Country profile: Palestine and Israel

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www.bbc.co.uk/news/world-middle-east-14628835




The division of the former British mandate of Palestine and the creation of the state of Israel in the years after the end of World War II have been at the heart of Middle Eastern conflicts for the past half century.
The creation of Israel was the culmination of the Zionist movement, whose aim was a homeland for Jews scattered all over the world following the Diaspora. After the Nazi Holocaust, pressure grew for the international recognition of a Jewish state, and in 1948 Israel came into being.

OVERVIEW

Much of the history of the region since that time has been one of conflict between Israel on one side and Palestinians, represented by the Palestine Liberation Organisation, and Israel's Arab neighbours, on the other. Hundreds of thousands of Palestinians were displaced, and several wars were fought involving Egypt, Jordan, Syria and Lebanon.

In 1979 Egypt and Israel signed a peace agreement, but it wasn't until the early 1990s, after years of an uprising known as the intifada, that a peace process began with the Palestinians. Despite the hand-over of parts of the West Bank and the Gaza Strip to Palestinian control, a "final status" agreement has yet to be reached.

The main stumbling blocks include the status of Jerusalem and the fate of Palestinian refugees and Jewish settlements.

FACTS

ISRAEL FACTS
Population: 6.4 million (UN, 2003 estimate)
Seat of government: Jerusalem, though most foreign embassies are in Tel Aviv
Major languages: Hebrew, Arabic
Major religions: Judaism, Islam
Life expectancy: 77 years (men), 81 years (women) (UN)
Monetary unit: 1 new Israeli shekel (NIS) = 100 new agorot
Main exports: Computer software, military equipment, chemicals, agricultural products
Average annual income: US $16,750 (World Bank, 2001)
Internet domain: .il
International dialling code: +972

PALESTINIAN FACTS
Population: 3.5 million (UN, 2003 estimate)
Intended seat of government: East Jerusalem
Major language: Arabic
Major religion: Islam
Life expectancy: 71 years (men), 74 years (women) (UN)
Monetary unit: 1 Jordan dinar = 1,000 fils, 1 new Israeli shekel (NIS) = 100 new agorot
Main exports: citrus
Average annual income: US $1,350 (World Bank, 2001)
Internet domain: .ps
International dialling code: +970

LEADERS

Israeli president: Moshe Qatzav

Prime minister: Ariel Sharon

Born in 1928 in Palestine when it was a British mandate, Mr Sharon became prime minister in February 2001 after beating the Labour incumbent, Ehud Barak, in the prime ministerial elections.

Israeli Prime Minister Ariel Sharon


He was elected in the midst of the second Palestinian intifada (uprising) on a pledge to ensure total security for Israel. One of the principal catalysts of the intifada was Sharon's controversial visit to Jewish holy sites on Jerusalem's Temple Mount, an area of the old city known to Muslims as Haram al-Sharif and considered to be Islam's third holiest site.

Mr Sharon had become closely identified with the invasion of Lebanon in 1982 when, as defence minister, he sent Israeli troops all the way to Beirut, where the PLO was then based.

He was forced from office in 1983 after an Israeli tribunal which found him "indirectly responsible" for the massacre of hundreds of Palestinian refugees by Israeli-allied right-wing Lebanese militiamen.

A wealthy cattle farmer, Mr Sharon has a house in Jerusalem's Muslim Quarter. As housing minister in the early 1990s, he presided over the largest expansion of Jewish settlements since the 1967 war.

Palestinian leader: Yasser Arafat


Born in 1929 and educated in Egypt, Yasser Arafat ran a successful civil engineering business in Kuwait before setting up Fatah (Arabic acronym for Palestine Liberation Movement) in 1958.

In 1964 Mr Arafat left Kuwait for Jordan, from where Fatah began guerrilla raids into Israel. In 1968 he was elected chairman of the Palestine Liberation Organisation (PLO), in effect putting Fatah at the core of the PLO.

Palestinian leader Yasser Arafat
Mr Arafat has survived numerous setbacks. In 1970 he was expelled from Jordan. He redeployed into Lebanon, but was driven from there by Israeli forces in 1982. In Tunisia, where the PLO had set up its headquarters after leaving Lebanon, he escaped an Israeli air strike and Israeli death squads. He also survived an air crash in the Libyan desert and recovered from a serious stroke.

