WASHINGTON, March 28 (IslamOnline & News Agencies) - Israel's closure of Palestinian territories and its crackdown on the Palestinian Intifida against Israeli occupation have left the Palestinian economy near total collapse, says a World Bank report.

"Mainly as a result of the heavy restrictions on the movement of labor and goods in the West Bank and Gaza [the 'closures'], the Palestinian economy is in severe recession," said the Bank's ‘Fifteen Months - Intifada, Closures and Palestinian Economic Crisis’.

According to the report, released earlier this week, unemployment has tripled, to almost one-third of the workforce. Real incomes have fallen by almost 30 percent, and are now lower than they were in the late 1980s. The proportion of the poor (those consuming less than two dollars per day) has doubled, to almost a half of the population of the West Bank and Gaza. The share of the Palestinian population living below the poverty line is estimated at almost 50 percent, double what it was in late 2000.

The report, other parts of which will be later released this month, says that the physical damage from the Intifada by the end of December 2001 is estimated at 305 million dollars, while Gross National Income losses amounted to at least a whopping 2.4 billion dollars.

"The economic crisis is not irreversible," the report quoted Nigel Roberts, Director of the World Bank in the West Bank and Gaza, as saying. "If the closures are lifted, the Palestinian economy will recover."

"If closures persist or intensify, the economy will eventually unravel,” added Roberts. “Public services will break down. Unemployment and poverty rates will continue to climb. Helplessness, deprivation and hatred will increase, and this unique chance for reconciliation will pass."

The report, which was prepared by the Bank with the technical support from Office Of The United Nations Special Co-Ordinator (UNSCO) and finance from the Government of Norway, squarely blames Israeli closures of Palestinians territories for the disintegration of the Palestinian economy.

"It is clear that the main proximate cause of the Palestinian economic crisis is closure, the impact of which far exceeds that of armed confrontation and associated physical destruction," says the report.

In its first section, the report described how Israel's policy of closures (internal closure within the West Bank and Gaza, closure of the borders between Israel and those areas, and closure of international crossings between them and neighboring main trading partners Jordan and Egypt) has left trade and movement of goods at a complete stop.

The Bank says that the Palestinian Authority (PA) finances have seen a rapid depletion since the start of the Israeli closure policy in September 2000 because of "a sharp drop in PA revenue collections" associated with the drop in economic activity and interruption of tax administration.

The exhaustion of the PA coffers is also attributed to the suspension, since December 2000 by the Israeli occupation government, of the transfer of the revenues, like taxes and tariffs, collected on the PA's behalf (over 500 million dollars at that time). The bankruptcy is compounded by an increase in the need for crisis expenditures, mainly in health.

"It is axiomatic from the Bank's analysis that any significant recovery of the Palestinian economy requires that the Government of Israel dismantle the present system of internal checkpoints and border restrictions on goods and workers," said the report. "In addition, withheld tax revenues need to be released to the PA (Palestinian Authority), and regular revenue clearances resumed."

The report, however, notes that Palestinian survival so far has been achieved by a solid PA emergency plans, strong social fabric and help from international donors.

The PA has managed the crisis well, says the report, particularly the budget, delivery of basic services and physical rehabilitation efforts. The PA has managed this deficit by borrowing from commercial banks, slashing salaries, constricting operating costs and shelving the payment of bills.

"But all of these strategies are reaching their limit," warned the report. Households have reduced their expenditures and drawn down their savings, and informal self-help and sharing systems have "redistributed" the economic pain.

The donors who now often work through Non Governmental Organizations have injected "timely and generous emergency assistance." Despite the difficulties of working in conflict, donor disbursements registered a 93 percent hike in 2001 when compared with 1999 (to almost 930 million dollars). Over 80 percent of this was devoted to budget support and emergency relief. "This unprecedented quantity of budget support has helped sustain a minimum level of market demand and has prevented the disintegration of government structures," noted the report.

Donor contributions to United Nations Relief and Works Agency for Palestine Refugees in the Near East, better known as the UNRWA, have also been key, and numerous small-scale job creation programs for the newly unemployed have been put in place.

"Without the intervention of the donors, and in particular the Arab League and European Union states, all semblance of a modern economy would have disappeared by now," said the report.

The report suggested that there was still a need for a well-designed Palestinian reform agenda that ensures "public accountability and transparency", and offers a firm legal milieu for private investment.

The report, however, warned that the economy is not far from total collapse with many households nearly exhausting all their savings and capacity to borrow. Emergency employment schemes have not made a noteworthy dent on unemployment. The fiscal situation continues to worsen, and donor assistance has not closed the budget deficit, the report says.

Nearly 1,300 people died because of the Israel military crackdown since September 28, 2000 and nearly 20,000 were injured, says the report. Of the dead, more than 900 were Palestinian and 220 Israeli; of the injured, some 17,000 were Palestinian (some 2,500 of whom are expected to suffer permanent disability).