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EU boycott would ‘devastate’
Israeli economy

IRNA (Islamic Republic News Agency)
25 June 2002

London - The Middle East conflict is having a significant effect on the Israeli economy but not enough to cause any major impact on the belligerent nature of the Zionist regime, according to an economic adviser at the British Foreign Office.

But Guy Gantley believes that an economic embargo by the European Union, its biggest trading partner, would have a devastating result on Israel.

Speaking on the economic implications of the Middle East conflict at the Royal Institute of International Affairs, the economic adviser said that although there was no comparison with the effects on the Palestinians, damage had been caused to the Israeli economy.

The most direct impact, he said, had many come from the slump in tourism, with chartered flights disappearing entirely. The number of visitors in March and April dwindled to just 670,000 down from over 2 million.

Gantly said that ‘tourist nights’ had also dropped to a fifth of the number before the start of the latest Palestinian intifada in October 2000.

The other effects included investment falling by two-third last year and was expected to be again to be sharply down in 2002.

Confidence was also said to have hit the stock market as well as the Israeli shekel.

The economic advisor for the Middle East and North Africa said that Israel would benefit most in the region from a peace dividend, but estimated that the cost of the growing conflict in the last two years could be as high as Dlrs 7 billion in lost output.

There was concern that the serious recession would get worse in Israel after being hit hard from the global recession. In the future, it would mean years of economic underperformance, he said but expressed doubts if it would lead to changes in political policy.

Asked what would be the effects of a boycott by the EU, with whom Israel has a comprehensive trade cooperation agreement, Gantly said the impact would be “devastating.” But again whether the embargo, called for by many British MPs, peace groups and humanitarian organisations, would have an influence on Israeli politics was a “different matter,” he said.

Speaking at the same meeting, senior economist at the World Bank, Sebastian Dessus described the “very severe recession” in the occupied territories, where the per capita income of Palestinians had declined by 30 per cent since the start of the intifada.

Palestinians living in poverty on less than 2 dollars a day covered half of the population, more than double the number before October 2000, according to best estimates, he said.

The economist said that physical damage caused by the Zionist regime was estimated by the World Bank at Dlrs 1.6 billion, but was only half of the losses in Palestinian income due to the Israeli siege.