24 September 2012)

Mr. President,
Excellencies,
Distinguished Delegates,
Ladies and Gentlemen,

1. On behalf of the Group of 77 and China, I would like to thank the secretariat for the preparations for today' debate, particularly for a precise and focused report which analyses the key trends in the Palestinian economy.

2. The report highlights key constraints on economic development in the Occupied Palestinian Territory. The report - which importantly focuses on Agriculture, a sector that is underutilized and underdeveloped in Palestine - offers concrete recommendations on moving forward to attain sustainable economic growth in the long-run, with the prospects of reducing unemployment by creating much needed jobs.

3. The report examines several development challenges facing the Palestinian economy in the light of the serious consequences of the ongoing Israeli policies that impact on the Palestinian economy. Alarming is the consequent high unemployment, falling productivity and declining real wages. Despite reforms, the fiscal crisis continues, so does the persistent trade deficit and forced economic reliance on Israel.

4. It is also alarming that the agricultural sector, one of the main sectors that Palestinians people have historically relied upon, has been prevented by occupation to play its strategic role because of the policies of occupation.

5. A fundamental concern is even before the global crisis, the Palestinian economy was already in the midst of severe external shocks. Today, the long-term prospects for Palestinian economic development have worsened. The observed 9.5 per cent economic growth in the Occupied Palestinian Territory in 2011 gives a false, being largely the result of developments in the blockaded Gaza Strip, and attributable in part to ongoing reconstruction activities following the devastation of the Israeli military operation of December 2008 - January 2009. Real gross domestic product (GDP) per capita in Gaza is still 10 per cent below the 2005 level.

6. The observed growth - limited in its scope and circumstances - was accompanied by a decline in real wages and labor productivity, troubling considering the unemployment rate persisting at 26 per cent. The resulting poverty aggravated food insecurity.
Mr. President,

7. Despite continuous efforts by the Palestinian Authority to reduce expenditure and enhance tax revenues, the budget deficit persisted. The Palestinian Authority's persistent fiscal weakness is mainly caused by lack of sovereignty over borders, revenue leakage to Israel and by the loss of potential output as a result of the measures imposed by the occupation. The effects of the weak revenue were compounded by the fact that donors' budget support was $520 million short of the PA financing needs in 2011. As a result the Palestinian Authority accumulated debt and arrears to private sector. Arrears grew by $540 million and debt to domestic banks reached $1.1 billion - 50 per cent of public revenue.

8. Additional pressures on public employment and wages threaten to constrain growth and further depress the economy, undermine social cohesion and jeopardize achievements made towards laying the institutional basis for a viable Palestinian State.

Mr. President,

9. The construction of the illegal Separation Wall leaves 10 per cent of West Bank land trapped in the "seam zone" between this Wall and the 1967 borders. As a result, thousands of Palestinian farmers find it hard to access and cultivate their own land in this zone because it is difficult to obtain Israeli permits for them and their workers to cross the Wall.

10. In addition, the Israeli ban on good-quality fertilizers for Palestinian farmers serves to fundamentally undermine the Palestinian economy. This ban has caused agricultural productivity to decline by 33 per cent, rendering Palestinian produce uncompetitive both in local and regional markets. Therefore, agricultural activities have become less viable, and many Palestinian farmers have lost their source of livelihood. This erosion of agricultural productivity is most starkly evident when one realizes that more than 2.5 million Palestinian fruit trees have been uprooted since 1967.

Mr. President,

11. A critical issue for the coming years is access to water. The report indicates that Israel over extracts water, above the share determined by the 1993 Oslo Accords, for use inside its borders and settlements, while denying the Palestinian Authority and Palestinian farmers the right to construct wells to meet growing demand for water.

12. The G77 and China reaffirm our solidarity with the Palestinian people and strongly urge the international community to step up to their support. The situation is alarming, if it is not addressed constructively, it will further destabilize, not only the country but, the entire region.

13. We once again express our appreciation to UNCTAD for its excellent work, and we call on all member states to extend the required support and resources.

Thank you Mr. President.