GENEVA -- Three of every four Palestinians live in poverty and their economy still depends on donors, despite 4.5 percent economic growth last year, the United Nations said on Wednesday.

The rise was fueled largely by agriculture and small businesses, which engage in ``forced import substitution'' because so few goods can get past Israel's tough blockade, said Raja Khalidi, a senior official at the U.N. Conference on Trade and Development.

But the increase in Gross Domestic Product follows two years of ``freefall'' since the outbreak of Israeli-Palestinian fighting in late 2000 and is unlikely to be sustained, Khalidi said.

``The fact that there was growth in 2003 is really a matter of bottoming out, not a rebound,'' he said, as he launched UNCTAD's annual report on the economic consequences of the conflict. ``Treading water is perhaps an apt metaphor,'' Khalidi later told the AP.

The Palestinian economy has been hit by Israeli roadblocks and closures, which have hampered commerce in the West Bank and Gaza Strip.

Israel says the restrictions are needed to stop Palestinian suicide bombers and gunmen who have killed around a thousand Israelis. Around 3,000 Palestinians have died.

The World Bank has cited a 40 percent fall in Palestinian per capita GDP since the outbreak of violence, saying it far exceeds the impact of the Great Depression in the United States.

``The Palestinian economy is being transformed into one of subsistence,'' said Khalidi.

Average income among the 3.5 million Palestinians fell from $1,750 a year in 1999 to $1,040 last year. Overall, 72 percent of Palestinians live below a poverty line of $3.60 a day.

Some 127,000 Palestinians used to work in Israel, providing vital income for many families. But under security restrictions the number has slumped to 53,000.

Around 277,000 Palestinians are unemployed, from a 792,000-strong work force, according to U.N. figures. The figure would be worse but for the Palestinian economy's ability to absorb many workers who used to have jobs in Israel, albeit at far lower wages, the report said.

Palestinian areas also rely on international aid to keep the economy afloat, Khalidi said. ``It's a crutch, and without that crutch (growth) is not sustainable,'' he said.

With new upscale restaurants, bars, and theater, the West Bank city is undergoing a cultural revival.

Just a few minutes drive from Yasser Arafat's half-destroyed headquarters, Usama Khalaf's version of upscale Ramallah dining is taking off.

His restaurant called Darna occupies a grand renovated stone villa with high-ceilinged archways and a second-floor patio that draws scores of young Palestinians. It serves large dishes of innovative Middle Eastern fare, but, more importantly, offers fragments of normalcy, which has become so elusive during the past four years.

The $800,000 spent by the restaurateur to open Darna - where waiters sport snappy bow ties and tuxedo vests - represents more than a shrewd bid to attract the city's bourgeois; it signals a revival of the cultural scene that made Ramallah a cosmopolitan capital for Palestinians.

In recent months new eateries have opened and the city's offerings have expanded despite Israel checkpoints and military raids. For Khalaf, opening Darna was simultaneously the fulfillment of a life's dream and an act of political defiance.

"I had an obligation to my hometown," Khalaf says. "When they saw someone investing despite the closures and incursions, it gave people the willingness to stay."

In the 1950s under Jordanian rule, Arab vacationers would arrive in Ramallah from the Persian Gulf in the summer to savor the cool mountain breeze during the evening. Pleasant weather and pastoral surroundings earned the tiny city the nickname "the Bride of Palestine." When the West Bank came under Israeli control, the Arab citizens of Israel would overrun the city's hotels on the weekends. It boasted a thriving nightlife, which included the only jazz club in the West Bank.

Danny Jafar, the grandson of a Ramallah hotelier, opened the Sangrias restaurant during the first year of the fighting with just five tables and a menu featuring nachos and burritos.

During the four months of daily military curfews in the summer of 2002, word of mouth spread that Sangrias had remained open for journalists. Patrons desperate to break the monotony of the citywide lockdown surreptitiously found their way to the bar. "I used to open up when people would go home and the tanks would come out," Jafar says. "Lights would be off and curtains would be drawn, but there were people inside. It was a hangout."

Last month, Jafar opened a new lounge area out back and expanded Sangrias' capacity to 45 tables. On a recent Saturday night, recordings by American rapper 50 Cent played from a stereo in the courtyard and smoke from nargilla water pipes floated among diners under illuminated walnut trees.

"I could be at a funeral procession in the morning and I could be at a bar at night," said Sameh Katkhuda, an information technology consultant. "This isn't Ramallah. It's San Francisco."

