The year under review was marked by the announcement of Israel’s disengagement plan from the Gaza Strip and parts of the northern West Bank, the death of Palestinian President Arafat, successful Palestinian presidential elections and cautious efforts towards a resumption of the peace process by both the Israelis and Palestinians, in spite of continued violence, which claimed lives on both sides. Internal and external closures and other measures taken by the Israeli military, although moderately alleviated towards the end of the reporting period, continued to create economic hardship for Palestinians and restrict the delivery of necessary emergency aid supplies.

While the humanitarian situation required that emergency assistance remain the priority throughout the year, United Nations agencies took steps in their programming, through technical support and capacity-building initiatives, to assist the Palestinian Authority in its efforts to refocus on longer term planning and improved governance at both the central and the municipal level.

The present report contains a description of efforts made by United Nations agencies, in cooperation with Palestinian and donor counterparts, to support the Palestinian civilian population and institutions.

Introduction

1. The present report is submitted pursuant to General Assembly resolution 59/56 of 2 December 2004, in which the Assembly requested the Secretary-General to submit to it at its sixtieth session, through the Economic and Social Council, a report on the implementation of the resolution. The reporting period was from May 2004 to April 2005.

2. Information on the living and socio-economic conditions of the Palestinian people is provided in reports prepared by other United Nations agencies and, in particular, (a) in the report of the Economic and Social Commission for Western Asia (ESCWA) on the economic and social repercussions of the Israeli occupation on the living conditions of the Palestinian people in the occupied Palestinian territory, including Jerusalem, and of the Arab population in the occupied Syrian Golan (A/59/89-E/2004/21); (b) in the annual report of the Commissioner-General of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) (A/59/13); and (c) in the report of the United Nations Office for the Coordination of Humanitarian Affairs entitled “Gaza on the Edge” on the humanitarian situation in the Gaza Strip (October 2004).

3. Throughout the year, the United Nations Special Coordinator for the Middle East Peace Process and Personal Representative of the Secretary-General to the Palestine Liberation Organization and the Palestinian Authority continued his efforts to support the peace process and to ensure effective coordination between the Palestinian Authority, the United Nations, the international community and the Government of Israel, as well as to document the economic and social conditions in the occupied Palestinian territory.

Overview of the current situation

Political context

4. The Israeli disengagement plan was announced in February 2004. The initiative to withdraw from the Gaza Strip and parts of the northern West Bank was welcomed by the international community, which, however, emphasized the need for coordination with the Palestinian Authority and the Middle East Quartet, and for implementation to take place in full compliance with the provisions of the road map. The Quartet expressed its support for the initiative in its statement on 4 May 2004.

5. The United Nations continued calling for the full implementation of the road map, endorsed by Security Council resolution 1515 (2003), and the realization of a just, lasting and comprehensive peace in the Middle East through the full implementation of resolutions 242 (1967), 338 (1973), 1397 (2002) and 1515 (2003). The Organization urged the parties to utilize the disengagement plan as a first step in returning to full negotiations. Despite the unilateral character of the plan and concerns over its economic consequences, the international community worked with both parties to ensure that Israel’s withdrawal would proceed in a manner that would contribute to the reinvigoration of the Palestinian economy and a revival of the peace process.

6. Following the election of Mahmoud Abbas (Abu Mazen) as Palestinian President and the formation of a new Israeli Government in January 2005, both sides took positive steps that raised hopes for change in the region. The parties held a summit meeting between President Abbas and Prime Minister Sharon in Sharm el- Sheikh on 8 February 2005. At the meeting, both leaders reaffirmed their commitment to the road map and agreed to end all violence and military activity against each other’s people.

7. The implementation of the understandings reached at Sharm el-Sheikh did not proceed without difficulties and delays. Both sides frequently reaffirmed their commitment to coordinate the implementation of the Israeli disengagement plan, though progress remained slow until April 2005. In this context, in April 2005 the Quartet appointed outgoing World Bank President James Wolfensohn as its special envoy to oversee and coordinate the international community’s efforts in support of the disengagement initiative, as well as to promote coordination and cooperation between the parties in this regard. The special envoy is to play a specific role in the methodology of withdrawal, the disposition of assets, and the envisaged postwithdrawal revival of the Palestinian economy, including investment and financing.

