Shorn of tourists, West Bank struggles

Average per-capita income in the West Bank dropped 40 percent after the intifada's first year.

American shopkeepers catering to tourists in their own still-fragile economy might think they've learned the meaning of hard times, but they haven't met West Bank residents Jameelah Isaac or Jiries Canavati.

Two years ago, Ms. Isaac's falafel restaurant and Mr. Canavati's souvenir shop were humming in the city of Jesus' birth as thousands of pilgrims from across the globe met the new millennium in style. But over the past year and a half, hard times have meant more than a slowdown. They've meant tanks in the streets, bombed-out city blocks, troop-enforced curfews – and days or weeks without a single customer.

"It's like in the Bible here," says Canavati, pointing upward to a row of unfinished hotel rooms. "You have seven good years and seven bad years in this country. Now, you can't even pay your electric bill."

Isaac, speaking in broken English on her restaurant's terrace overlooking the city, says: "We have no customer. None. No one come."

In this biblical land, where unemployment dipped to 10 percent in 2000's boom times, the dominant tourism industry once shone as a beacon of hope. But no more. By December 2001, Palestinian unemployment had climbed to 26 percent, according to a 2002 World Bank report. Average income per capita had dropped 40 percent – from $1,716 to $1,030 – from the prior year.

A primary reason: tourists are afraid to visit.

"You have hundreds of restaurants and hotels [in the West Bank] where literally no one shows up," says Youssef M. Ibrahim, Senior Fellow for Middle East economics at the Council on Foreign Relations. "The ripple effect is much more. It affects laundry, garbage collection, catering.... I suspect a lot of people are going bankrupt because they just can't do it anymore," he says.

As pressure mounts for an end to the 20-month cycle of Israeli-Palestinian violence, the devastation of the region's tourism industry has created suffering that will last long after the killings cease. Since tourism represents the largest sector of the West Bank economy and the third-largest industry in Israel, its plundered infrastructure and loss of capital guarantee long-term repercussions.

Signs of desperation here already reflect those in such cities as Cairo and Calcutta. Bethlehem shops don't bother to open until someone spots the occasional foreigner. Then the padlocks and bars come off. Within minutes, a shopkeeper doing any business has a flock of cheap jewelry hawkers on her doorstep. Too proud to beg, they lay plastic bead necklaces on an exiting customer's wrist, asking the about $10 in exchange. Sales pitches appeal to compassion.

"How many shekel you have?" one asks. "My children have to eat. I cannot feed them. Help me. Help Palestinian."

Israelis have felt the blows to tourism as well. A $4.3 billion annual boost to the economy has shrunk to just $2.1 billion, according to the Israeli Ministry of Tourism. Businesses that haven't closed are offering deep discounts. The Knight's Palace Hotel in Jerusalem's Old City, for instance, has given tour groups free lodging this spring with hopes they will urge friends to visit. Meanwhile, manager Nadal Salah laid off all but one employee, running the hotel largely by himself.

Israel's economy, however, is less tourism-dependent than the West Bank's, according to Ibrahim. Foreign aid in the neighborhood of $3 billion to Israel, for instance, coupled with Israel's strong manufacturing and high technology industries, makes even a sharp drop in tourism manageable, he says.

Signs of the West Banks's aggressive investment in anticipation of 2000's tourism boom now languish as reminders of the conflict's far-reaching toll. A Jordan River bridge, widened to handle heavy tourist traffic, stood desolate at 10 a.m. on Saturday during Lent this year. Elsewhere in West Bank, town centers, roads, and shops upgraded for tourists now lay impassable or buried in rubble respectively.

In Ibrahim's view, the private sector will never recover on its own. "Without a massive infusion of foreign aid and easy loans from the international community ... some people will never be able to come back," from bankruptcy, Ibrahim says. But in the meantime, Palestinian leaders are taking short-term measures to avert further disaster.

In Beit Sahour, which abuts Bethlehem and lives largely on tourism, Mayor Fuad Kokaly has cut back on street lighting and stopped paying municipal utility bills in order to create public jobs for at least one person per family.

"People are going hungry," said Suzan Sahori, spokesperson for Mr. Kokaly. "Those who had some money saved up are now desperate. We have families who have received no income for the past year. The suffering is growing, and we are desperate for help."