West Bank

Under the Israeli-PLO Declaration of Principles on Interim Self-Government Arragements ("the DOP"), Israel agreed to transfer certain powers and responsibilities to the Palestinian Authority, and subsequently to an elected Palestinian Council, as part of interim self-governing arrangements in the West Bank and Gaza Strip.

A transfer of powers and responsibilities for the Gaza Strip and Jericho has taken place pursuant to the Israel-PLO 4 May 1994 Cairo Agreement on the Gaza Strip and the Jericho Area. A transfer of powers and responsibilities in certain spheres for the rest of the West Bank has taken place pursuant to the Israel-PLO 29 August 1994 Agreement on Preparatory Transfer of Powers and Responsibilities.

The DOP provides that Israel will retain responsibility during the transitional period for external security and for internal security and public order of settlements and Israelis. Final status is to be determined through direct negotiations within five years.

Economic progress in the West Bank has been hampered by Israeli military administration and the effects of the Palestinian uprising (intifadah). Industries using advanced technology or requiring sizable investment have been discouraged by a lack of local capital and restrictive Israeli policies.

Capital investment consists largely of residential housing, not productive assets that would enable local Palestinian firms to compete with Israeli industry. GDP has been substantially supplemented by remittances of workers employed in Israel and Persian Gulf states. Such transfers from the Gulf dropped after Iraq invaded Kuwait in August 1990.

In the wake of the Persian Gulf crisis, many Palestinians have returned to the West Bank, increasing unemployment, and export revenues have dropped because of the decline of markets in Jordan and the Gulf states. Israeli measures to curtail the intifadah also have added to unemployment and lowered living standards. The area's economic situation has worsened since Israel's partial closure of the territories in 1993.

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note: most electricity imported from Israel; East Jerusalem Electric Company buys and distributes electricity to Palestinians in East Jerusalem and its concession in the West Bank;

the Israel Electric Company directly supplies electricity to most Jewish residents and military facilities; at the same time, some Palestinian municipalities, such as Nabulus and Janin, generate their own electricity from small power plants