Unlike other cities in the West Bank, Ramallah is a base for the Palestinian government, nonprofit organizations, and foreign diplomats, providing for a steady flow of disposable income. The international presence in the city of 21,000 (the population goes up to 250,000 if you count surrounding villages) has helped turn it into hub for cultural institutions. The Ramallah Cultural Palace, a state-of-the art auditorium that opened in July, has already hosted a film festival and a production of "Al-Fawanees," the first Palestinian musical.

"As an outsider, you would think that there's no place for cultural activities or a cultural life," says Rita Janssen, a UN official who is the director of the cultural palace. "But it seems to be more important to them than when you're living in peace and quiet."

Hours after a performance of "Al-Fawanees," both Ms. Janssen and casts members were dining at Darna, where 20-somethings wearing American athletic jerseys had gathered to lounge in the patio.

When the restaurant was featured on Israeli television news magazine, Ariel Sharon is said to have been "amazed" at the site of such an establishment, owner Khalaf recalled with satisfaction.

"We're not just suicide bombers. We don't love just blood," Khalaf said. "We have another face. Ultimately, we have a desire to live."

To all Friends and Supporters of Human Rights around the World:

The Committee for the Families of Political Prisoners and Detainees in the West Bank, representing 7,500 political prisoners currently in Israeli prisons, is seeking the support of the international community in its campaign against the gross violations of their rights that the prisoners are enduring and against the appalling conditions under which they are being detained.

Political prisoners in Israeli prisons will be commencing a hunger strike on Sunday, August 15, 2004 to protest their conditions. They complain that the conditions they experience are reminiscent of the former Abu Ghoraib facility in Iraq which gained worldwide notoriety recently for its treatment of detainees.

The families of the Palestinian political prisoners plead with you, the members of the international community, to join in solidarity with our sons, daughters, fathers, mothers, brothers and sisters who are being held in Israeli prisons by organizing demonstrations, marches, holding silent vigils or activities to publicize the plight of the political prisoners and to bring pressure on the government of Israel to cease these violations of law and to treat Palestinian prisoners as human beings entitled to basic human rights.

Israeli Public Security Minister, Tzachi Hanegbi, told reporters at a press conference in Jerusalem on August 13th that the prisoners "can strike for a day, a month, even starve to death, we will not respond to their demands".

Some of the conditions that the prisoners are protesting include:

- Arbitrary and indiscriminate beating of prisoners in their cells, in prison courtyards and during transportation to and from prisons.
- Arbitrary and indiscriminate firing of tear gas into prisoner's cells and prison courtyards and intimidation of prisoners by guards entering their cells with guns.
- Humiliating strip searches of prisoners in full view of other prisoners and guards each time they enter or exit their cells
- Subjecting prisoners to solitary confinement for excessive periods of time, for months and even years.
- Arbitrary imposition of financial penalties on prisoners for minor infractions, arbitrary revocation of visitation rights and extended confinement to cells as punishment for minor infractions such as singing or speaking too loudly
- Confining children with adult prisoners and political prisoners with criminals
- Withholding or delaying medical treatment and the provision of medication to sick detainees
- Severely restricting the category of family members entitled to visit prisoners thus denying visitation rights to other close family members
- Arbitrary denial of travel permits to family members of prisoners living in the West Bank or Gaza so that they cannot travel to prisons to see their relatives
- Imposing conditions on travel for family members and obstacles that result in travel of a few hours being prolonged to 16 or 17 hours for a 45-minute visit
- Conducting humiliating strip searches of visiting family members even though they are usually separated from the prisoners by a full glass barrier as well as a wire mesh barrier.
- Providing such poor visitation facilities that prisoners find it difficult to see or hear their loved ones
- Maintaining prisoners on near starvation diets that are insufficient to sustain health.
- Applying rules concerning items that prisoners may receive from their families arbitrarily and inconsistently, on the whim of the guards, with each visit.
- Withdrawing studying privileges that in the past allowed prisoners to continue their high school or university studies through correspondence courses

The treatment of Palestinian prisoners in Israel violates both international and Israeli laws, as well as rules governing the administration of Israeli prisons. The Committee for the Families is planning a series of activities in the West Bank to coincide with the start of the hunger strike on August 15th.

