Rising Cost of Occupation

Abstract

Since 1967 when Israel when the West Bank and Gaza Strip occupation begun, there has been increasingly taxing social-economic effects on Israel. The second uprising broke out after the collapse of the OSLO agreements, in the early 2002. The Israeli economy was hit twice. It was first hit by the dotcom crash in the US; second, by the 2000-2005 Palestinian . The drastic effects on the Palestinian economy which shortly after split in to two political units (the West bank, controlled by the Palestinian Authority, and the Gaza Strip controlled by Hamas). Especially the Gaza strip economy got down to the level of humanitarian crisis. that the early 2000s shock had relatively small effect on the long-term trajectory of Israel's real GDP. The effect on the Israeli economy of the second Intifada shock was mild, and short-lived. globalization proved to be a “shield” against the Palestinian-Israeli military conflicts and regional trade obstacles for the Israeli economy. This means, that the Israeli economy is exposed, however, to alarming long run risks. If, and when, the Palestinian-Israeli conflict, and the long occupation of the of the West Bank territory would trigger political conflicts between Israel and its trade-and-finance partners, this “shield”, provided by Israel high level of integration with the global economy, may break down.