Written by: Dr. Saeed Sabry

The fragile Palestinian economy lives in a quagmire of obstacles, challenges and difficulties that impede its progress. We are witnessing an increase in the unemployment rate in Palestinian, which reached about 33% or 500 thousand people of the workforce, and a decline in the gross domestic product to 14% compared to last year. It is expected that the Palestinian economy will suffer losses in the current year 2020 to reach 2.5 billion dollars.

While the Palestinian economy sees a sharp decline in gross domestic product, the major decline was the construction sector, which reached 21% according to official Palestinian statistics, other sectors also witnessed a decline ranging between 5% - 19%.

The Palestinian Authority relies on the monthly income collected by the occupation according to the previous agreements signed between the Palestinian and Israeli sides since 1995 and known as the "Paris Agreement" that left an economic and monetary dependency and a labor market, which in turn created complete control over aspects of the commercial and economic life of the Palestinians: known as The "clearing", which is based on four main elements:

• Income taxes of Palestinian workers in Israel.
• Income tax collected from Palestinians working in settlements.
• Import taxes (customs) and other fees on goods whose destination is in the territories of the Palestinian Authority.
• The added-value tax paid by Palestinian non-profit organizations and institutions, and registered with the Palestinian Authority, on transactions in Israel.

Israel also collects administrative costs that it deducts from the clearing process, amounting to 10% to 15%.

The clearing represents 70% of the annual income of the Palestinian Authority, which amounts to $ 2.4 billion, or $ 200 million per month, and the clearing represents what makes about 55% of the total government expenditures. Being main pillar of the Palestinian economy, the clearing provides for the salaries of workers in the public sector and pays the obligations of the periodic authority. The clearing is considered the political pressure sword by the occupation on the Palestinian Authority and the Palestinian citizen, as all the commercial protocols signed with the Arab countries and the Islamic and neighbouring countries failed to increase the percentage of exports of products to foreign markets, as a result of the control of the other side over the commercial crossings. Palestinian exports to Israel make about 59% of the volume of foreign trade, compared to 41% to the rest of the world before the 2019 Corona pandemic, so what have successive governments provided as alternatives for the Palestinian citizen to enable him to live a decent life?

The Corona pandemic came to complete the economic scene from the suffering of the Palestinian citizen, accumulated loans, an increase in debt, bounced checks, economic contraction, a decline in the citizen's purchasing power. The private sector of small enterprises, which represent 96% of the size of the private sector, is affected daily, with increasing unemployment, so what did we attend or catch up to save the situation the economy has reached?

We have been witnessing for some time an official approach that adopts the principle of economic separation from the occupation state, and as an observer, analyst and reader, do not witness any specific movement on the ground by the official authorities. The cumulative process of relying on "clearance funds" that lasted for nearly 25 years is not easy to end in there are legal, administrative and financial challenges.

In this context, I would like to present practical proposals to revive the Palestinian economy so that it can start again towards economic independence: -

First: Work to carefully review all laws, legislations, and policies regulating the private and private sector, including those related to emerging and small enterprises, and work to facilitate procedures and laws for their work, including the establishment of an investment window that includes a package of support programs for those productive sectors in Palestine.

Second: Import substitution, represented in supporting the emerging economic sectors with a focus on supporting the productive sectors as a priority in order to be able to include labour.

Third: Work vigorously to mobilize all logistical capabilities and international relations to open global markets for the Palestinian product in order to encourage the export of industrial and agricultural products to global markets

Fourth: Supporting the production chain for industrial and agricultural projects in Palestine, by providing tax exemptions for all small and micro enterprises who employ one or more persons, up to five persons.

Fifth: Work to develop a program aimed at alleviating the effects of the precautionary measures to combat Corona virus on the small and micro-enterprises sector, and specifically to alleviate the burdens of fluctuating cash flows and to support the working capital in support of the private sector.

Sixth: To support the construction sector in Palestine, work to provide housing loans with a grace period of two years from the date of the loan.

Seventh: The monetary authority and local banks should work on developing a product to support the operating expenses of its customers from affected small and medium industrial projects, and in support of the national product.

Eighth: Exempting all micro and small enterprises from all government fees.

Ninth: Recruiting clearance funds to build Palestine and self-reliance in light of challenges.

Tenth: Consolidating commercial and economic relations with Arab and Islamic countries such as "Turkey and Malaysia" as a strategic option to reduce economic dependency with Israel, especially in the promising industrial and agricultural sectors where economic indicators show them as promising markets for products and will enhance economic development.

Towards a strong and independent economy instead of a small and weak economy with a productive base capable of creating job opportunities and supporting the local Palestinian product of high quality to compete with Israeli or foreign products.