Scheduled Activities:

1. A press conference at noon in Ramallah will kick off the campaign Sunday, August 15.
2. Hunger strike solidarity tents will be set up in the centre of all the cities in the West Bank and in all the Red Cross Centres and will be occupied by the public around the clock for as long as the prisoners'strike lasts.
3. August 18; The Palestinian Prime Ministers' office has declared this day National Day for Prisoners, a day that all Palestinians will show solidarity with the prisoners. All government ministers, members of the Palestinian National Council and heads of all political parties will join the public in the Solidarity Tents and fast in support of the prisoners.
4. August 20; after Jumپfa prayers at mosques processions will march towards the Solidarity Tents.
5. August 21st; Palestinians in various Israeli cities will march, together with other supporters, to the prisons where Palestinian political prisoners are being held
6. August 22; after church services, processions will march to the Solidarity Tents. These processions will be held every weekend during the campaign.
7. August 23; children of the prisoners will lead a procession.
8. August 25; all professionals involved in the Justice system in Palestine will congregate at the Solidarity Tents in their official legal gowns and will lead a procession to the centre of their cities.
9. August 26; the grandson of Mahatma Gandhi, Arun Gandhi, will lead a mass procession in Ramallah.
10. August 28; candlelight processions will be held at 8:00 p.m.
11. August 29; all members of the public are invited to join the open hunger strike.

September 4, 2004: International Day of Solidarity with Palestinian Prisoners

We ask you also to register your protests by letter, fax, email, or telephone to the officials listed below. Ask them to stop the harsh treatment of Palestinian political prisoners and to accede the demands of the striking prisoners so that the conditions under which they are imprisoned are consistent with international norms of human rights and basic decency.

In addition, please register your protest with your own political representatives and governments ministers.

Please send a copy of your protest message to alhureih@yahoo.com

Messages of support from organizations would also be appreciated by the prisoners and their families. Please send them to the same address with some details of the organization.

For more information visit our temporary website at www.palsolidarity.org/prisoners or telephone (972) 2 277 4602 or (972) 547-358-579 or email: info@palsolidarity.org

With much appreciation for your valued support,

Mahmoud Ziadi, General Secretariat, Families of Palestinian Political Prisoners PO Box 2151, Ramallah, Palestine.

Israeli Government Contacts:

Prime Minister, Ariel Sharon Office of the Prime Minister 3 Kaplan Str., P.O. Box 187 Jerusalem, 91919 Israel Fax: 972-2-670-5475 e-mail: pm_eng@pmo.gov.il

Minister of Defense, Shaul Mofaz 37 Kaplan Str. Tel Aviv, 61909, Israel Fax: 972-3-696-2757 or 691-7915 e-mail: san@mod.gov.il or pnoit@mod.gov.il

Minister of Justice, Yosef Lapid 29 Salah al-Din Str. Jerusalem, 91010, Israel Fax: 972-2-628-5492 e-mail: san@justice.gov.il

Minister of Interior, Tzahi Haneghi Kiryat Hamenshala, P.O. Box 18182 Jerusalem, 91181 Israel Tel. 972-2-530-9999 Fax: 972-2-584-7872 e-mail: sar@mops.gov.il

Addresses of Israeli embassies worldwide can be found at www.embassyworld.com/embassy/isreal1.htm or go to the Government of Israel website at www.info.gov.il/FirstGov/

Israel's naval blockade of the Gaza Strip violates international law, a panel of human rights experts reporting to a U.N. body said on Tuesday, disputing a conclusion reached by a separate U.N. probe into Israel's raid on a Gaza-bound aid ship.

The so-called Palmer Report on the Israeli raid of May 2010 that killed nine Turkish activists said earlier this month that Israel had used unreasonable force in last year's raid, but its naval blockade of the Hamas-ruled strip was legal.

A panel of five independent U.N. rights experts reporting to the U.N. Human Rights Council rejected that conclusion, saying the blockade had subjected Gazans to collective punishment in "flagrant contravention of international human rights and humanitarian law".

The four-year blockade deprived 1.6 million Palestinians living in the enclave of fundamental rights, they said.

"In pronouncing itself on the legality of the naval blockade, the Palmer Report does not recognise the naval blockade as an integral part of Israel's closure policy towards Gaza which has a disproportionate impact on the human rights of civilians," they said in a joint statement.

An earlier fact-finding mission named by the same U.N. forum to investigate the flotilla incident also found in a report last September that the blockade violated international law. The International Committee of the Red Cross (ICRC) says the blockade violates the Geneva Conventions.

Israel says its Gaza blockade is a precaution against arms reaching Hamas and other Palestinian guerrillas by sea.

