Coronavirus May Lead to Financial Woes for PA
With tourism dried up, borders around Israel tightening, and the Bethelem area shut down by an outbreak of the virus, COVID-19 has landed a heavy blow against the economy in the Palestinian territories
The coronavirus pandemic’s spread across Israel and the Palestinian territories is not only a health crisis but a financial one, as well, particularly for the already fragile Palestinian economy.
More than 100,000 Palestinian workers cross into Israel daily for work, and about 30,000 work in Israeli settlements in the West Bank. But these numbers have declined due to the outbreak.
The Israeli military’s Coordinator of Government Activities in the Territories (COGAT) said in a written statement that, following “consultation” with the security establishment, Erez Crossing with the Gaza Strip would remain closed to the movement of people, except for humanitarian cases.
The COGAT statement also said that Palestinian workers from the West Bank were “allowed to enter up to the age of 50.”
According to the Palestinian Health Ministry, at least 35 people in its jurisdiction have been infected with coronavirus and 100 suspected cases are in quarantine.
Most cases are in the Bethlehem area. COGAT’s statement said workers from that area would not be allowed to enter Israel.
The Palestinian Authority government sealed off the entire Bethlehem area, not allowing anyone to leave or enter.
About 9,000 Palestinians from the Bethlehem area have permits allowing them to work in Israel.
With the tourism sector virtually at a standstill, Palestinians are scrambling to find work and stay financially afloat.
Amjad, 36, from the village of Beit Sahour, works in construction in Israel. He told The Media Line by phone that he had enough savings to last him only a month.
“I’m OK for now but if the closure continues for long, I don’t know what to do,” Amjad, who refused to give his last name, said, “I understand why they are taking these steps but at the same time they need to think of us, too. We have families to feed and we must return to work.”
The largest employment sector after construction is agriculture.
The Palestinian Authority is economically dependent on Israel; Palestinians who work in Israel pump millions of desperately needed dollars into the PA’s economy.
Thabit Abo Al Ros, a financial expert at Palestine Technical University in the West Bank told The Media Line that “as long as the Palestinian economy is heavily connected to the Israeli economy, there will be direct damages to the Palestinian economy.” Al Ros argued that not allowing thousands of workers to enter Israel will have catastrophic results on an already weak economy. “This means depriving the Palestinian economy of the cash remittances earned by workers in Israel and spent in the areas of the Palestinian Authority. Therefore, unemployment will increase, and in the Palestinian territories it is already officially 27%.”
A Palestinian official with Labor Ministry told The Media Line, on condition of anonymity, that these measures could have devastating effects on the Palestinian economy.
“The cash flow generated by our workers keeps our economic engine going. We don’t have many resources and Palestinians working in Israel remain one of the main cash sources for us.”
The high-ranking official with the Labor Ministry said that the PA is struggling financially. “A long delay in allowing workers to return to work in Israel may lead to the destabilization of the PA economically. We are definitely going to need international assistance.”
Hasan Awwad, a Palestinian expert at the University of Bridgeport in Connecticut, told The Media Line, “A high percentage of the workers are above 50 years old because the younger generations have no access to work permits allowing them entry to Israel because the older ones get security clearance more easily.”
Awwad says the loss of income may spell doom for the PA.
“This impacts all sectors of the economy and might lead to the bankruptcy of some local businesses and increase the national debt as a percentage of the GDP.” He adds, “Any extended interruption in the flow of cash is bad news for the Palestinians’ economy.”
Palestinians working in Israel make two and a half times the average salary in the PA, which stands at $500 per month.
According to Al Ros, the loss of this income will “paralyze” the Palestinian economy.