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READING INTERNATIONAL

MODEL UNITED NATIONS

2

nd Annual Conference

29th

November – 1st December

ECONOMIC AND FINANCIAL

COMMITTEE

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A message from your directors:

Dear ECOFIN delegates,

I am honored and privileged to welcome you as the Chair of

the Economic and Financial committee at Reading International Model

United Nations conference 2013. Together with yourselves and my co-

chair this committee will have the chance to face some of the most

important topics that have an impact on the human financial life. The

topics for the Economic and Financial Committee this year revolve

around emerging trends that will have an immense impact on the global

economy.

Firstly we have the opportunity to discuss the topic of tax

evasion and tax havens. Recent events have demonstrated that countries

from all over the world face a growing problem in collecting taxes to

fund public goods and services such as healthcare, education,

infrastructure and the general reduction of poverty in developing

countries. This effect of globalisation undermines the fiscal basis of the

welfare state. Though markets have become more integrated, tax

structures have remained nation-specific. Open borders have created

exaggerated tax competition, which in turn has led to a race to the bottom

in taxation of companies and high incomes.

Furthermore we will talk about the Permanent sovereignty of

the Palestinian people in the Occupied Palestinian Territory, including

East Jerusalem, and of the Arab population in the occupied Syrian Golan

over their natural resources. Israeli settlements in the Occupied

Palestinian Territory and the occupied Syrian Golan not only are illegal

but also constitute an obstacle to peace. The international community

should exert all possible efforts to ensure the implementation of

international law and relevant United Nations resolutions. These efforts

should include providing support for initiatives that seek to end the Israeli

violations of international law in the occupied territories, especially

Israeli settlement activities, as a first step towards a final and just

resolution to the conflict that ends the occupation and allows the

attainment of the inalienable rights of the Palestinian people, as

guaranteed by international law.

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But the most important part during the whole MUN experience

is your participation. Your vision and your professionalism will make the

ECOFIN one of the best committees of Reading Mun. It is our

responsibility to guide you and we are at your disposal. Please do not

hesitate to contact us we are here to help you to answer to your questions

and also meet you in person. Loz and I truly believe in your energy and

passion.

We are very much looking forward to welcoming and meeting you all this

November.

Best Regards

Panourgias Papaioannou.

Chair of the Economic and Financial Committee of

Reading International Model United Nations 2013 IInd Session

Loz Simpson.

Co-Chair of the Economic and Financial Committee of

Reading International Model United Nations 2013 IInd Session

History of ECOFIN

The Economic and Financial Committee, otherwise known as ECOFIN,

was first formed when United Nations first received its charter in 1945.

Meeting first in London in January of 1946, they made their first decision

to move headquarters to New York City in the United States. It is the

second of six main committees that make up the General Assembly. The

Economic and Financial Committee foremost focuses discussion on the

economic and financial policies regarding growth, trade and developing

sectors of the world economy. The second committee also takes into

consideration special situations regarding LDCs, Less Developed

Countries, and LLDCs, Land-Locked Less Developed Countries.

Structure and Responsibilities

ECOFIN consists of one chairperson, three vice-chairpersons and one

rapporteur, chosen to represent the geographic regions evenly. Meeting

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once a year in October for a four to five - week session, ECOFIN is open

for all 192 member states of the United Nations to attend.

The Second Committee works to draft resolutions that seem to fit the

needs of all of its members‟ best. ECOFIN takes great consideration

when coming upon special cases like LDCs and LLDCs when in session

and is able to take action upon the resolutions. To ensure efficiency

during session, the second committee is continuously updating its

working methods and practices to ensure better debates and discussion on

the floor.

TOPIC A: Dealing with tax havens and combating money laundering

and tax evasion through international cooperation.

1)Definition of the tax havens

There is no precise definition of a tax haven. The OECD initially defined

the following features of tax havens:

1. no or low taxes,

2. lack of effective exchange of information,

3. lack of transparency,

4. no requirement of substantial activity.

Other lists have been developed in legislative proposals and by

researchers. Also, a number of other jurisdictions have been identified as

having tax haven characteristics.

