Executive Summary

The ongoing genocide in the Gaza Strip has compounded several humanitarian and legal violations, particularly inrelation to the reproductive rights of Palestinian women. Since the launch of its military offensive in October 2023, Israelhas systematically targeted Palestinian women in ways that undermine their ability to survive, give birth, and raisechildren. More than 12,300 women have been killed, 4,700 women and children are missing, and approximately 800,000women have been forcibly displaced. An estimated one million women and girls now suffer from acute food insecurity.Israel’s actions constitute a deliberate attempt to impair the reproductive capacities of Palestinian women, aimed atdismantling the future of Palestinian society. Through the bombing of shelters, destruction of hospitals, blockading ofmedical and hygiene supplies, and attacks on fertility clinics and maternity wards, Israel’s policy of erasure is notincidental, it is intentional.

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Executive Summary

The United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) is vital inproviding humanitarian aid, education, and health services to Palestinian refugees across Jordan, Lebanon,Syria, and the Occupied Palestinian Territories. Beyond its humanitarian role, UNRWA represents aninternational commitment to Palestinian refugees' right of return, as established in UN General AssemblyResolution 194 in 1948. However, Israel has long sought to undermine the agency through financial, political,and military means.Recent Israeli actions have escalated, with the Israeli Knesset passing legislation banning UNRWAoperations in areas under Israeli control, effectively revoking its legal status. Concurrently, Israel hasintensified military attacks on UNRWA facilities. In the Gaza Strip since October 2023, Israeli forces havetargeted 310 UNRWA sites, destroying schools and killing 273 UNRWA employees alongside hundreds ofcivilians sheltering in its facilities. Throughout the occupied West Bank, the Israeli military has been turningUNRWA facilities into military bases and detention centers, and has closed UNRWA’s headquarters in EastJerusalem. These actions violate multiple international legal agreements and aim to erase Palestinian refugeeidentity and their legal rights.

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The shocking human cost that occupation has taken on Palestinian women is laid bare in research published today. Combining research, extensive surveys, and first-hand testimonies from over 40 Palestinian women, Palestinian Women: The Disproportionate Impact of The Israeli Occupation provides new insight into the gendered experience of occupation, looking into four issues in particular:

• women refugees
• the impact of residency revocation on Palestinian women in Jerusalem
• the experience of women prisoners
• Gazans’ access to health

Co-authored by four Palestinian NGOs – the Palestinian Initiative for the Promotion of Global Dialogue and Democracy (MIFTAH), Palestinian Working Woman Society for Development (PWWSD), the Women’s Centre for Legal Aid and Counselling (WCLAC), and Women Media and Development (TAM), the report includes detailed findings that demonstrate how the oppression occupation has permeated women’s daily lives, and the particular impact is has had on women in Palestinian refugee camps, Palestinian women living in Jerusalem, women prisoners, and residents of Gaza who require health services.

The impact on refugee women

Researchers spoke to 500 Palestinian refugee women from 12 Palestinian camps (7 in the West Bank, 5 in Gaza). Their findings included the following:

• A third of women surveyed had been directly exposed to physical assault by Israeli Occupation Forces. 9% had been exposed to threats of being attacked by police dogs during Israeli night raids on their homes.
• Over a third (37%) of respondents had been exposed to detention or interrogation, while 38% said that they or members of their households had been exposed to verbal abuse during Israeli army raids, at checkpoints or while visiting religious places.
• Nearly a quarter (24%) were forced to live in shelters or with extended family. 22% were forced to live under unhealthy conditions. 13% stated that the female and male members of their families were separated as a result of having to live in shelters.
• More than one in five (21%) had been exposed to beatings or tear gas at Israeli checkpoints while they were pregnant. 4% reported that they aborted or gave birth at Israeli checkpoints.
• The majority (64%- 321 cases) had been unable to visit religious or recreational places because of Occupation restrictions.

