Gaza Strip

The Israel-PLO Declaration of Principles on Interim Self-Government Arrangements (the DOP), signed in Washington on 13 September 1993, provided for a transitional period not exceeding five years of Palestinian interim self-government in the Gaza Strip and the West Bank. Under the DOP, Israel agreed to transfer certain powers and responsibilities to the Palestinian Authority (PA) as part of the interim self-governing arrangements in the West Bank and Gaza Strip.

A transfer of powers and responsibilities for the Gaza Strip and Jericho took place pursuant to the Israel-PLO 4 May 1994 Cairo Agreement on the Gaza Strip and the Jericho Area and in additional areas of the West Bank pursuant to the Israel-PLO 28 September 1995 Interim Agreement, the Israel-PLO 15 January 1997 Protocol Concerning Redeployment in Hebron, the Israel-PLO 23 October 1998 Wye River Memorandum, and the 4 September 1999 Sharm el-Sheikh Agreement.

The DOP provides that Israel will retain responsibility during the transitional period for external and internal security and for public order of settlements and Israeli citizens. Direct negotiations to determine the permanent status of Gaza and West Bank began in September 1999 after a three-year hiatus, but were derailed by a second intifadah that broke out in September 2000. In April 2003 the Quartet (US, EU, UN, and Russia) presented a roadmap to a final settlement of the conflict by 2005 based on reciprocal steps by the two parties leading to two states, Israel and a democratic Palestine.

The proposed date for a permanent status agreement has been postponed indefinitely due to violence and accusations that both sides have not followed through on their commitments. Longtime Palestinian leader Yasir ARAFAT died in November 2004 and Mahmud ABBAS was elected PA president in January 2005, bringing hope of a turning point in the conflict. In February 2005 Israel and the PA agreed to the Sharm el-Sheikh Commitments, focused on security issues, in an effort to move the peace process forward.

Progress has been slow because of different interpretations of the verbal agreement by the two sides. In September 2005, Israel withdrew all its settlers and soldiers and dismantled its military facilities in the Gaza Strip and four northern West Bank settlements. Nonetheless, Israel controls maritime, airspace, and most access to the Gaza Strip. An agreement signed by the PA and Israel in November 2005 authorized the reopening of the Rafah border crossing between the Gaza Strip and Egypt under joint PA and Egyptian control, with monitoring provided by the EU.

High population density, limited land access, and strict internal and external controls have kept economic conditions in the Gaza Strip - the smaller of the two areas under the Palestinian Authority (PA)- even more degraded than in the West Bank. The beginning of the second intifadah in September 2000 sparked an economic downturn, largely the result of Israeli closure policies;

these policies, which were imposed in response to security interests in Israel, disrupted labor and commodity relationships with the Gaza Strip. In 2001, and even more severely in 2003, Israeli military measures in PA areas resulted in the destruction of much capital plant, the disruption of administrative structure, and widespread business closures.

Including the West Bank, the UN estimates that more than 100,000 Palestinians out of the 125,000 who used to work in Israel or in joint industrial zones have lost their jobs. Half the labor force is unemployed. Israeli withdrawal from the Gaza Strip in September 2005 offers some medium-term opportunities for economic growth, especially given the removal of restrictions on internal movement.

In addition, recent agreements and continuing negotiations on the administration of Gaza's border crossings increase the prospects for trade.