Formal Lists of Tax Havens

The OECD created an initial list of tax havens in 2000. A similar list was

used in S. 396, introduced in the 110th Congress, which would treat firms

incorporated in certain tax havens as domestic companies; the only

difference between this list and the OECD list was the exclusion of the

U.S. Virgin Islands from the list in S. 396. Legislation introduced in the

111th Congress to address tax haven abuse (S. 506, H.R. 1265) uses a

different list taken from IRS court filings, but has many countries in

common. The definition by the OECD excluded low-tax jurisdictions,

some of which are OECD members, that were thought by many to be tax

havens, such as Ireland and Switzerland. These countries were included

in an important study of tax havens by Hines and Rice. GAO also

provided a list.

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Table 1 lists the countries that appear on various lists, arranged by

geographic location. These tax havens tend to be concentrated in certain

areas, including the Caribbean and West Indies and Europe, locations

close to large developed countries. There are 50 altogether.

Table 1. Countries Listed on Various Tax Haven Lists

Caribbean/West Indies Anguilla, Antigua and

Barbuda,Aruba

Bahamas, Barbados,d,e British

Virgin Islands,

Cayman Islands, Dominica, Grenada,

Montserrata Netherlands Antilles,

St. Kitts and

Nevis, St. Lucia, St. Vincent and Grenadines,

Turks and Caicos,

U.S. Virgin Islandsa,e

Central America Belize, Costa

Rica,b,c Panama

Coast of East Asia Hong Kong,b,e Macau,a,b,e

Singaporeb

Europe/Mediterranean Andorra,a Channel Islands (Guernsey

and Jersey),e

Ireland,a,b,e Liechtenstein,

Luxembourg,a,b,e

Malta,MonacoSan

Marino,a,e

Cyprus,eGibralter,IsleofMan,e

Switzerlanda,b

Indian Ocean Maldives,a,d Mauritius,a,c,e

Seychellesa,e

Middle East Bahrain, Jordan,a,b

Lebanona,b

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North Atlantic Bermuda

Pacific, South Pacific Cook Islands, Marshall Islands,a

Samoa,Nauru

Tonga,a,c,d Vanuatu, Niue

West Africa Liberia

Sources: Organization for Economic Development and Cooperation

(OECD), Towards Global Tax Competition,

2000; Dhammika Dharmapala and James R. Hines, “Which Countries

Become Tax Havens?” Journal of Public Economics, Vol. 93, 0ctober

2009, pp. 1058-1068; Tax Justice Network, “Identifying Tax Havens and

Offshore Finance Centers:

http://www.taxjustice.net/cms/upload/pdf/Identifying_Tax_Havens_Jul_0

7.pdf.

The OECD‟s “gray” list is posted at

http://www.oecd.org/dataoecd/38/14/42497950.pdf.

The countries in Table 1 are the same as the countries, with the exception

of Tonga, in a recent GAO Report, International Taxation: Large U.S.

Corporations and Federal Contractors with Subsidiaries in Jurisdictions

Listed as Tax Havens or Financial Privacy Jurisdictions, GAO-09-157,

December 2008.

2)Developments in the OECD Tax Haven List

The OECD list, the most prominent list, has changed over time. Nine of

the countries in Table 1 did not appear on the earliest OECD list. These

countries not appearing on the original list tend to be more developed

larger countries and include some that are members of the OECD (e.g.,

Switzerland and Luxembourg).

It is also important to distinguish between OECD‟s original list and its

blacklist. OECD subsequently focused on information exchange and

removed countries from a “blacklist if they agree to cooperate.” OECD

initially examined 47 jurisdictions and identified a number as not meeting

the criteria for a tax haven; it also initially excluded six countries with

advance agreements to share information (Bermuda, the Cayman Islands,

Cyprus, Malta, Mauritius, and San Marino). The 2000 OECD blacklist

included 35 countries; this list did not include the six countries eliminated

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due to advance agreement. The OECD had also subsequently determined

that three countries should not be included in the list of tax havens

(Barbados, the Maldives, and Tonga). Over time, as more tax havens

made agreements to share information, the blacklist dwindled until it

included only three countries: Andorra, Liechtenstein, and Monaco.

