Rationale and background

Abstract

Since 1967, the Occupied Palestinian Territory has been subject to protracted Israeli occupation that has created a hostile environment affecting the Palestinian economy and all spheres of life. Following the signing of the Protocol on Economic Relations in 1994, which was expected to improve Palestinian economic conditions, the economic policies as well as the security and military measures of Israel imposed on the Occupied Palestinian Territory have rendered the outcomes of the Paris Protocol inimical to Palestinian development needs. The Palestinian economy is characterized by deteriorating economic indicators, along with a chronic fiscal and trade deficit and a high level of dependence on the economy of Israel. This has entailed over two decades of denying the Palestinian people and economy the right to benefit from the country’s diverse natural and water resources and to make optimal use of fiscal, financial and other resources. The issue of the costs of the Israeli occupation and Palestinian fiscal losses and revenue leakage to Israel resulting from flawed application of the Paris Protocol are therefore garnering increased attention. In this context, since 2014, different studies have addressed Palestinian fiscal leakage and losses resulting from the current trading framework with Israel, the first of which was published by UNCTAD in 2014.