PALESTINIANS ANSWER "NO" TO QUESTION, "ARE YOU

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 001909

SIPDIS

NEA FOR SATTERFIELD

E.O. 12958: DECL: 05/29/2004
TAGS: ECON EAID SOCI ISRAELI PALESTINIAN AFFAIRS ECONOMY AND FINANCE
SUBJECT: PALESTINIANS ANSWER "NO" TO QUESTION, "ARE YOU
BETTER OFF?"

Classified By: Economic Counselor Ted Mann per 1.4 b and d

This cable is a joint message from Embassy Tel Aviv and
Consulate General Jerusalem. This cable is confidential
until publication of World Bank Quarterly update.


1. (C) Summary: Starting in October 2003, the World Bank
and Palestinian Central Bureau of Statistics (PCBS) have
conducted a series of monthly surveys to measure Palestinian
attitudes and expectations concerning their economic and
humanitarian circumstances. An average of 1253 households and
517 businesses have been surveyed over the four months. The
most recent survey results available are from January 3 - 26,

2004. An advance copy of the January results show that
Palestinians continue to view each month as "worse" than the
previous month. Despite this history, they do not expect
conditions to deteriorate further, but nor do they expect
them to improve. Mobility restrictions remain much more
pronounced in the West Bank (WB) than in Gaza and have a
differentiated impact in both WB and Gaza. For example,
access to elementary school remains good in both WB/G, but
access to one's workplace can be more problematic.
Palestinian households continue to report that on an
individual level, the most pressing need is for food
assistance. However, their aspiration for their community is
for more job creation. Only 14 percent of respondents over
the four months said they are aware of donor projects to
address their communities' needs. Business owners continue
to have a conservative outlook on the future, anticipating no
new hiring, no capital investments, and no increased revenues
in the near term, leading the World Bank to question the
prospects of future economic growth. End Summary.

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Quality of Life
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2. (C) Over the past four months, Palestinian households
have consistently reported that their overall "quality of
life" deteriorated from the previous month. Despite this
negative trend, respondents have remained neutral or slightly
optimistic about the future. When asked to look forward one
month, respondents expected life to be either "unchanged" or
"somewhat better." Jerusalem residents are the most negative
in assessing their current situation relative to the previous
month and also the most pessimistic in expectations of future
improvements. In the West Bank and Gaza, there has been a
strong correlation between the assessment of the overall
quality of life and the degree of Israeli military
intervention in the area during the particular reporting
period.

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Movement Restrictions
--------------


3. (C) West Bank households reported an improvement in
mobility between October and November 2003, but no
improvements since. It is important to note that in each of
the four months, over 50 percent of the West Bank respondents
reported that their mobility was restricted "a lot". In
Gaza, on average 30 percent of the respondents said their
mobility was restricted "a lot." Mobility restrictions have
not had a universal impact. Respondents were asked about
their ability to access schools, health care, place of
employment, and agricultural land. For the most part,
respondents said their children in both WB and Gaza are able
to attend elementary and secondary schools without
difficulty. Accessing university, which often requires some
travel, is more problematic, but still does not pose
overwhelming difficulties for most respondents.


4. (C) In Gaza, respondents reported few difficulties in
accessing health care facilities. In the WB, the results are
mixed, with residents of Hebron and West Bank villages
reporting the most difficulty in the January survey.
Residents of West Bank refugee camps reported the fewest
problems, most likely due to the existence of UNRWA clinics
within the camps. Concerning access to employment, Gazan
households reported that they have between "few" and "no"
problems accessing their workplaces. In the West Bank, the
average fell between "few problems" and "difficult" and
varied greatly by governant. For example, in Nablus fully 35
percent of those with/with jobs said it was "very difficult"
or "impossible" to reach their workplace in the January
survey. In the WB, there has been a slightly positive trend
regarding access to agricultural land over the past four
months. In Gaza, however, the trend has been negative.