On 1 July 1994, after 27 years in exile, Mr Arafat returned to Gaza to take up the post of president of the Palestinian National Authority (PNA) to which he had been elected by the PLO Central Committee in October 1993 and confirmed by a plebiscite in 1996.

But in April 2002 he faced one of his biggest challenges. Israeli Prime Minister Ariel Sharon declared him "irrelevant" and Israeli troops, who had been surrounding his headquarters in Ramallah for four months, battered and occupied most of his compound. However, he survived thanks to international pressure on Mr Sharon to end his siege.

For many, Mr Arafat has come to embody the Palestinian struggle for self-determination.

His critics among the Palestinians, however, accuse him of running an over-personalised, corruption-ridden administration, of making too many concessions to Israel and of putting undue trust in the US which, in their view, had utterly failed to apply the necessary pressure on Israel to withdraw from Palestinian territories.

In March 2003 the parliament approved the creation of the post of prime minister. The move had been demanded by the US as a condition to begin work on an internationally-backed peace plan for the region. Deputy PLO leader Mahmoud Abbas was appointed to the post, but resigned in August 2003 amid a power struggle with Mr Arafat. Speaker of the Palestinian Legislative Council Ahmed Qurei was nominated as his successor.

Internet
Around 60,000 people were connected to the internet by March 2001.

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PALESTINIAN MEDIA

Television is the key medium for news and information in the Palestinian areas. Satellite dishes are common, and pan-Arab broadcasters, particularly Qatar's Al-Jazeera TV, are popular among viewers.

The official radio and TV stations of the Palestinian National Authority operate alongside dozens of private radio stations and a handful of private TV stations. Jordanian TV is widely-watched in the West Bank.

The Palestinian authorities limit freedom of speech and the security services have regularly shut down media outlets, banned publication or broadcast of material, and harassed or detained journalists, including foreign reporters covering the second intifada. Self-censorship by Palestinian journalists is widespread.

Media watchdog Reporters Without Frontiers reported in 2002 that privately-run and official media outlets had been "at the service of Palestinian Authority propaganda" since the start of the uprising.

Palestinian media outlets were badly damaged by Israeli military operations in the wake of the second intifada. Radio and TV stations were destroyed, including, in January 2002, the premises of the Palestinian National Authority's TV and radio stations in Ramallah. Israel has repeatedly accused Palestinian TV and radio of inciting violence.

The press


Al-Quds - Jerusalem-based, largest-circulation Palestinian daily
Al-Ayyam - Ramallah-based daily
Al-Hayat Al-Jadidah - Palestinian National Authority daily
Radio


Voice of Palestine - official station of Palestinian National Authority
Television


Palestine TV - official station of Palestinian National Authority
Palestine Satellite Channel - Gaza-based, run by Palestinian National Authority
Private TV stations include Al-Quds Educational TV, Al-Mahd TV, Al-Majd TV, Al-Nawras TV, Al-Sharq TV, Amwaj TV, Bayt Lahm TV, Shepherds TV and Watan TV.
News agency
Palestine News Agency - Wafa - in Arabic, English, French and Hebrew

Internet
Around 60,000 people were connected to the internet by March 2001.

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(EIU Viewswire Via Thomson Dialog NewsEdge)COUNTRY VIEW

FROM THE ECONOMIST INTELLIGENCE UNIT

OVERVIEW: Kadima (Forward), the new centrist party founded by the former prime minister, Ariel Sharon, and now headed by the acting prime minister, Ehud Olmert, is poised to head a new coalition government following its emergence as the largest party in the March 28th general election. However, the party's comparatively modest showing will make for a relatively unwieldy coalition government. Healthy real GDP growth will be supported by a strong domestic performance and steady export growth. The budget deficit will widen in 2006-07, but, despite a modest increase in social spending, improved fiscal management will keep the deficit at around 3% of GDP. Interest rates have begun to rise as the Bank of Israel (the central bank) responds to rate hikes in the US and to increased domestic demand. Average inflation will rise in 2006 but stay low overall in 2006-07. The current-account surplus will contract in 2006, before rising in 2007.