The four-man panel headed by former New Zealand Prime Minister Geoffrey Palmer found Israel had used unreasonable force in dealing with what it called "organised and violent resistance from a group of passengers".

Turkey has downgraded ties with Israel over the incident.

Richard Falk, U.N. special rapporteur on human rights in the occupied Palestinian territories and one of the five experts who issued Tuesday's statement, said the Palmer report's conclusions were influenced by a desire to salve Turkish-Israeli ties.

"The Palmer report was aimed at political reconciliation between Israel and Turkey. It is unfortunate that in the report politics should trump the law," he said in the statement.

About one-third of Gaza's arable land and 85 percent of its fishing waters are totally or partially inaccessible due to Israeli military measures, said Olivier De Schutter, U.N. special rapporteur on the right to food, another of the five.

At least two-thirds of Gazan households lack secure access to food, he said. "People are forced to make unacceptable trade-offs, often having to choose between food or medicine or water for their families."

The other three experts were the U.N. special rapporteurs on physical and mental health; extreme poverty and human rights; and access to water and sanitation.

French President Nicolas Sarkozy backed the creation of a "viable" Palestinian state on Monday but was cautious about repeating his foreign minister's support for possible recognition of a state before its borders were set.

Speaking at a news conference in Paris with visiting Palestinian President Mahmoud Abbas, Sarkozy repeated France's support for statehood for Palestinians but added: "We have always said a viable Palestinian state."

"What we want when we argue for a Palestinian state is a real state, which can give hope and a future for millions of Palestinians. It's not just an idea," he told reporters.

In a newspaper interview at the weekend, Foreign Minister Bernard Kouchner said that to break a stalemate in Middle East peacemaking, some countries might recognize a Palestinian state before its borders were fixed.

"One can imagine a Palestinian state being rapidly declared and immediately recognized by the international community, even before negotiating its borders. I would be tempted by that," he told the Journal du Dimanche.

Sarkozy said that Kouchner was thinking of possible ways to bring momentum to the peace process but that France's goal remained a functioning Palestinian state in clearly set borders.

"In Bernard's comments, there was the thought that if we don't manage that, then when the time comes, in accord with our Palestinian friends, we might underline the idea of this state politically, to lift it up a notch in a way," he said.

"But the objective is the idea of a Palestinian state in the frontiers of 1967, with an exchange of territory, just as we have said all along."

'Geopolitical conditions are ripe'

The Ramallah-based Palestinian leadership said last year it would seek UN Security Council backing for a Palestinian state based on 1967 borders, referring to the West Bank and Gaza Strip borders as they were on the eve of the 1967 Middle East war.

It said the initiative would not be a unilateral declaration of statehood but would aim to secure international support for the eventual creation of a state based on the 1967 borders.

Sarkozy said that if any such initiative were launched, "we would see what we would do" but that it was up to the Palestinians to decide how they wished to proceed.

Israel has sharply criticized the idea of any unilateral initiative and says only negotiations can produce results.

But there has been growing speculation in Israel that the Palestinians are looking for ways around direct talks which have been suspended for over a year.

A think-tank close to the Israeli government says the Palestinians "have largely abandoned a negotiated settlement and instead are actively pursuing a unilateral approach to statehood" with serious implications for Israel.

"Palestinian unilateralism is modeled after Kosovo's February 2008 unilateral declaration of independence from Serbia," said a recent paper by Dan Diker of the Jerusalem Center for Public Affairs.

The EU and the United States recognized the independence of Kosovo without the support of a Security Council resolution. Palestinian leaders now believe "geopolitical conditions are ripe" to follow that path, Diker said.

Ismail Haniyeh, prime minister of the Islamist movement's government in the coastal enclave, said other armed groups in the Gaza Strip should observe what has amounted to a ceasefire since Israel's major offensive a year ago. That, Haniyeh said, was in the interests of protecting Gazans from Israeli attacks.

Monday, Israel's defense minister had warned Hamas to rein in its allies "or else" -- a threat of more Israeli action.

Rocket fire by smaller groups Islamic Jihad and the Popular Resistance Committees, and Israeli air strikes that killed several Palestinians, made the past two weeks among the most violent since the three-week war that killed 13 Israelis and over 1,400 Palestinians before a ceasefire in mid-January 2009.

"We call upon Palestinian factions to intensify their meetings in order to reinforce the national agreement and to work in a joint spirit to protect our people and to protect our interests and to block any possible Israeli aggression against our people," Haniyeh said before a cabinet meeting in Gaza.

