West Bank

The Israel-PLO Declaration of Principles on Interim Self-Government Arrangements (the DOP), signed in Washington in September 1993, provided for a transitional period of Palestinian interim self-government in the Gaza Strip and the West Bank. A transfer of authority to the Palestinian Authority (PA) 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.

Direct negotiations to determine the permanent status of Gaza and the West Bank began in September 1999 after a three-year hiatus, but were derailed by a second intifadah that broke out a year later. 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. Following Palestinian leader Yasir ARAFAT's death in late 2004, Mahmud ABBAS was elected PA president in January 2005. A month later, Israel and the PA agreed to the Sharm el-Sheikh Commitments in an effort to move the peace process forward.

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. A November 2005 PA-Israeli agreement authorized the reopening of the Rafah border crossing between the Gaza Strip and Egypt under joint PA and Egyptian control. In January 2006, the Islamic Resistance Movement, HAMAS, won control of the Palestinian Legislative Council (PLC). The international community has refused to accept the HAMAS-led government because it does not recognize Israel, will not renounce violence, and refuses to honor previous peace agreements between Israel and the PA. Since March 2006, President ABBAS has had little success negotiating with HAMAS to present a political platform acceptable to the international community so as to lift the economic siege on Palestinians. The PLC was unable to convene in late 2006 as a result of Israel's detention of many HAMAS PLC members and Israeli-imposed travel restrictions on other PLC members.

The West Bank - the larger of the two areas under the Palestinian Authority (PA) - has experienced a general decline in economic conditions since the second intifadah began in September 2000. The downturn has been largely the result of Israeli closure policies - the imposition of border closures in response to security incidents in Israel - which disrupted labor and trading relationships.

In 2001, and even more severely in 2002, Israeli military measures in PA areas resulted in the destruction of capital, the disruption of administrative structures, and widespread business closures. International aid of at least $1.14 billion to the West Bank and Gaza Strip in 2004 prevented the complete collapse of the economy and allowed some reforms in the government's financial operations.

In 2005, high unemployment and limited trade opportunities - due to continued closures both within the West Bank and externally - stymied growth. Israel's and the international community's financial embargo of the PA since HAMAS took office in March 2006 has interrupted the provision of PA social services and the payment of PA salaries.