Jerusalem: Residency Revocation and Family Reunification

According to official figures, 14,595 Palestinians from East Jerusalem had their residency status revoked between 1967 and the end of 2016.

Through residency revocations, Israel has separated husbands from wives, parents from children, and extended families from one another, causing traumatic complications for women attempting to remain with their families in both Jerusalem and the West Bank.

This leads to traumatic fears of separation from children for mothers and an entrenching of patriarchal practices across society. Palestinian women living in Jerusalem lose residency rights if they get divorced or their husbands remarry. Limiting their access to justice, female victims of domestic violence fear reporting abuse to authorities in case they are forcibly transferred away from their children.

Women prisoners

Since the beginning of the Israeli Occupation of Palestine in 1967, approximately 10,000 Palestinian women have been arrested and detained by Israeli military forces. According to the Commission of Detainees and Ex-Detainees Affairs’ 2017 annual report, 1,467 children were arrested last year.

Our researchers spoke to prisoners who experienced physical and psychological torture at arrest and imprisonment, and traumatic, gendered treatment, including:

• Women denied access to menstrual products while detained
• A woman arrested while pregnant who gave birth while chained to a prison hospital bed
• Ex-prisoners who report being subjected to rape and death threats during interrogation, including a girl in of 15-years old threatened with rape
• Women who were subjected to frequent forced and violent strip searches
• A prisoner who reported toothache, only to have the wrong tooth removed

Access to Health in Gaza

Israel exercises strict control Gaza’s borders, a policy of ‘actual authority’, constituting continued occupation, despite the withdrawal of its permanent presence. This control in particular affects those who need medical treatment outside of Gaza’s struggling health system, who require permission to leave. The report shows that the rate of approval applications is falling year-by-year:

• 92.5% of applications were successful in 2012
• 88.7% in 2013
• 82.4% in 2014
• 77.5% in 2015
• 62.1% in 2016

Of the 26,282 permit applications submitted by patients aiming to exit through Erez in 2016, 8,242 (31.4%) were delayed. Many applicants received no response from border authorities, even after lawyers filed formal applications on their behalf. These delays regularly extend months and years beyond medical appointments, worsening already life-threatening diseases and in some cases resulting in death.

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Palestinian Women – The Disproportionate Impact of the Israeli Occupation

The formal financial sector in WBG emerged some 15 years ago, after 1993-1994 with the signing of the Oslo Accord in 1993 and the Paris Protocol in 1994. The latter provided Palestinians the authority to administer monetary and financial affairs in order to support the expected economic growth.

Those expectations were never fully realized because of on-going restrictions on mobility of persons and goods and on access to natural and financial resources imposed by Israel. In the last several years the Palestinian economy has been in steady decline. Per capita GDP is estimated to have fallen by nearly 30.0 percent from its height of USD 1610 in 1999 to around USD 1,130 in 2006. Except for a short period between 2003 and 2005, when the economy was recovering, growth was negative every year since 2000. During the last two years the decline has accelerated. GDP contracted by nearly 8.8 percent in 2006 and by 4.2 percent in the first quarter of 2007. In 2007 the growth rate was near zero and in it is projected to be only one percent in 2008.

In spite of the difficult environment, the Palestinians have managed to establish a financial sector composed of most of the expected sub-sectors: banks, a securities market, insurance companies, payments system, housing finance companies, microfinance institutions and financial leasing companies. Yet, important needs for financial services have not been met (for micro-credit, households, and SMEs).

The Palestinian Authority (PA) has established two main institutions to regulate and supervise the financial sector: the Palestinian Monetary Authority for the banking sector (as well as payments system, micro finance institutions and money changers), and the Capital Market Authority for the non-banking sector (securities market, financial leasing, mortgage finance companies, pension funds, and insurance companies). The development of those subsectors, as well as the regulatory bodies, is uneven and the PA’s monetary powers and sovereignty remains limited since it has no national currency, which therefore narrows the scope for influencing monetary and economic conditions.