Domestic politics: Kadima is poised to lead the next coalition government following the March 28th general election, when it won the most seats (29 of 120) in the Knesset (parliament). The party, which was formed by the now incapacitated Mr Sharon, benefited from his popular, unilateralist approach to the Israeli-Palestinian conflict as well as from the weakness of the other main parties. However, a low voter turnout hurt its showing at the polls, broadening the number of parties that would be required to ensure a comfortable majority in the Knesset. As anticipated by the Economist Intelligence Unit, the proposed coalition partners include the centre-left Labour, which held steady to win 19 seats, and Shas, a religious party, with 12 seats. The coalition will also include the new pensioners advocacy party, Gil, with seven seats. This will give the new government control of at least 67 seats. The major political realignments in recent months, which have included the implosion of the right-wing Likud, disaffection with other large parties including Labour, the creation of Kadima and Mr Sharons incapacitation, have added uncertainty over subsequent government policy and composition.

International relations: With the new Israeli administration inclined to continue the unilateralism of its predecessor (a policy that remains broadly popular in Israel) and Hamas, a radical Islamist group, forming the new Palestinian government, the long-stalled Israeli-Palestinian peace process is unlikely to be revived any time soon. Israel will continue to act against perceived threats emanating from the Palestinian Territories. Israeli has long argued that any restoration of the peace process will be dependent on the ability of the Palestinian president, Mahmoud Abbas, to deliver enhanced security. However, his position has been further weakened by the formation of a Hamas-dominated government. Nevertheless, Hamas has largely complied with the ceasefire agreed in February 2005, mindful of the unpopularity of actions that provoke Israeli reprisals. However, without substantive changes to Hamass stance towards the Jewish state and existing agreements, negotiations are unlikely to happen, other than possibly over practical and humanitarian issues. Even if bilateral talks in some form are conducted, a proper resumption of formal negotiations towards a final settlement of the conflict is unlikely. The political and practical difficulties for any Palestinian leadership in preventing attacks on Israelis, and the likelihood that Israel will not wish to make significant concessions to a Hamas-led government, could even lead to a resumption of sustained confrontation.

Policy trends: The outgoing government was active in promoting economic liberalisation, setting realistic fiscal and other policy targets, and restarting a stalled privatisation programme. In addition, financial market reforms have provided greater financing options for businesses. Further fiscal consolidation will move at a slower pace under the new government, given the prominence that some of Kadimas coalition partners have placed on improving welfare provision. However, given that many of the most important measures have already been implemented, or have progressed too far to be easily rolled back, and coupled with Mr Olmerts insistence that the Ministry of Finance remain under Kadimas control, we do not expect a major reversal. Other reforms will move forward, albeit at a modest pace, particularly in the financial sector. These will include some privatisations. The institution of a compulsory (but not state-funded) universal pension system will also be on the agenda. Further tax reforms were legislated on by the previous government, including cuts to sales, corporation and income taxes, offset by broadening capital gains tax. The new government may give these measures lower priority, and a tax-credit system to encourage employment among low earners may be introduced.

International assumptions: World GDP growth (at purchasing power parity exchange rates) is expected to slow modestly from 4.6% in 2005 to 4.3% in 2006 and 4.1% in 2007, as the impact of a slowdown in the US is partly offset by stronger performance in the EU, Japan (in 2006) and elsewhere. US growth will fall to an average of 2.7% a year in 2006-07, as fiscal and monetary policy becomes less accommodating to growth. Real GDP expansion in the EU25 will strengthen but remain modest, at 2.2% in 2006 and 2.3% in 2007. Israels two main export destinations are the US and the EU, but it has increasingly diversified its markets. The Economist Intelligence Unit expects the high-tech export sector to continue to expand--global demand growth for these products will remain fairly healthy--and foreign direct investment to stay high. The three-month target rate at the US Federal Reserve (the central bank) will continue to trend upwards in 2006, as will rates in the euro zone, which will continue to rise into 2007. With oil prices now likely to rise further in 2006 and slacken only slightly in 2007, there will be some pressure on consumer prices, particularly in 2006, which will increase the likelihood of further interest rate rises in Israel.

Economic growth: With global demand growth easing slightly since 2005, economic expansion will continue to be more evenly distributed than during the initial export-led economic recovery in 2003-04. A stronger recovery in the domestic economy will mitigate the impact on exports of more modest global demand, although growth in exports of goods and, particularly, services will remain robust. Private consumption will continue to rise. Moreover, gross fixed capital formation will expand strongly.

