UN agency sees growth shoots in ‘bleak’ Palestinian economy

The economic situation in the Palestinian territories improved slightly in 2009, partly propped up by the tunnels in Gaza Strip, a report for the International Labour Organisation said Thursday.

The ILO underlined that the Palestinians remained in a precarious economic situation, although average incomes grew by 3.7 percent over 2008, the growth rate accelerated and employment rates improved slightly.

The Gaza Strip in particular remained an “industrial cemetery” one year after fighting during an Israeli military offensive devastated the territory, according to the annual report by the ILO’s secretariat.

It examined for the first time the economic impact of an estimated 400 to 600 tunnels built by Palestinians in the Gaza Strip to try to overcome a blockade, senior ILO official Friedrich Buttler said.

“Although reliable data on the tunnel economy do not exist, it can no longer be described as clandestine when about 20,000 people are said to be connected with it,” the report said, adding that even big containers could pass through the tunnels.

The Hamas-led authority in Gaza controlled traffic through the tunnels and drew “an important income stream” from them, it added.

The ILO estimated that economic growth reached 8.5 percent of GDP in the West Bank and one percent in Gaza, but worker conditions remained a cause for serious concern.

“The bleak economic, social and humanitarian situation in the occupied Arab territories creates and environment in which workers rights and human dignity continue to be violated on a daily basis,” ILO Director General Juan Somavia said.

The 1.5 million people in the impoverished Gaza Strip have largely relied on the vast network of illicit tunnels since Israel and Egypt sealed the coastal territory off to all but some aid after the Islamist Hamas seized power in June 2007.