Assuming that the potential of the West Bank and Gaza economy is unleashed, which would require a major dismantling of today’s closure regime, the financial sector, as it appears now, would be ready to play an active role. That said, the PA should continue to refine and strengthen this sector to improve its functioning under the current constraints. Those efforts would also fully benefit the West Bank and Gaza economy if and when the political situation eases. In the meanwhile, the PMA should pursue its goal of becoming a full-fledged central bank, while the CMA would benefit from capacity building support so they can play a more effective role as regulator of the various sub-sectors for which it is responsible.

Banking Sector

As in most developing countries, the banking sector dominates the financial sector. Banks are generally in sound financial condition and products are well developed as is the regulatory infrastructure. However, the sector remains vulnerable due to its dependence on the Jordanian banking system and, from an operational point of view, on the Israeli one. Due to a large extent to the current political instability and to the depressed economic activity, banks play a very limited role in the financing of the WBG economy. The cautiousness of the banks reflects various structural problems such as the lack of suitable collateral and the uncertainty of the outcome in debt collection. Important steps have been taken by the PMA to develop the banking system and improve its stability (credit bureau, payments system, capital requirements and regulations on secured credit). Additionally, two bank loan guarantee programs to largely substitute for the lack of acceptable collateral for small and medium enterprises (SMEs) were successfully launched. Despite the current economic situation, those programs should continue to expand.

While the current efforts of the PMA to develop the sector should continue including enactment of a new banking law to provide better basis for implementation of all of the Basel Core Principles, extending the network of the credit bureau, and completing the installation of the payments system, the PA should also consider strengthening the financial infrastructure by promoting out-of-court settlement for debt collection and establishing a national registry for pledges of movable property to increase the array of collateral likely to be accepted by banks to secure credit facilities.

Payments System

The payments system has a number of weaknesses and vulnerabilities which are magnified by the multi-currency status of WBG as well as the movement and access restrictions resulting from the closure regime. While some banks have electronic payment instruments for their customers, WBG remains mainly a paper-based financial transaction economy with cash being the dominant payment medium for the general public. Aware of the weaknesses and the importance of an effective and comprehensive payments system for the development of the WBG economy, the PMA, with the assistance of the World Bank, has embarked on a modernization program. Systemic risk will also be reduced by the planned introduction of liquidity management functions.

With regard to non-banking sector, insurance and microfinance are fairly well developed while financial leasing and housing finance have emerged only recently, private pension funds have yet to be established and the regulation and supervision of this sector began only 2 ½ years ago.

Securities Market

The capital market, which consists of underwriting of share issues and trading of shares on the Palestinian Stock Exchange (PSE), began 10 years ago. The activity is regulated by the CMA and the PSE, according to an allocation of responsibilities which should be clarified. Given the predominance of SMEs and family-owned enterprises in the WBG economy, there are only 35 listed companies thus far and the potential for new applicants appears limited. The PSE is thinly traded and the index is relatively high and very volatile, which could potentially amplify economic shocks. This situation reflects the fact that rumors rather than economic fundamentals move prices and also that numerous individual investors with limited financial knowledge buy shares directly on the stock exchange.

Given the current situation, the CMA may want to consider various measures to develop the market such as the establishment of professionally managed investment funds for investment in securities, the definition of its respective regulatory and supervisory roles vis-à-vis the PSE and the development of a bond market. Also, the PA may wish to consider amending the Law of the CMA to give it more political independence.

Insurance

With 2.5 percent of the financial sector’s assets, insurance companies do not play the role as those in other countries as important institutional investors. The contribution of insurance premia to GDP was only 1.6 percent in 2006 while the spending on insurance per capita was about USD 18 compared to the average of 2.7 percent and USD 60 in developing countries. This situation mainly reflects depressed economic activity, transit restrictions and limited public awareness of insurance products.