Inflation: A weakening of the shekel against the dollar and surging oil prices have seen consumer price growth strengthen overall in recent months, but at a modest pace, helped by sluggish wage growth. Despite rising interest rates, domestic demand will stay relatively strong throughout 2006 as unemployment falls further and the output gap narrows. Global commodity prices will continue to rise this year, adding to supply-side pressures. A recovery in house prices will also feed into consumer price growth, although the recent strengthening of the shekel against the US dollar (housing is dollar denominated) should help offset some of the impact of this trend. Nevertheless, after climbing to 3.6% year-on-year in March, consumer price inflation will return to within the central banks 1-3% price-stability target range over the forecast period. Average annual inflation will rise slightly in 2006 to 2.6% (little changed on the end-2005 figure of 2.4%), before slowing to 2.1% in 2007 as the weakening in global commodity prices helps offset continued strong domestic demand. The main risk to our central forecast will remain shekel volatility, with the currency vulnerable to poor economic policy decisions and political events.

Exchange rates: Strong export growth and capital inflows are likely to help anchor the exchange rate during the forecast period, despite the end of the differential tax treatment of domestic and overseas assets from 2005. The shekel will remain sensitive to political and security developments, but such concerns, along with other worries over fiscal policy or further reform of the tax rules, should only have a short-term impact on the currency, unless there is a major change in policy. A reversal in the current trend of strong net capital inflows is the biggest threat to our main scenario of a relatively stable currency. As it is, we expect a modest fall in these inflows, as well as the maintenance of a fairly narrow differential between Israeli interest rates and those in the US and the EU, to offset the impact of a weakening of the dollar against other major currencies. The shekel has made significant gains against the US dollar in recent weeks as election-related jitters have passed. However, given its weakness earlier in the year, we expect the shekel to depreciate to an average of NIS 4.58:US$1 in 2006. The currency will continue to strengthen in the latter part of 2006 and in 2007, averaging NIS 4.53:US$1 that year as the dollar weakens further on global markets and Israeli interest rates trend upwards, although by end-2007, with the dollars decline halted, the shekel will be marginally weaker. Despite these later gains against the dollar, the shekel will stay relatively competitive against its main trading partners, in particular the euro zone economies.

External sector: Israel registered a record current-account surplus of US$2.4bn (1.9% of GDP) in 2005, owing to rapidly rising services and income credits. These have offset the pick-up in import spending stemming from rising consumer and business demand and the surging price of imported commodities. In 2006-07 export earnings will remain fairly robust. Capital goods imports will also rise, however, and the recovery in demand for imported consumer goods will continue, albeit at a gentler pace. Record oil prices will also keep import costs high in 2006, although weaker non-oil commodity prices and a fall in oil prices in 2007 will help limit the expansion in the import bill. We expect the trade deficit to widen to US$4.8bn in 2006 before easing to US$3.8bn in 2007.




www.tmcnet.com/usubmit/2006/05/05/1639544.htm

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The Gaza Strip is a narrow piece of land along the Mediterranean coast between Israel and Egypt. Just 40km long and 10km wide, it is home to more than 1.4m Palestinians.


Gaza City is the Strip's main administrative and commercial hub

The shape of the territory was defined by the Armistice Line following the creation of Israel in 1948 and the subsequent war between the Israeli and Arab armies.



Egypt occupied the Strip for the next 19 years, but Israel conquered it during the 1967 Arab-Israeli war and Gaza has been under Israeli control since then.

In 2005, Israel pulled out the troops occupying Gaza, along with thousands of Jews who had settled in the territory. As far as Israel was concerned that was the end of the occupation.

However, that has not been accepted internationally as Israel still exercises exclusive control over most of Gaza's land borders, as well as its territorial waters and airspace.


POPULATION CENTRES
Gaza City is the Strip's biggest population centre and has about 400,000 inhabitants. It is a commercial and administrative hub for the whole of the occupied territories, although travel is severely restricted between it and the West Bank.

As in other towns in Gaza, there are high levels of poverty, deprivation and unemployment in Gaza City. It has been the scene of frequent deadly clashes between gunmen from the rival Hamas and Fatah factions.

Air strikes by Israel targeting militants in the densely populated city often kill bystanders as well.

Gaza's other two main population centres are Khan Younis (population 200,000) in central Gaza and Rafah (population 150,000) in the south.

