Israeli Sales to West Bank Rose 50% in Three Years

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A Palestinian woman shops at a store that sells clothes by the Israeli company Fox in the West Bank city of Ramallah, Thursday, July 25, 2013. Credit: AP

Sales by Israeli firms to areas of the West Bank controlled by the Palestinian Authority have grown dramatically since 2009, a new Bank of Israel study shows.

The Palestinians purchased 11.8 billion shekels ($3.4 billion) a year in goods and services from Israel in 2009, while by 2012 the comparable figure had reached 16.4 billion shekels. Although figures for 2013 are not final, the upward trend appears to have continued. It is not clear, however, what portion of the sales since 2009 were actually of Israeli-manufactured products rather than merchandise imported through Israel.

However, Israeli purchases from the Palestinians did not increase to the same extent, rising from 2.5 billion shekels in 2009 to 3 billion in 2011. According to the Central Bureau of Statistics, the figure for 2013 – including Palestinian products shipped abroad via Israeli exporters – was also 3 billion shekels.

The Bank of Israel said the actual figure is apparently higher, in part at least due to purchases by Israelis in the West Bank itself, although Israelis are barred for security reasons from entering areas under full Palestinian control.

Since the 2007 takeover of the Gaza Strip by Hamas, regular trade between Israel and that territory has been barred, but it remained small in comparison to Israeli trade with the West Bank in any event.

The surplus in trade in Israel’s favor was offset somewhat by wages paid by Israeli employers to Palestinians, which went from 2.9 billion shekels in 2009 to 4.3 billion shekels in 2012. No official figure is available for 2013, but it is expected to reach 5.3 billion – a reflection of the increasing reliance of Israel on Palestinian labor, with Israeli authorities increasing the number of work permits issued to Palestinians to work in Israel (in addition to Palestinians who work in Israeli illegally).

On balance, after deducting Israeli purchases from the Palestinians and wages paid to Palestinians working in Israel, Israel enjoyed a 6.4 billion shekel surplus in its trade with the Palestinians in 2009, a figure that jumped to 9.1 billion shekels in 2012.

Although high-tech products make up 45% of all of Israel’s global exports, sales of goods and services to the Palestinians for the most part consist of low- and medium-technology products, with high-tech exports representing only 3.1% of what Israel sells to the Palestinians.

In 2012, Israel’s retail and wholesale sales to the Palestinians amounted to some 7 billion shekels, in addition to 3 billion shekels in electricity and water sales. However, the Palestinian Authority has racked up a huge unpaid electricity bill to the Israel Electric Corporation.

The Palestinians also purchased 1.2 billion shekels in food in 2012, representing 3.4% of total Israeli food sector sales. Although Israeli sales of wood products were relatively small in 2012, at 117 million shekels, the figure constituted 19% of the total sales in that industry.

The study also addressed the preference on the part of the Palestinians for purchasing products in Israel rather than from neighboring Arab countries, attributing it to the customs union between Israel and the PA, prevailing standards and the ease of access to infrastructure in Israel, making it easier to import goods from Israel than from, for example, neighboring Jordan.