The insurance industry was not supervised for ten years until 2005 and remedial supervisory measures are underway by the CMA. Insurance products are varied but overall income has declined due to the marked reduction in underwriting of compulsory motor vehicle insurance. The legal and regulatory infrastructure for insurance is based on international practices and the Council of Ministers and CMA have issued prudential and market conduct regulations. Market development depends mostly on an increase in economic activity though some new products were recently introduced that are promising. The CMA should endeavor to strengthen companies’ operations to enable them to qualify for high international ratings and for reinsurance of a major portion of their liabilities by highly rated reinsurance companies.

Financial Leasing

Financial leasing is in its infancy. There are four active companies leasing mainly motor vehicles for commercial fleets. Some basic regulations have been issued by the CMA and a leasing law is under development. That law may stimulate more interest in the activity. The CMA should issue market conduct regulations and the companies should develop a consumer education campaign to promote financial leasing of commercial and industrial equipment in addition to automobiles.

Housing Finance

Housing needs are great in WBG, but price levels and spatial restrictions, partly due to the on-going Israeli settlement activity in the West Bank and the existence of restricted roads and areas, constrain the effective demand while products available for finance housing demand are too limited. The Palestinian Mortgage and Housing Corporation (PMHC) that provides refinance and mortgage guaranties had a catalytic effect in the emergence of mortgage lending but has lost its attractiveness for primary lenders. The Palestinian Investment Fund (PIF) is working on late stage plans to help address housing and mortgage finance needs by developing a large-scale, affordable housing project and is in advanced negotiations to establish a mortgage finance company.

To further develop the market, the PA should improve the legal and regulatory environment (strengthening and modernization of the mortgage lending framework, development of a framework for the financing of housing development, and alignment of CMA and PMA regulations in respect of mortgage lending and housing finance) and take steps to foster market development and facilitate access to housing by moderate income groups an conjunction with the PIF initiative. This should include, inter alia, the reform of the PMHC to improve its services to the market and the building of lender’s capacities. The adoption by the CMA of appropriate prudential and market conduct regulations will also be key element for the emergence of a sound housing finance sector.

Microfinance

Microfinance is well developed in its offering of products that are essentially only credit but apparent needs far exceed the funding capacity at present. Funding is by donors and reinvested profits. MFIs are not currently sustainable.

Operations infrastructure of the nine nonbank providers is being strengthened and a regulatory framework is being developed by PMA that should require MFIs to be organized as companies with effective corporate governance structures and procedures and contain rules for market conduct. If MFIs were permitted to take deposits from the public or convert to banks with moderate regulatory requirements, as acknowledged by the Basel Committee on Banking Supervision, it would enable MFIs to become sustainable. Moreover, profitable and expanding MFIs should result in those institutions providing access to finance for the middle market (households and SMEs), thereby creating a financing continuum in the customer spectrum.

Pension Funds

There are no privately managed pension products in WBG and the domestic financial sector currently lacks entities other than insurance companies which could offer or manage pension products. There are too few regulations in place for the provision of either pension products or the underlying products and services. The CMA would need technical assistance to train its personnel, develop the necessary regulatory framework, and establish bilateral supervisory agreements with regulators in other countries.

Legal Framework

The general legal framework supporting the financial sector should be considerably modernized and its enforcement made more efficient. The company laws applicable in WBG do not reflect the revolution in corporate governance in recent years. A corporate governance code is being developed but is reported to be only voluntary. For creditors’ rights there should be modern rules for creation, registration and enforcement of pledges of moveable property. Some debt collection procedures are efficient but regular court proceedings are protracted and outcomes would benefit from modern case management and training of judges in commercial and financial matters.

Recommendations for Reforms

The recommendations for reforms in this report are summarized in Section IX. Those and the actions undertaken and planned by the PMA and the CMA would provide an adequate financial sector structure and infrastructure to support expanded economic activity. In that respect, these actions would support the Palestinian Reconstruction and Development Plan which recognizes the importance of private sector development to meet its goals.

