Expert: West Bank Economy Can Tolerate New 5-day Lockdown
Business owners, citizens divided on Palestinian Authority’s latest attempt to contain coronavirus
Palestinian Authority President Mahmoud Abbas has extended the state of emergency in the West Bank by 30 days amid a five-day lockdown declared on Friday due to the spiraling number of new coronavirus cases.
The only exceptions during the lockdown are for pharmacies and grocery stores, the PA’s health ministry says. Palestinians who cross into Israel for work will not be allowed back for the time being.
The ministry adds that the lockdown could be extended as needed, although there are concerns that this latest in a series of coronavirus closures will have a dire effect on the West Bank economy.
Nasr Abd al-Kareem, a professor of finance and banking science at the American University in Ramallah, told The Media Line that the closures would indeed hurt the Palestinians economy, just as they would that of any other country.
“But we can’t really call these repercussions catastrophic,” he said. “Our economy is different [from most] as it’s a small one that’s not tied to the world economy and to global contracts.”
We can’t really call these repercussions catastrophic. Our economy is different [from most] as it’s a small one that’s not tied to the world economy and to global contracts
The closure will, however, “stop the wheels of the economy” that depend on the free movement of people, thereby reducing trade, consumption and investment, he says.
“The closure caused a breakdown in important circles in the Palestinian economy. Expectations for growth performance and employment have declined, in addition to having a direct effect on certain sectors such as tourism, transportation and service sectors,” he noted.
Some enterprises might be forced out of business due to a lack of liquidity, while others will sustain significant losses and accumulated debt.
“Every crisis leads to the closure of some businesses,” he said.
Kareem adds that it is to the Palestinians’ benefit that their economy is localized and not based on corporations.
“It is highly flexible and depends on personal and family capital,” he stated. “Because of this, it is resistant [to bankruptcies] and has a high degree of resilience.”
He notes that the number of Palestinians working in Israel has not changed, thus reducing the pressure on the West Bank economy, explaining that it could recover with a moderate injection of cash to maintain sufficient liquidity. The economy managed to almost completely recover from the first lockdown – and this after having been reopened for only a month.
“Excluding the losses of hotels and the tourism sector, most businesses have almost fully compensated for the damage they suffered from the first closure, but the latest wave [of coronavirus infections] has reduced confidence, especially as it coincides with the Israeli annexation plan, which has added political pressure [to the PA],” he said.
“The current right-wing government [in Israel] has postponed annexation [in the West Bank] for now, but it hasn’t canceled it,” he continued.
The PA was unable to pay government salaries for May after refusing to accept so-called tax-clearance monies collected by Israel, which make up 60% of the Authority’s budget. This refusal was part of a package-reaction to the annexation plan, which is eyeing some or all Israeli settlements and the Jordan Valley.
Jeiries Rayan, a currency-exchange owner in Ramallah, told The Media Line that a complete closure of Palestinian cities for five days could paralyze economic activity and harm people’s living conditions.
“The first closure in March affected citizens negatively and they accumulated debt. The unemployment rate has increased, and we can say the general situation has worsened,” he stated.
Rayan says he understands that the government needs to prioritize public health and safety, but adds that the first lockdown, when the number of COVID-19 cases was not as high as it is now, had severely damaged the economy and people’s incomes.
“The government should have considered the situation of [separate] cities in terms of the number of infections and the spread of the virus before making the decision to close them all,” he said. “It should have closed those cities where the virus had spread rather than closing all of the West Bank.”
The government should have considered the situation of [separate] cities in terms of the number of infections and the spread of the virus before making the decision to close them all. It should have closed those cities where the virus had spread rather than closing all of the West Bank
Mohammed Salameh, owner of Effivel Sweets in Ramallah, told The Media Line that the health aspects of the coronavirus crisis left little room to consider the financial consequences despite the severe effect on business.
“We try to see the government decision [to put a lockdown in place] as a way to get out of this medical situation, and anyway, we as Palestinians have become used to closures and curfews because of the Israeli occupation,” he noted.
“Of course we will be affected badly,” he said, “but we will survive.”
More than 2,000 people have come down with COVID-19 this time around. Decision-makers say the current wave is mainly due to noncompliance with safety measures set out by the Health Ministry.
Ramallah resident Siham Saleh supports the PA’s decision on the lockdown, as public health is more important than the economy.
“I think it’s a good decision as it will protect people,” she told The Media Line, “but five days aren’t enough. The government should have closed cities a long time ago.”
Saleh adds: “I’m for full closure. People’s lives are more important than money. Businesses can be compensated, but not health.”
Yet Monef al-Barghouti, also from Ramallah, told The Media Line that the PA should take one more look, as imposing another lockdown without supporting citizens financially or assisting them with alternatives reflects the random nature of it policies.
“People don’t have money and were affected badly by the first closure, and now citizens won’t be able to work or secure an income,” he said. “This doesn’t work. The government should at least support these people.”