Despite denials from some of the smaller groups, Hamas has insisted lately there was an agreement to hold back on attacks.

EGYPTIAN RELATIONS

While hostility between Hamas and Israel is the norm, the Palestinian Islamist movement has also been concerned of late over a deterioration in relations with Egypt, which controls the short southern border of the Gaza Strip.

Already frustrated in its efforts to promote reconciliation between Hamas and the rival Fatah party of West Bank-based Palestinian President Mahmoud Abbas and by its difficulties in brokering a prisoner swap between Hamas and Israel, Cairo was angered last week by the death of a soldier at the Gaza border.

He was shot during clashes when Hamas supporters rallied at the frontier in the town of Rafah to protest at Egyptian efforts to stem supplies reaching Gaza through secret tunnels.

Egyptian officials have said the soldier was hit by a bullet fired from the Palestinian side. Hamas spokesman Sami Abu Zuhri said Tuesday there was evidence the Egyptian border guard could have been hit by a bullet from his own side.

Whatever the case, Haniyeh said, Hamas was working in good faith to clarify what happened and to protect relations with Cairo: "We are carrying out an investigation ... (which) aims to arrive at the truth and to put measures in place that ensure Palestinian-Egyptian relations are protected."

Cairo has long had cool relations with Hamas, which shares roots with the banned Egyptian opposition movement the Muslim Brotherhood. But Egypt, the first Arab state to make peace with Israel, is also keen to avoid being portrayed as an ally of the Jewish state in its conflict with the Palestinians.

(Editing by Alastair Macdonald and Tim Pearce)

Hamas said on Sunday the Islamist group was in the final stages of reconciling with the rival Palestinian Fateh Party after its leader met Saudi officials to try to narrow the rift.

"We made great strides towards achieving reconciliation," Hamas leader Khaled Mishaal told reporters at the Saudi foreign ministry during a visit to Riyadh. "We are in the final stages now."

An Egyptian proposal to promote reconciliation between Hamas and Palestinian President Mahmoud Abbas' Fateh group has called for presidential and legislative elections to be held in the West Bank and Gaza Strip next June.

Mishaal said Hamas still had some points to resolve in the Egyptian proposal.

Azzam Al Ahmad, a senior Fateh official, said Fateh had already endorsed the Egyptian proposal and it was up to Hamas to either follow suit or reject it.

"We urge Hamas to sign it so that we begin implementing the agreement," Ahmad told Reuters.

Mishaal's meeting with Saudi Foreign Minister Prince Saud Al Faisal was designed to help reconciliation of the feud, Saudi officials said.

Another senior Fateh official, Zeyad Abu Ein, said Mishaal was trying to put on a good face in Saudi Arabia.

"Khaled Mishaal did not come with anything new. The Palestinian people and Fateh are waiting for Hamas to sign on the Egyptian paper for reconciliation to take place," he said.

Egyptian barrier

Mishaal said Hamas wants Saudi Arabia to play a special role alongside Egypt and other Arab countries to unify the Palestinian position and also to prompt Arabs to confront the Israeli government.

It was the first known meeting between Saudi and Hamas officials since Saudi Arabia brokered the Mecca Agreement in 2007 between Hamas and Fateh.

After the Mecca agreement, Hamas drove the Fateh movement out of the Gaza Strip. Abbas' Palestinian Authority runs the Israeli-occupied West Bank.

Israel pulled out of the cramped Mediterranean Gaza enclave in 2005, then launched a military offensive against it in late 2008 in which hundreds of Palestinians were killed and key infrastructure destroyed.

Mishaal's meeting with Saudi officials took place ahead of an expected visit by the US presidential envoy for the Middle East, George Mitchell.

Saudi officials say Iranian support for Hamas has widened the rift with Fateh and hampers a resumption of peace talks.

"This meeting should dissipate doubts about roles being played in our region," Saudi Arabia's Faisal said. "We must clarify the picture, especially to Palestinian officials, and also understand from them what are their orientations and goals."

A Western diplomat said Hamas also hopes Riyadh will convince Cairo to abandon a plan to build an underground barrier along its border with the Gaza Strip.

Hamas calls the project a "wall of death" that could seal an Israeli-led blockade by smothering smuggler tunnels from the Egyptian Sinai Peninsula.

"The wall could turn the table on Hamas," the diplomat said.

Hamas does not recognise Israel's right to exist and opposes the Fateh strategy pursued by Abbas of seeking to negotiate a permanent peace deal.