Additionally, a comprehensive Financial Sector Development Plan could be considered, including monetary policy management issues (limitation of number of currencies, establishment of a money market, issuance of PA bonds). In any event, since there is no entity in WBG with responsibility for reform of the overall financial sector, the establishment of a steering committee composed of the main financial sector stakeholders, would seem to be appropriate to coordinate technical cooperation and to keep reform efforts on track.

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EXECUTIVE SUMMARY

The course of the Palestinian economy since the Second Intifadah has left per capita GDP in 2006 ($1,130) at 40% less than in 1999, and has altered an already-fragile economy from one driven by investment and private sector productivity, to one sustained by government and private consumption, and donor aid.

Reversing this downward cycle requires parallel actions by the Palestinian Authority (PA), Israel and the donors. Reform and development of the Palestinian economy and its institutions must proceed immediately. To succeed, these reforms must be implemented with determination by the PA, underwritten by donors and supported by Israeli actions. In the same vein, Israeli policies that impact the Palestinian economy and Palestinian actions on security to reinforce these policies must proceed in parallel.

The PA’s Palestinian Reform and Development Plan (PRDP) for 2008-10 represents a process around which the PA, Israel and the donor community can coalesce. The PRDP is an important document that envisions a sequence of steps centering on control of expenditures with medium-term reforms across sectors to bring the PA back to financial sustainability. In addition, the PRDP is a promising effort by the PA to link policy-making, planning and budgeting, and to deliver a Palestinian-owned plan for allocating resources.

The PRDP is regarded as succeeding insofar as it is addressing the entirety of the Palestinian population. The Gaza Strip represents about 40% of the population, and an essential part of the Palestinian territory and economy. Any effort at economic recovery and development must address the impacts of the current closure regime and the aftermath of the illegal takeover of Gaza. The continued entry of humanitarian goods has mitigated the impact of the closures on Gaza’s population, but has not been sufficient to offset the collapse of the private sector there.

The Expenditure Control Policy of the PRDP

The PRDP, with a gap for recurrent and capital expenditures of around $1.8 billion in 2008, seeks to stabilize the PA’s fiscal situation through donor budgetary assistance, while containing recurrent spending and, as the economy improves, shifting resources progressively towards development spending. This expenditure control policy would extend to the largest spending categories, including the public sector wage bill and net lending.

Wages for civil service and security personnel account for almost half of total government expenditures and have increased by nearly 57% since 2004. New policies will reduce the wage bill from 27% of GDP in 2007 to 22% of GDP by 2010. This is a considerable effort in light of the need to compensate for the scarcity of private sector jobs, but is still insufficient to bring the civil service in line with actual requirements. Within the public sector, the security services represent approximately 44% of the wage bill. Reform of the security sector is linked to a political framework that includes the rebuilding of institutions, support to disarmament, demobilization and reintegration, and measures to improve the rule of law. Regardless of the ultimate structure of the security services, some early steps can be taken, including an accounting of their numbers, the removal of “non-compliant” officers, and exploring options for officers nearing or past retirement age. Outside of the security sector, health and education represent other areas of reform over the three year period. These sectors have seen significant accomplishments over the years, but there remains a scope for efficiency gains and cost savings.

Any practical discussion on expenditure control and reform must be supported by a viable pension system. Taking this into the account, the PA has included pension reform in the PRDP, with a planned institutional review of current pension schemes in 2008. Some early steps can be taken, including addressing the unregulated private sector pension system. Also, the PA is exploring a policy of a ‘flat rate coverage system’ to cover the poorest in the WB&G. This can be explored, with a costing of different options in comparison with the likely savings from a revised pension system. These steps, along with an adequate focus on safety nets, can facilitate any necessary steps the PA would take to recalibrate the pension system to one that is consistent with the PRDP’s expenditure control policy.

