Until 5th June 1967, East Jerusalem and the West Bank were part of the Hashemite Kingdom, a fact recognised only by Pakistan and by Britain. Gaza was governed by Egypt.

If you look at reports from the World Bank or various UN agencies for the period, these Palestinian territories were amongst the poorest in the world.

“The Israel Test”, a new book by George Gilder, throws some interesting light on what happened to the standard of living after Israel took control. Citing a string of UN reports, Gilder notes that the Palestinian economy took off. In an interview this week, he observed:

When Israel inherited the territories in 1967, it administered them, but much more loosely than it administered it own economy. And so the territories became the fastest growing economy on the face of the earth. Some 250,000 Israeli settlers moved to these previously Judenrein areas, and they attracted some two million Arab settlers. Eight Arabs moved in for every Jew.

This was a golden age for Arab Palestinians. Their numbers tripled, their per capita incomes also tripled, their educational levels soared, and their life expectancy rose from 42 to some 70 years.

……..the delivery by the international community of the territories to the PLO (in 1993), who then brought to a screeching halt all the economic development. The PLO caused a 40 percent drop in GDP per capita incomes, and just generally reversed the huge achievements of the previous 20 years.

The moment Chairman Arafat launched the Intifada in September 2000, the Palestinian economy was bound to go into free fall. Labourers were not allowed into Israel. The industrial area at the Erez checkpoint was decimated. Even money given to the Palestinians to rebuild Gaza after Israeli withdrawal – such as for the greenhouses project – seemed to vanish.

Today, there seems to be 2 Palestinian economies. Clearly, there are parts of the West Bank, which are doing well under the tutelage of President Abu Mazen.  For example, the Ramallah stock exchange is on a high.

Yet down in Gaza, after 2 years of Hamas rule, there appears to be little economic progress. Associated Press reports that the situation is so bad that people are buying fake cancer prognoses in order to leave.