Economic catastrophe envelops Palestinians

The banning of all but a handful of Palestinians in the occupied territories from working in Israel has created a catastro- phic economic situation.

Professor Mohammed Shtayyeh, a Palestinian economist, says the whole economic agreement between Israel and the Palestinians is now in question, adding: "Unemployment is 52 per cent in Gaza and 45 per cent on the West Bank."

Things are not going to get any better. The Israeli Prime Minister, Yitzhak Rabin, says he will bring in 20,000-25,000 workers so "there will be no need for any Palestinians in the territories to come to Israel". Already drunken Romanians, who have taken over from Palestinians on building sites, can be seen sprawled around Jaffa Gate in the old city of Jerusalem.

Palestinians see the ban - on all but the 15,000 being allowed through - as dooming Gaza and the West Bank to a deep economic depression. Before the Beit Lid bomb on 22 January, some 55,000 Palestinians were crossing legally and taking back $700,000 (£455,000) a day.

There have been travel bans before, but at the weekend Mr Rabin spoke of making it permanent. Already some 65,000 foreign workers, mostly Romanians and Thais but also Chinese, are in the country and Israeli officials say the numbers will be increased to 90,000.

Most will work on construction sites or as agricultural labourers. Traditionally employers have been loath to stop using Palestinians, who are more skilled than imported foreign labour, work harder and usually speak Hebrew. But government pressure means construction companies are increasingly turning abroad.

As the new policy takes effect, construction sites - the immigration of 70,000 Russian Jews a year means a continuing need for housing - increasingly resemble those in Arab oil states, which long ago decided labour from outside the Middle East was cheaper and more tractable.

For Gaza and the West Bank the move is devastating. A study by Data Centre for Studies and Consultation in Bethlehem says the average daily wage is $11 (West Bank), and $9 (Gaza Strip). Nabil Kokali of Hebron University, says annual income a head is $2,500 (West Bank), $1,400 (Gaza) and $10,000 in Israel. Palestinian economists say the abrupt ending of such income will far outweigh the benefits of foreign aid, itself slow in coming.

Shaher Saad, head of the Nablus-based Federation of Trade Unions, said: "Labourers have nothing to do with incidents that take place within Israel. This is unjust collective punishment."