Another key fiscal reform is the reduction in net lending, which is the second largest expenditure after the wage bill. The PA has already initiated critical steps in this regard. Moving forward, these initiatives are of greatest impact if accompanied by other reforms over time, including: (a) creating electricity suppliers that are financially sustainable and able to collect payments from customers; (b) transferring electricity supply from municipalities to electricity distribution companies, complemented with a system to fix municipal finances; and (c) introducing a well-targeted social protection system to ensure access to electricity for the poorest segments of the population.

The Development Investment Agenda

The PRDP also presents a coherent development plan that reflects a frank assessment of the PA’s absorptive capacity for project implementation. The development agenda contains priority investments in governance, social, economic and private sector, and infrastructure development worth $1.644 billion over three years. The development budget increases progressively over this three year period (from $427 million in 2008 to $667 million in 2010), reflecting pragmatic assumptions by the PA of its own absorptive capacity.

As the PRDP is a rolling process, additional analysis will be needed to ensure that the development projects are properly costed and sequenced. Moreover, the economic development projects are vital for creating an environment for investment and trade. Once these priorities are clearly set, it will be necessary to determine the mandates and resource needs- including for capacity building- of relevant institutions such as the Land Authority, Customs, General Administration of Crossings and Borders, etc. Programs aimed at increasing production and exports will need to be designed carefully to ensure access of goods and to account for the impacts of movement and access restrictions.

Implementing the PRDP

The realization of the PRDP relies on parallel commitments by the PA, Israel and donors, but also on a proper design of the implementation mechanisms. In terms of channels of assistance, the PA has expressed the need for donor aid to cover the entirety of the PRDP, with primary focus on recurrent expenditures to ensure the PA’s viability. Also expressed was the need for direct assistance into the MOF’s Single Treasury Account (STA), given the priority for financing recurrent expenditures and the PA’s successful efforts to reconstitute key parts of the public financial management system. In addition to these, other aspects of implementation must be addressed, including: (a) monitoring and evaluation of the PRDP that is clear, practical and that encompasses all of the Palestinian Territories; (b) identifying innovative ways, reflective of the PRDP’s commitments, to ensure that Gaza is not confined to humanitarian assistance alone; and (c) exploring, over time, ways of improving the existing intergovernmental fiscal relations.

Scenarios Facing the Palestinian Economy

The PA’s macroeconomic framework assumes: (a) the successful advancement of reforms, including law and order; (b) sufficient donor funding; and (c) a gradual easing of movement and access restrictions subject to Israeli security concerns. It does not assume a resolution of the situation in Gaza. Therefore most of the growth would be in the West Bank, driven by Government investment and consumption, both of which are linked to aid. Successfully reaching the PRDP goals will lead to modest growth, averaging 5% per year, which– given current demographics and distribution of income- will barely affect poverty levels.

An economic scenario analysis shows that the successful implementation of Palestinian commitments alone, with partial donor funding and continued movement and trade restrictions, will fall well short of the intended targets. Achieving 5% growth rates will depend critically on the commitment of the international community to fill the total fiscal gap over the next three years, as well as on the revival in the private sector as a result of concrete steps by Israel on settlement growth, and movement and access restrictions. Even with full funding but no relaxation in the closure regime, growth will be slightly negative, at around -2% per year. If the required aid also fails to materialize, income will decline even more, and the already high and growing poverty levels will rise dramatically.

Alternatively, a scenario where the PRDP is implemented and fully funded by donors and where private sector activity and trade is revived will accelerate growth considerably. Embedded in this scenario is a recovery in Gaza driven by the resolution of the current stalemate, and the removal of movement and trade restrictions affecting both the West Bank and Gaza.

Under every foreseeable scenario, the short-term viability of the Palestinian economy will be driven by aid. Even under the most optimistic scenarios significant aid will continue to be required for the medium-term. Clearly, the ability of the private sector to resume its place as a driver for growth will have a major bearing on the sustained health of the Palestinian economy and thus its aid requirements, which will therefore be even larger in the absence of improvements in movements and access restrictions.

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