By Ishac Diwan, Radwan A. Shaban
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Extra info for Development Under Adversity: The Palestinian Economy in Transition
100 28 Development Under Adversity Areas of Relative Economic Improvement While overall performance of the Palestinian economy recently has been dismal, there are areas of relative progress. Hopes for and expectations of an improved economy and political situation have stimulated interest from the private sector in possible investments-particularly from local and Diaspora Palestinians. The financial sector has expanded rapidly in recent years, albeit from a negligible base, in the number of banks and in total deposits.
Israel responded by imposing its most severe closure ever on the WBGS, including restrictions on travel between areas of the West Bank (see "internal closure" in Chapter 4). This resulted in substantial Palestinian economic losses through foregone wages and exports, price increases, a steep rise in local unemployment, and shortages. International development projects were severely disrupted. For its part, the PA responded to these events with stepped-up security measures against militant groups.
In addition, special arrangements would be negotiated for the city of Hebron, followed by Israeli redeployment from that city. Israel further agreed to redeployment from other populated areas of the West Bank (zone B), including some 450 Palestinian towns and villages. Together, zone A (3 percent of the territory of the West Bank) and zone B (27 percent of the West Bank) contain the majority of the Palestinian population. The remaining areas which cover most of the territory (including agricultural land, the Jordan Valley, nature reserves, areas with lower population density, Israeli settlements, and designated military areas) were assigned to zone C.