Each of these suffered from their proximity to Israeli forces and have seen a relative security improvement since 2005.

However, an Israeli blockade and international isolation in response to Hamas's election victory in 2006 have left both towns in a worse economic situation.


REFUGEE CAMPS


Some refugee camps lack basic amenities


The majority of Gaza's residents are refugees who fled or were expelled in 1948 from the land that became Israel - most of these still live in eight refugee camps administered by the United Nations.

Some of the camps have merged with nearby towns, while others such as Nuseirat and Bureij are self-contained.

The influx of refugees into the narrow strip of land means it now has one of the highest population densities on earth. About 20% of refugee dwellings are not connected to the sewage system and waste water flows in open channels along roads.

UN figures for the camp populations are: Jabaliya (106,691), Rafah (95,187), Shati (78,768), Nuseirat (57,120), Khan Younis (63,219), Bureij (28,770), Maghazi (22,266), Deir el-Balah (19,534).


BORDERS
An Israeli-built metal fence separates Israel and the Gaza Strip. It is heavily guarded by Israeli forces and is the frequent target of Palestinian militant attacks.

Guerrilla fighters are often spotted and killed before they reach the fence, which is protected by an open 300-metre-wide buffer on the Gaza side.

After the 2005 pullout, Israeli wanted to keep control of Gaza's border with Egypt, known as the Philadelphi Route, to control traffic and prevent smuggling.

However, it was obliged by international pressure to abandon the plan and it handed over responsibility for the border to Egypt.

Palestinian forces, monitored by European Union officials, are stationed at the Rafah border crossing to Egypt. Under a deal brokered by the US, Israel uses video surveillance at Rafah, but cannot stop people crossing.


ENTRY/EXIT POINTS


Israel controls crossings into Gaza from its territories


Rafah crossing is Gaza's sole contact with the outside world not under direct Israeli control. It is open to pedestrians and can be used to export goods, but imports are not allowed.

Officially goods can enter from Egypt by the Kerem Shalom crossing and from Israel via the Sufa and Karni crossings, both of which are controlled by the Israeli army.

But troops have frequently closed the goods crossings, citing security reasons.

This has occasionally led to shortages of basic humanitarian supplies and severely hampered Gaza's main exports - perishable goods such as fruit and cut flowers.

The main passenger crossing point into Israel, Erez in the north, has been closed to Palestinians for long periods, preventing labourers from working in Israel, though internationals and emergency medical cases are allowed to cross.

In the late 1990s, the Palestinians were allowed to open their own airport in the Gaza Strip, but this has been put out of use by Israeli attacks since the 2000 intifada.

Israel agreed in principle to the opening of a seaport for Gaza and to allow bus connections with the West Bank in a US-brokered deal in November 2005. But both moves are yet to be implemented.


MILITANT ACTIVITY
Gaza is one of the strongholds of the Palestinian militant organisation Hamas, which won parliamentary elections in January 2006.

Other groups such as Islamic Jihad, the al-Aqsa Martyrs Brigades (affiliated to the former ruling party Fatah), and the Popular Resistance Committee all have a strong presence in the Strip.


Militant groups control the streets in much of the Gaza Strip


Despite Gaza's isolation, militants have continued to attack Israeli interests from the Strip since the 2005 pull-out.

The main vehicle of resistance, as the militants describe it, is the firing of short-range homemade rockets which can reach nearby Israeli population centres, such as Sderot, less than a kilometre from Gaza's north-east corner.

These have caused a handful of deaths and injuries, but severe disruption for Israelis living within range.

Israeli shelling and rocket attacks, meanwhile, which Israel says are meant to stop the rocket fire, have killed dozens of Gazans, including many civilians.


FORMER SETTLEMENT ZONE
Israel's former settlements in Gaza were bulldozed by the Israeli army - except synagogues, which were controversially demolished by Palestinians, and greenhouses, which were handed to Palestinian farmers.

A massive clear-up was meant to have taken place to rehabilitate the rubble-strewn areas, but this has not happened.

In a rare gesture of goodwill, wealthy Jewish American philanthropists paid the departing settlers about $14m (£8m) to leave the greenhouses standing.

The once-lucrative market gardening sector has proved disastrously unprofitable, as goods crossings have remained closed and produce has had to be thrown away.








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