Econostrum | Economic News in the Mediterranean

Gaza reconstruction bill could reach $485m

Written by Eric Apim on Thursday, July 8th 2021 à 17:10 | Read 214 times

The damage in Gaza after eleven days of bombing has mainly affected housing (photo: UNRWA/Mohamed Hinnawi)
The damage in Gaza after eleven days of bombing has mainly affected housing (photo: UNRWA/Mohamed Hinnawi)
PALESTINE. According to a report published by the UN, the European Union and the World Bank, Gaza will need $485 million (€410m) to rebuild its infrastructure destroyed in May 2021 during the eleven days of bombing in the war between Hamas and the State of Israel. The conflict caused the death of more than 260 Palestinians (including 66 children and 41 women) and twenty-nine deaths on the Israeli side. The no-win battle also displaced 58,000 people.
The conflict has once again hit the Palestinian enclave of two million people who already have suffered from their economic conditions due to “restrictions on the movement of people and commercial goods at border crossings, limits to fishing off Gaza’s coast, and now the effects of the COVID-19 pandemic.” the report says. The text backs this up by citing an "alarming" unemployment rate of around 50% and a population where more than half lives in poverty. 62% of Gazans are now reportedly food insecure.
According to this Rapid Damage and Needs Assessment (RDNA), carried out between 25 May and 25 June 2021 in close cooperation with the Palestinian Authority and in consultation with civil society and the private sector, the physical damage amounts to between $290 and $380 million (€245 to 321 million). Economic losses - interruption of economic flows, production and services - amount to $190m (€160m). The three institutions indicate that “recovery needs have been estimated up to US$485 million during the first 24 months”, including $125m to $195m by the end of 2021 and $220m to $290m within six to 24 months.

Mobilising donors

In terms of physical damage, the social sector was the most affected ($140-180m - €118m-152m). Housing alone accounts for almost 93% of this damage. The other sectors most affected are the productive and financial sectors, led by agriculture and services, trade and industry.
The social sectors also bear the brunt of economic losses, with around 87% attributed to additional health and social protection costs and unemployment. Critical needs include cash support for around 45,000 people (in the form of food and non-food aid), the creation of 20,000 additional full-time jobs for 12 months, rehousing for over 4,000 people, interventions to improve food production in the agri-food and fisheries sectors, and the rehabilitation of physical assets.
At the same time, the document calls for financial support to severely damaged micro-enterprises and SMEs providing services, goods and employment to communities. With an emphasis on sustainable energy and water saving techniques.
"This is yet another unfortunate episode in which the Palestinian people in Gaza saw themselves in the midst of conflict and destruction. The humanitarian crisis is worsened in an economy with very limited ties to the outside world. Gaza’s GDP may contract by 0.3% in 2021 compared to an estimated 2.5% annual growth before the conflict. With this assessment, we hope to mobilize donors’ support to help restore dignified living conditions and livelihoods in Gaza, and lead the way to recovery." said Kanthan Shankar, World Bank Country Director for the West Bank and Gaza. "This RDNA is an important step in that process. I appeal to the international community to come together in support of these efforts," said Tor Wennesland, UN Special Coordinator for the Middle East Peace Process.

Building back better

The RDNA suggests a "Building-Back-Better" approach and therefore calls for a focus on "rebuilding a more resilient climate-friendly economy and infrastructure and people’s ability to absorb shocks, as well as on improving living standards and lives.” The report states that "the recommended actions range from meeting immediate and future needs, such as restoring inclusive, energy efficient and environmentally sustainable infrastructure, to adopting stronger social safeguards measures and implementing targeted policy reforms".
For Sven Kühn von Burgsdorff, representative of the European Union, the root causes of the conflict must be addressed. "The recovery of Gaza must be backed by a meaningful peace process that will bring security and dignity for all.” This will require the Palestinian Authority to put in place a sustainable system of governance and create a business environment conducive to public sector-led growth.

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