3) Features of Havens

-While almost any jurisdiction can have some tax haven elements, rarely

can it be defined as a `pure‟ tax haven. The central feature of a “haven” is

that its laws and other measures can be used to evade or avoid tax laws or

regulations of other jurisdictions.

-The minimization of tax liability is also an important element of tax

havens. This is a function of:

(i) “the use of paper or `shell‟ companies, trusts and other legal entities ;

(ii) routing and managing financial flows.”

-Generally, tax havens offer particular privileges, such as a zero or

significantly low tax rate to non-residents or legal entities owned by

foreign individuals.

-“Pure” tax havens have laws tailored to the aforesaid objectives, aiming

to attract the financial and corporate services business. Said sector

constitutes a large portion of their economic output.

-What is more, “secrecy” is at the core of their operations. There are two

types of “secrecy”:

(i) bank secrecy: limited access to banking/financial institution

information as far as tax collection is concerned;

(ii) secrecy of legal entities: lack of information availability on

companies, corporations, trusts, foundations, or other legal entities.

Concealed information includes (but is not limited to) data on

shareholders of a company, beneficiaries of a trust or individuals in

charge of controlling the use of assets and financial accounts.

As a conclusion, defining a tax haven may be more complicated than it

seems. Generally, low tax rates and the presence of financial and

legislative Secretiveness are phenomena that are present in the definition

of said entities.

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4)Method of Corporate Tax Avoidance

Multinationals companies are not taxed on income earned by foreign

subsidiaries until it is repatriated to the country parent as dividends,

although some passive and related company income that is easily

shifted is taxed currently under anti-abuse rules referred to as Subpart F.

(Foreign affiliates or subsidiaries that are majority owned country owned

are referred to as controlled foreign corporations, or CFCs, and many of

these related firms are wholly owned.) Taxes on income that is repatriated

(or, less commonly, earned by branches and taxed currently) are allowed

a credit for foreign income taxes paid. (A part of a parent company

treated as a branch is not a separate entity for tax purposes, and all

income is part of the parent‟s income.)

One method of shifting profits from a high-tax jurisdiction to a low-tax

one is to borrow more in the high-tax jurisdiction and less in the low-tax

one. This shifting of debt can be achieved without changing the overall

debt exposure of the firm. A more specific practice is referred to as

earnings stripping, where either debt is associated with related firms or

unrelated debt is not subject to tax by the recipient. As an example of the

former earnings stripping method, a foreign parent may lend to its U.S.

subsidiary. Alternatively, an unrelated foreign borrower not subject to tax

on U.S. interest income might lend to a U.S. firm.

The second major way that firms can shift profits from high-tax to low-

tax jurisdictions is through the pricing of goods and services sold between

affiliates. To properly reflect income, prices of goods and services sold

by related companies should be the same as the prices that would be paid

by unrelated parties. By lowering the price of goods and services sold by

parents and affiliates in high-tax jurisdictions and raising the price of

purchases, income can be shifted.

5)The Consequences: Estimated Tax losses

“Half of the world trade appears to pass through tax havens, although

they account for only 3% of the world‟s GDP. The value of the assets

held offshore, either tax-free or subject to minimal taxes, is at least USD

11 trillion -over one third of the world‟s annual GDP. Consequently, an

estimate for the U.S in 2010 put corporate tax losses in the range of $10

to $20 billion”13. That said, large-scale and reputable corporations do not

usually resort to “secrecy”. They are just engaged in “tax planning”,

hence altering the location of gains and losses via “transfer pricing” and

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advantageous lending/borrowing. Consequently, they are often

challenged by tax officials and have developed a response mechanism

in case of potential allegations.

A number of different approaches have been used to estimate corporate

tax avoidance, however, all of these approaches rely on data reported on

assets and income. For individual evasion, estimates are much more

difficult because the initial basis of the estimate is the amount of assets

held abroad whose income is not reported to the tax authorities. In

addition to this estimate, the expected rate of return and tax rate are

needed to estimate the revenue cost.