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Expect to get a job?
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5. (C) In January's survey 26 percent of the WB and 28
percent of Gaza respondents had no/no employed persons in
their households during the previous week working either full
time or part time. At the same time 57 percent of the WB and
60 percent of the Gaza households reported that they had no
family members that were unemployed. Asked about expectations
of finding work in the next month and over the next six
months, both WB and Gaza unemployed were neutral saying they
were "neither optimistic nor pessimistic". These neutral
expectations have been consistent for all four months of the
survey. If, however, the unemployed knew the replies given
by business owners, perhaps they would be more pessimistic.
For all four months, both WB and Gazan business owners said
they did not anticipate hiring new staff in the following
month. Asked to project out six months, most WB employers
still predicted that the employment levels in their companies
would be "unchanged." Gazan businesses owners were slightly
more optimistic about increasing hiring in October and
November 2003, but in the December and January surveys, they
too said that six months hence they expected their employment
levels to be "unchanged."

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I Need Food; My community needs employment
--------------


6. (C) Throughout the Intifada the international community
has struggled to find the right balance between humanitarian
responses and long-term development needs. The World Bank
surveys pose several questions related to this debate and
asks participants to rank their most pressing needs as a
household and as a community. At the household level, food
assistance was the need most often selected - it was both the
number one ranked need (selected by roughly one-third of
households each month) as well as the item most included
among household's ranking of their top five needs. However
at the community level, job creation was the most perceived
need, selected by a plurality in the WB and an absolute
majority in Gaza. Public infrastructure was second to job
creation and selected as the number one community need by
roughly one fourth of households in both WB and Gaza. These
rankings and shares have remained consistent over the course
of the four monthly surveys.

Household Number One Need - West Bank/Gaza
(January Survey)

Food 35% / 32%
Clothing 0% / 1%
Education 8% / 9%
Employment 16% / 25%
Financial Assistance 26% / 19%
Health 8% / 5%
Housing 6% / 7%


Community Number One Need - West Bank/Gaza
(January Survey)

Employment 45% / 57%
Health 13% / 5%
Food 6% / 5%
Education 4% / 5%
*Public Infrastructure 25% / 26%
No Needs 7% / 1%

* Asked what type of infrastructure they required, Gaza
residents chose sewage/wastewater disposal as their number
one need, with roads second. West Bankers were evenly split
between roads, health facilities, and sewage/wastewater
disposal. In both West Bank and Gaza, answers varied widely
based on the prevailing conditions within a locality.

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Most do not know donors exist
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7. (C) Only 14 percent of households in Gaza and WB said
they were aware of donor financed projects designed to
satisfy their communities' priority needs. Those households
who were aware of donor efforts generally expressed
"moderate" levels of satisfaction with donor projects.
(Comment: The largest donor contribution - USD 230 million
in 2003 in PA budgetary support - may be invisible to the
average household. End Comment.)

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Pal private sector says don't count on me
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8. (C) Asked about the overall business environment and
their establishments' sales, employment levels, profits, and
costs, business owners/managers continue to report that the
current period represents a deterioration from the previous
month. In January's survey, WB business managers in Qalqilya
governate reported the greatest deterioration relative to the
previous month; while in Gaza, Rafah establishments reported
the greatest decline. Looking forward, businessmen in WB and
Gaza remain neutral, saying they do not expect their overall
condition to change in the next month. Specifically they
said they did not anticipate increased sales, capital
expenditures, or employment within the next month, nor within
the next year. All of these indicators led the World Bank to
conclude the "modest economic recovery witnessed in 2003 may
have been more along the lines of a partial rebound from the
severe negative shock of 2002. But going forward, economic
growth will be tentative at best, and vulnerable to reversal."

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Comment
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9. (C) The fact that for each of the four months
Palestinians have identified food as their most pressing need
is an indicator of just how bad the economic and humanitarian
situation is in the territories. The assessment that each
month is worse than the last suggests that Palestinians are
not perceiving any benefit from intermittent Israeli
initiatives to improve humanitarian conditions. It is
worrisome that that only 14 percent of respondents said they
were aware of donor projects and suggests that the donor
community needs to do more to publicize its efforts. Looking
forward, it remains clear that economic and humanitarian
conditions will remain dismal absent progress on the
political/security agenda that would enable greater private
sector investment and an increased donor focus on long-term
development needs. End Comment.

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