Palestinians - the second largest importer of Israeli goods after U.S.

Here are some economic implications for both Israel and Palestinians if total blockade on Gaza becomes a fact:

* In 2006, total Israeli exports to the 60 million or so residents of France stood at slightly more than $1 billion. Israeli exports to the same amount of people in Italy stood at just below $1 billion.

* But total exports to both of these countries, which rank among the eight richest countries in the world, are equal to Israel's exports to the 3.5 million people of the West Bank and Gaza Strip, according to the Central Bureau of Statistics. This is more than 6 percent of all Israeli exports, excluding diamonds. Despite all the intifadas, the Palestinian Authority is the second biggest customer of Israeli exports, after the United States.

If the blockade becomes permanent policy, Israel will lose a large part of its "captive market" - a stock phrase which in this case literally describes Gaza. "Israel benefited from its relations with the Palestinians," says Dan Catarivas, head of the foreign commerce branch of the Manufacturers Association and a former senior official in the finance and industry ministries. "And at the end of the day, it will lose if these ties are cut."

Whatever the 1.5 million people in Gaza need to live comes to them from Israel - from milk products to diapers, from medicine to cement. Even the humanitarian aid from international organizations is bought almost entirely from Israeli companies. Israeli firms also earn money as middlemen. Gas for cars is bought in Gaza via an Israeli intermediary at a tidy fee. About 5 percent of all freight that passes through the Ashdod port is earmarked for Gaza. This is to say nothing of the customs fees Israel is supposed to collect for the Palestinian Authority as part of the Paris Agreement signed in the 1990s, when everyone believed in a future of cooperation between Israel and the Palestinians. This money represents hundreds of millions of dollars that Israel put aside so it could eventually serve as a whip against the Palestinians.

An estimate by the Palestine International Business Forum shows that cutting off economic ties between Israel and the Palestinians would bring down the standard of living in the PA by one-third. Income per capita would fall to $500, the lowest in the Arab world, even lower than Sudan or Yemen.

Israel, according to this research, would lose around $2 billion per year. Some 76,000 jobs would be lost. Catarivas does not know whether these data are correct, but it is clear to him that Israel will be hurt. To his regret, he does not think that anyone really cares about this damage. "The system will adapt in the long run," Catarivas says. "Economic considerations will not have the upper hand over diplomatic considerations."

based on a report by Meron Rapoprt, Haaretz Correspondent

OVER 60% OF GAZA CITIZENS BELOW THE POVERTY LINE

"The average wage in the Gaza Strip is NIS 1,690 ($419) a month for a
full time position (NIS 76 per day) (roughly $18.85), compared to an
average wage of NIS 7,920 (roughly $1,964) paid in Israel (NIS 360 -
roughly $89 - per day, including part time workers)." (Ynet News,
10/17/07) The data was collected in the Palestinian Authority by the
New Family organization.

The data also showed, that the average monthly wage among
Palestinians in the West Bank is NIS 1,720 (roughly $426) a month.
206,000 Palestinians are unemployed - a total of 23.6% of
Palestinians from the territories who are part of the workforce
(workers and job seekers). According to the study, 63.1% of Gaza
residents live below the UN poverty line.

The question that arises is, "Where do the hundreds of millions of
dollars in international support to the Palestinians go?" Surely if
they went to the poor, the situation would be different! But we all
know where the money goes... it's just that no one wants to say it
out loud for the fear it will then have to be acknowledged and acted
on. Interestingly enough, yesterday, the trial of the Holy Land
Foundation ended in a mistrial, as the jurors were not able to reach
a unanimous verdict for the members of this organization, suspected
of financing terrorist organizations.

“The Economist”: Israel in top 5 emerging markets

Israel has risen 12 places to become the world 36th largest economy.
by Zeev Klein

In its latest emerging markets survey, “The Economist” notes that Israel has been one of the five fastest growing emerging markets in the past 20 years. Israel has risen 12 spaces from the world’s 48th biggest economy in 1980-84 to 36th biggest economy in 2001-05. “The Economist” ranked economies by size on the basis of their five-year average GDP in current dollars, and compared the rankings of 1980-84 with 2001-05.

“The Economist’s” report is a shot in the arm for Prime Minister Ehud Olmert, Minister of Finance Abraham Hirchson, and Governor of the Bank of Israel Prof. Stanley Fischer, given that, since 1980, the country has undergone two intifadas, the effects of two wars in Iraq and two wars in Lebanon - the only one of the 28 emerging economies to have such an experience.

The four fastest climbing countries are in Asia: Singapore rose 20 places from the world’s 59th largest economy in 1980-84 to 39th in 2001-05; Taiwan rose 14 places from 32nd place to 18; South Korea rose 12 places from 23rd place to 11th; and Hong Kong also rose 12 places from 42nd place to 30th. Israel climb matched those of South Korea and Hong Kong.

“The Economist” notes that China has risen only four notches to become the world’s sixth largest economy - but even in the early 1980s it was already the world's tenth-biggest economy in current dollars. India, perhaps surprisingly, has barely budged as the world’s 12th largest economy. Several oil producers have fallen down the rankings, despite the increase in oil prices towards the end of the period covered: Venezuela has fallen 12 place from 25th place in 1980-84 to 37th place in 2001-05; Iran has fallen 16 place from 17th place to 33rd; Nigeria has fallen 16 places from 33rd place to 49th, and Saudi Arabia has fallen to 15th place from 22nd.