Humanitarian and socio-economic context

8. Overall, macroeconomic indicators for the occupied Palestinian territory showed that the economy was resilient, despite the pressures of ongoing conflict and closure. Gross domestic product growth, estimated at 3 per cent, remained positive for the second year running, though lower than in 2003. In 2004, for the first time, domestic public revenues exceeded budget projections. However, despite this positive picture, a climate of protracted social and humanitarian crisis endured through the year, punctuated by an intensification of the conflict, ongoing barrier construction and persistent fiscal crisis. Private investment, particularly in productive sectors, remained low due to an ongoing lack of confidence of potential investors in the political situation.

9. An estimated 48 per cent of Palestinians were living below the poverty line at the end of 2004, with poverty rates expected to rise if prevailing conditions persist. Food insecurity declined slightly in 2003, affecting 37 per cent of Palestinians.2 Overall, however, food consumption per capita has fallen by 25 to 30 per cent since September 2000. In general, there is greater dependence on external aid in the Gaza Strip than in the West Bank. Humanitarian assistance constituted the chief part of the household food basket in the Gaza Strip, whereas in the West Bank employment and casual labour were the main sources of household income and food.

10. Israeli restrictions on movement were a proximate cause of economic hardship among ordinary Palestinians. The restrictions became more severe in the Gaza Strip, where the conflict intensified during 2004. The Rafah crossing was closed for 86 days during the reporting period, severely disrupting the flow of people and goods to and from Gaza. The average number of daily workers in 2004 entering the Erez industrial zone dropped by 75 per cent against 2003, and the number of those crossing Erez to work in Israel dropped by 64 per cent. This decline in labour access from Gaza was a major factor in overall Palestinian unemployment, which reached 26.9 per cent in 2004.3 At the same time, there was an increasing trend towards under-18 child labour, particularly in the Gaza Strip and the barrier-affected communities of the West Bank.4 It is important to note, however, that the total number of workers entering Israel and crossing into the Erez industrial zone began to increase significantly as of mid-February 2005.

11. Imports from Israel, through the main commercial terminal between the Gaza Strip and Israel at Karni rose by 5 per cent, though exports dropped by 30 per cent in 2004 compared with 2003. During the first quarter of 2005, imports through Karni declined by 18 per cent and exports by 39 per cent compared with the same quarter in 2004.5 Internal checkpoints restricted movement between the northern, central and southern parts of the Gaza Strip. The barrier, together with more than 700 roadblocks, disrupted the flow of goods and people within the West Bank, as well as to and from Israel. The Allenby bridge remained the only international crossing for West Bank Palestinians.

12. On 9 July 2004, the International Court of Justice rendered an advisory opinion pursuant to General Assembly resolution ES-10/14 of 8 December 2003. The opinion stated that the construction of the wall “constitutes breaches by Israel of several of its obligations under the applicable international humanitarian law and human rights instruments”. On 20 July 2004, the General Assembly adopted resolution ES-10/15, which acknowledged the Court’s advisory opinion, demanded that Israel comply with its legal obligations and called on all Member States to comply as well. The resolution also requested the Secretary-General to establish a register of barrier-related damages. The register is expected to be established later in 2005.

13. Israel continued its construction of the barrier in the West Bank, contrary to the advisory opinion of the International Court of Justice of 9 July 2004 and General Assembly resolutions ES-10/13 and ES-10/15. By early 2005, the barrier was approximately 205 km long, of which 24.1 km consisted of concrete slabs and 181 km was fence-like in structure. A further 72.1 km was under construction. Approximately 157,800 acres lies between the barrier and the Green Line, affecting an estimated 93,200 Palestinians located in these areas. Land confiscations combined with access restrictions associated with the barrier were estimated to have cost Palestinians approximately $320 million in lost property and income,1 while the barrier made Palestinian access to Israel’s labour and commodity markets more difficult.

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Footnotes
* A/60/50 and Corr.1.
** E/2005/100.
*** The present report was submitted after the established deadline in order to include as much updated information as possible.

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