OECD: Settlements weaken Israeli economy

Study shows inclusion of east Jerusalem, West Bank settlements and Golan Heights in Israel's statistic figures reduces per capita income, increases inequality

Sever Plocker |Published: 08.15.11 , 07:42

The inclusion of east Jerusalem, West Bank settlements and the Golan Heights in Israel's statistic figures reduces the per capita income and increases inequality, according to a first-of-its-kind study conducted by the Organisation for Economic Co-operation and Development (OECD).

The report, based on new surveys, includes an in-depth analysis of the economy of the settlements and areas annexed by Israel and states that they weaken the Israeli economy.

Here are some of the study's main findings:

Israel's population within the Green Line included 6.7 million residents in 2009. An additional 440,000 residents lived in east Jerusalem, 290,000 in West Bank settlements, and 41,000 in the Golan Heights. From 1997 to 2009, the east Jerusalem population grew by 40% and the settlement population rose by almost 100% - at a pace of 8% a year. The Israeli population within the Green Line grew at a pace of only 2.2% a year during that period.

The settlement of Itamar (Photo: George Ginsburg)

The economic inequality in the territories, which include the settlements and east Jerusalem, is 10% higher compared to the inequality in income within the Green Line – and in both cases it is one of the highest among OECD members.

The poverty rate in Israel, both within the Green Line and in the territories, is the second highest among developed countries – after Mexico.

The inclusion of the settlements and east Jerusalem adds about 4% to Israel's gross domestic product, but reduces the GDP per capita by a significant rate of 6.5% a year. "Without east Jerusalem, the Golan Heights and the settlement, the GDP per capita within the Green Line would have been 6.5% higher. The post-1967 territories pushed Israel's GDP per capita down," the OECD rules.

In the budget year of 2007, the Israeli government spent some NIS 12.5 billion (NIS 14.5 billion in 2011 prices) on the West Bank settlements, Golan Heights and the annexed part of east Jerusalem – a 10% addition to the State Budget. In addition, NIS 5.5 billion were invested that year in the settlements and east Jerusalem, NIS 2.4 billion of them on housing construction.