The Tax Justice Network has estimated a worldwide revenue loss for all

countries of $255 billion from individual tax evasion, basically using a

7.5% return and a 30% tax rate.These assumptions would be consistent

with a $33 billion loss for the United States using the $1.5

trillion figure. Their worldwide numbers are consistent with $11 trillion

in offshore wealth. Their more recent estimates place wealth at $21

trillion to $32 trillion, which would double or triple these estimates. Thus

the cost for the United States could be much larger approaching $100

billion.

6)Responding to the Financial Threat of “ Tax Havens”

At the 2002 European Social Forum in Florence, European NGOs and

social movements active in the field of financial criminality founded the

European Tax Justice Network (TJN)16 to combat tax evasion.

Such action was taken due to the then-recent economic globalization

which inhibited government ability to tax wealthy beneficiaries and large

corporations adequately. The TJN found that said globalization

tendencies have disturbing implications for democracy, public services as

well as individuals‟material and non-material well-being. At the 2013

World Social Forum (WSF) in Porto Alegre, the Network was expanded

globally by Northern and Southern American organizations. The WSF of

Mumbai in January 2004 extended it to Asia.

Currently, the Network needs support from Africa, so as to further

enhance its international character. The TJN aims to:

• Eliminate cross-border tax evasion;

• Limit the scope for tax avoidance;

• Publicize issues and educate interested parties;

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• Advocate said issues on an international level, within the UN, IMF,

OECD, EU, etc.;

• Encourage, support and coordinate national and regional activities;

• Create a network among interested parties around the world;

• Encourage research and debate on tax evasion-related matters.

In Porto Alegre, the TJN discussed a draft Declaration/Manifesto. The

document contains the following important strategic points:

• Eliminating cross-border tax evasion and limiting the possibility of tax

avoidance, so that large corporations and wealthy individuals pay tax in

line with their ability to do so;

• Increasing citizens‟ influence in the democratic control of taxation and

restricting the power of capital to dictate tax policy solely in its own

interest;

• Restoring a standardized tax treatment of different forms of income and

lifting tax incidence in the case of ordinary citizens;

• Removing the tax and secrecy incentives that encourage the outward

flow of investment capital from countries most in need of economic

development.

7)Using Offshore Accounts to evade Tax Obligations: the Issue of

Money Laundering

A basic barrier to identifying a regulatory breach, and, thus, a tax offence,

is the normative variety within jurisdictions. For instance, a certain

number of countries do not raise government revenues via income taxes.

Hence, income tax evasion is not considered a crime in said states.

In recent years, however, several inter-governmental bodies have sought

to create a climate where tax investigations can be conducted across

borders.

Consequently and, by the application of laws, these bodies‟ general

purpose is to treat any issue of financial fraud as not one of tax collection

but one of a criminal offence.

The aforesaid fact is one area of considerable concern but it pales in

comparison with the greater picture of how said inter-governmental

bodies are pressuring governments to change domestic laws. The issue is

simply one of sovereignty violation. In light of the above, efforts are

being made to discourage financial institutions in some countries from

being excessively involved in the affairs of their counterparts in others.

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Whether tax crimes are a predicate offence in the context of money

laundering legislation is a question of the express provision of the

counter-money laundering laws, or the interpretation of these laws by

Courts. In countries that have “all-crime” counter- money laundering

laws, it is almost certain that tax crimes will fall within the catch-all

provisions. As a conclusion tax offences fall on the border of what is and

what not “laundering”

Money Laundering Case:

If a person who is liable for the payment of a 40% marginal rate of

income tax receives a £100 salary and fails to declare it, then the £40 is

money "stolen" from the Treasury. Therefore, they do not launder the

£100 - they launder the £40. It is the tax evaded that is laundered.

One complication that makes this difficult to understand is that, in order

to retain the £40, the individual actually puts the whole £100 through the

laundering process. They have to demonstrate that they received £100

legitimately, in order to evade a payment of £40.

Another complication is that the £40 is said to have been "commingled"

with the remaining £60, thus “staining” the otherwise clean money.

