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Assessing the Palestinian Response:
Economy, Leadership & Implications for Statehood

Dr Amal Daraghmeh Masri,
Editor-in-chief of Middle East Business Magazine & News
The Palestinian Authority has achieved a remarkable success in its fight against Coronavirus, which was recognized domestically and internationally. The economic price of this success, however, was equally alarming and beyond the endurance capacity of this impoverished country.

From the very start, the PA was quick to close the country. It took this bold decision since the first infections were detected in Bethlehem on 5th March, weeks before neighboring countries such as Israel and Jordan acted. Despite the negative impacts, the early closure brought about certain positive results including a limited number of infections and only two fatalities (from the virus) were recorded in the West Bank.

In private meetings and behind the scenes, Prime Minister Dr. Mohammad Shtayyeh, said he found himself faced with two options: 1. An intact economy with an Italian or Spanish scenario outbreak potential or 2. A more robust health response with higher economic collapse probability. He chose the second without delay for two main reasons. The first reason was due to the weakness of the health system and its inability to treat large numbers of infected people. It is worth noting that the healthcare system has 120 artificial respirators; 1 health center for every 6,100 citizens; and no more than 20,000 beds across over 67 hospitals for a population in the West Bank and Gaza that amounts to 5 million. The second reason was due to limited size of the Palestinian that whose Gross National Product does not exceed USD 16 billion a year. 

In order to protect the disadvantaged and the vulnerable groups prone to major damages as a result of the closure, the government declared a general state of emergency in the country, and took decisions outside the context of the prevailing law, such as requesting landlords of closed commercial stores to stop collecting rental fees for a period of three months, along with demanding the banks to postpone due payments and installments. The government also offered some support to some of the affected groups by collecting donations from wealthy Palestinians amounting to NIS 60 million. 

It seems that Palestinian society, which is used to adapting to such crises of closures, incursions and curfews for many months, managed to cope relatively well with the measures taken. Public opinion polls revealed that the Palestinian public was satisfied with the government's measures despite the economic impact. For example, the results of a survey recently conducted by the Arab World for Research and Development Awrad indicated that 86% of the public have trust in the measures taken by the government to combat the virus. The results of an poll conducted by the Jerusalem Media and Communication Center indicated that 96% of the public in the West Bank is ready to abide by government decisions aimed at curbing the spread of the virus. The successful government measures were reflected in an increased popularity for PM Shtayyeh, who was quoted in the various news analyses of major international agencies. These successes also point to Shtayyah's enhanced chances of succeeding President Abbas.

Likewise, Eastern Mediterranean countries commended the efforts of Palestine in confronting the virus, by applying strict measures to deal with the virus outbreak in the early hours of its detection, which was prompt enough and more than 14 days faster than neighboring countries.

The measures taken by the government were also praised by Dr Gerald Rockenschaub, Head of Palestine Office for World Health Organization who noted that the Palestinian government has taken advanced measures, with the Ministry of Health (MoH) going beyond what was internationally recommended at the time. The MoH followed WHO standards in patient examination and testing procedures, quarantine regulations, and public health measures. The results of the closure in Palestine appear to be very modest at the socioeconomic conditions level when compared to others worldwide.
Health Challenges

The exclusive focus on infected cases to prevent the spread of the virus constituted a critical challenge for the Palestinian MoH. This caused serious pressures on how to maintain the provision of basic health care services on a continuing care basis. The ministry has received support to combat the virus from the Global Health Cluster, WHO.  All major service providers (the Ministry of Health, UNRWA and NGOs) have reduced sexual and reproductive health services as a result of the outbreak.

The endeavors to meet the needs of quarantine sites faced great challenges, including lack of laboratory supplies necessary to carry out coronavirus testing at local levels along with shortages in some basic case management equipment, especially in relation to critical cases, infection prevention and protection supplies.

Despite the early announcement of the state of emergency and the precautionary measures taken, there is still a need for a clear recovery plan that involves all concerned parties, in and/or in consultation with, the different sectors to avoid a collapse in businesses as a result of the closure and, in particular, the shutting off small and medium enterprises both registered and unregistered as well as those relying on day-to-day revenue. The majority of the poor and women, especially female entrepreneurs, are operating in this sector. In addition, this plan needs to address the devastating effects of the pandemic on the tourism sector in a tangible way in order to prevent its bankruptcy. The private sector is envisaged to assume a great deal of the results and consequences of the "post-Corona" era.
Political Challenges

The reality in the Gaza Strip has been much worse with the continuous blockade of the Strip for more than 14 years along with a high unemployment rate amongst almost half of the labor force. Meanwhile, the situation in East Jerusalem is also difficult given that the Israeli authorities prevented the concerned bodies within the PA from providing services to curb the spread of the epidemic. Alongside this, Jerusalem civil society organizations were prohibited from volunteering to support the residents. The approach that was adopted by the Israeli forces at time often complicated and hindered service delivery. During this period, we also witnessed a spike in Israeli settler attacks on Palestinian residents and properties in the West Bank. The impact of the virus and the ongoing restrictions resulting from the occupation led to an exacerbation of the situation.