Therefore, under the general principles of asset seizure, anything that is

purchased with the £60 may be subject to freezing or forfeiture.

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8)Basic Methods of Money Laundering Connected to Tax Evasion

• Wire transfers or electronic banking:

The primary tool of money launderers to move funds around in the

banking system. These moves can conceal the illicit origins of the funds

or just place the money where the launderers need them. Often, the funds

go through several banks and even different jurisdictions.

• Cash deposits:

Money launderers need to deposit cash advances to bank accounts prior

to wire transfers. Due to anti-money-laundering regulations, they often

„structure‟ the payments, i.e. break down large to smaller amounts. This

is also called „smurfing‟.

• Informal value Transfer systems (IVTS):

Money launderers need not rely on the banking sector. Other transfer

providers, such as the Hawala or Hindi are readily available to undertake

fund transfers. These systems consist of shops (mainly selling groceries,

phone cards or other similar items), which are also involved in transfer

services. IVTSs enable international fund transfers, as these shops are

present in several jurisdictions.

• Cash smuggling:

Money launderers might mail, Fedex or simply carry cash with them from

one region to another, or even to different jurisdictions.

• Gambling:

Casinos, horse races and lotteries are ways of legalizing funds. The

money launderer can buy (for „dirty‟ cash) winning tickets – or, in the

case of casinos, chips – and redeem the tickets or the chips in a „clean‟

bank check. Afterwards, the check can be easily inserted into in the

banking sector.

• Insurance policies:

Money launderers purchase single premium insurance (with dirty cash),

redeem early (and pay some penalty) in order to receive clean checks to

deposit. Longer-term premium payments might make laundering even

harder to detect.

• Securities:

Usually used to facilitate fund transfers, where underlying security deals

provide cover (and legitimate-looking reason) for transfers.

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• Business ownership:

Money might be laundered through legitimate businesses, where

laundering funds can be added to legitimate revenues. Cash-intensive

operations, such as restaurants, are especially well-suited for laundering.

• Shell corporations:

Money launderers might create companies exclusively to provide cover

for fund moves without legitimate business activities.

• Purchases:

Real estate or any durable good purchases can be used to launder money.

Typically, the item is bought for cash and resold for clean money, such as

bank checks.

• Credit card Advance payment:

Money launderers pay money in advance with “dirty” money, and receive

clean checks on the balance from the bank

• ATM operations:

Banks might allow other firms to operate their ATMs (i.e. to maintain and

fill them with cash). Money launderers fill ATMs with dirty cash, and

receive clean checks (for the cash withdrawn) from the bank.

9)Global Community Response

In 2009, the G20, pursuant to the pressing demands of a majority of

countries and having to deal with huge amounts of lost revenues, declared

zero tolerance towards tax havens. “The era of bank secrecy is over”,

officials leaving the G20 Summit stated. Despite the fact that measures

were taken to secure capital transparency through large-scale multilateral

cooperation, deposit data from the Bank of International Settlements

(BIS) indicates that bank accounts in tax havens still contained $2.7tn

(£1.7tn) in 2011 (almost identical to the 2007 amount).

Bank secrecy is still an issue and tax havens continue to thrive.

Information exchange systems have not, as of now, lived up to the

international community‟s expectations. Niels Johannesen and Gabriel

Zucman researching on BIS data stated: “so far, the G20 tax haven

crackdown has largely failed. Treaties have led to a modest relocation of

bank deposits among tax havens but have not triggered significant flows

of funds out of tax havens.” .

Despite their large number, fiscal information exchange agreements

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signed with tax havens do not provide information automatically, but

only “upon request”. “Each year, Her Majesty‟s Revenue and Customs

(HMRC) automatically receives millions of reports from British banks

about the amount their customers earned in interest and dividends. This

information makes tax evasion via UK bank accounts very hard.”

However, under an existing UK-Swiss agreement, for instance, the

HMRC can request information from Swiss authorities only if they have a

well-documented suspicion that a UK resident has evaded tax payments.

However, this information is difficult to obtain.