Although the Palestinian government extended the state of emergency for an additional month, it also eased some of the restrictions. This explains the increase in economic activity during the last period, which of course does neither mean full nor partial resumption of the normal state of commercial traffic. The socioeconomic aftereffects continue to have an effect on daily life, and this will endure for at least the medium-term. Whilst there was a degree of health cooperation between Israel and the PA at the height of the pandemic, this has been overshadowed by the current political situation and the Israeli announcement to proceed with annexing parts of the West Bank. 
Contraction of the Economy 

The World Bank estimated a contraction of the Palestinian economy during 2020 by 2.6% to 7.6%, due to a number of factors, including the decline in demand as a result of job losses and salary cuts. It also expected the PA to encounter a financial deficit of up to 2 billion USD as a result of a decline in revenues and an increase in expenditures to cope with the epidemic. UN Special Coordinator for the MEPP, said, “if the current trends continue, the damage to the Palestinian economy is expected to jeopardize the existence of the PA itself." The UN and its affiliate agencies have estimated that the inter-agency response plan requires USD 42.4 million to address the crisis caused by Coronavirus.
Economic Losses

Since the outbreak of the epidemic, the Palestinian government set up a crisis cell to communicate with citizens through a daily press briefing with Shtayyeh alongside regular updates from the Spokesperson of Government and the Minister of Health. As for the direct dialogue with the various sectors, especially the private sector, it witnessed ups and downs. With the launch of the “Stand of Pride” Fund (Sondoq Waqfet Ezz) – that includes donations and contributions from the private sector and individuals to support the health sector along with the poor and affected families – a crisis of mistrust has erupted between the two parties. This situation encouraged concerned individuals and professionals to continue publishing proposed solutions on their pages in the social media. This points to a crisis of communication with decision makers, especially because the private sector requested representation in the economic emergency committees which did not happen despite their clear articulation of such a demand.

This pandemic has had major socioeconomic consequences that are expected to surge and directly affect food security, especially with many families having lost their sources of income due to restrictions imposed. The Ministry of Social Development expects 100,000 families to join the list of impoverished families.

In a study conducted by the Palestinian Central Bureau of Statistics, it was estimated that the Palestinian economy would incur losses of USD 2.5 billion if the pandemic lasts for three months, while the GDP is expected to fall by 14% in 2020 as compared to 2019. The report also referred to developments on the ground, including the declaration of the state of emergency in the West Bank, followed by the governmental decree restricting traffic among the governorates and cities for a period of two weeks. It also noted the renewal of these measures for an additional month, along with Palestinian government calls upon all Palestinian workers to return home (from the green line/areas of 1948).

At the expending level, the same report forecasts that the Gross Domestic Product (GDP) is likely to drop by 14% in 2020 as compared to 2019. The total economic losses (in GDP) are estimated at about USD 2.5 billion in 2020, compared to the pre-pandemic era. Those losses resulted from a decline in total public and private consumption by approx. USD 1.3 billion, a drop-in investments by approx. USD 2.1 billion and in imports by approximately USD 1 billion.

It is expected that the losses in agriculture, forestry and fishing activities will amount to USD 200m as compared to USD 362m  in manufacturing, USD 220m in the construction activity, and USD 1.175b in the services sector. The losses of the wholesale and retail activity accounted for 59% of the total services activity losses at USD 689m. Besides, the losses of various service activities amounted to 31% of the total services activity losses (USD 374m) whereas the losses of the restaurants and hotels, which were subject to a total closure, constitute about 10% of the total services activity (USD 112 m).
Dr Amal Daraghmeh Masri is CEO of Ougarit Group, Editor in Chief, and Founder of Middle East Business News. She holds positions in local business organisations working for the advancement of women in Palestine and across the Arab world. She is head of the Local Economic Council Al-Bireh Municipality, a board member of Islamic Reporting Initiative IRI-UK, and former President of the Businesswomen Forum, amongst various other positions she has held. She is an activist in economic rights for women and believes that economic independence is key to the advancement of women.
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