That said, ever since zero tolerance was declared, tax havens have signed

more than 700 “upon request” information exchange agreements. Why is

there, however, approximately as much cash in tax havens today as there

was several years ago? Bank deposits held by foreigners in tax havens

amounted to around $2,700 billion in 2009, according to the Bank for

International Settlements. This figure has slightly increased today.

Evidently, there has been no substantial repatriation of funds since the

London G20 in 2009.

Tax evaders, on the other hand, have been quick in responding to the

upheavals caused within the offshore operations world after 2009. They

have tried to secure their income and reserves from taxation by doing

exactly what they did before. The only difference is that, currently, they

tend to avoid tax heavens that have signed “upon request” information

exchange agreements.

Merely the fact that tax heavens accepted to discuss information

exchange systems ought to be considered as innovative. Quantitatively

speaking, however, progress is very modest to start discussing the “the

end of bank secrecy.” There are, however, feasible methods to

significantly improve tax collection. It takes political will from all

countries to encourage and convince tax havens to sign treaties

internationally. A truly global agreement would prevent tax evaders

from transferring their funds from haven to haven.

As an overall conclusion, it is the global community‟s responsibility to

earn the trust and support of tax havens. At the same time, it must use

diplomatic pressure in order to establish information exchange systems

among tax havens and pertinent international organizations. This would,

in turn result in a more efficient tax mechanism and an optimized tax

collection process.

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10)Questions a Resolution May Consider

1. Countries defined as tax havens and/or OFCs exhibit varying levels

of economic performance. Would standardized measures in

response to their activity be efficient or would a case-by-case

approach be more effective in comparison?

2. Should tax havens and OFCs each be addressed differently?

3. What are the main tax haven/OFC jurisdiction cases that should be

addressed via a Resolution?

4. How can multilateral information exchange agreements signed

with tax havens be further improved?

5. How can other members of the international community contribute

to the plan of action already proposed by the G20?

6. How does the presence of the 2nd Committee assist in the fight

against financial and fiscal crime?

7. What incentives could tax havens and OFCs be provided with so as

to further cooperate with other jurisdictions on said issues?

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11)Bibliography and Further Reading:

Briefing Paper: Tax Information Exchange Arrangements

http://www.taxjustice.net/cms/upload/pdf/Tax_Information_Exchange_A

rrangements.pdf

b.) Tax Justice Network – Closing the floodgates

http://www.taxjustice.net/cms/upload/pdf/Closing_the_Floodgates_-_1-

FEB-2007.pdf

c.)The Price of Offshore

http://www.taxjustice.net/cms/upload/pdf/Briefing_Paper_-

_The_Price_of_Offshore_14_MAR_2005.pdf

d.) Information Exchange: What would help developing countries now?

http://www.taxresearch.org.uk/Documents/InfoEx0609.pdf

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TOPIC B: Permanent sovereignty of the Palestinian people in the

Occupied Palestinian Territory, including East Jerusalem, and of the

Arab population in the occupied Syrian Golan over their natural

resources.

Introduction

The conflicts, disputes and failed peace talks from the Israeli occupied

regions continue to blight attempts to create a peace and stability in the

region. Although the jurisdiction of the ECOFIN committee does not

allow it to create a formal and binding peace agreement in the region, it

does have the power to lay the foundations of a greater peace agreement

in the future. If the ECOFIN committee can form an agreement regarding

the sovereignty natural resources in the region as well as liberties towards

those living in occupied territories to build a solid and sustainable

economy then, perhaps, further developments can be made in creating a

longer and greater peace in whatever way the Israelis and Palestinians

choose for themselves.

THE BACKGROUND

In June 1967, Israel formally annexed 70km2 of land from the West Bank

Palestinians, including East Jerusalem and many nearby villages.

Currently this land is home to nearly 500,000 Israelis. Under

international law these settlements are illegal, however Israel disputes

these claims. Furthermore, as Israel insists that this territory should be

under Israeli jurisdiction, yet this has not been recognised by the United

Nations or any other international body. To date, Israel has seized over

1000 km2 of Palestinian land, accounting for approximately 40% of the

West Bank and paced it within the jurisdictional boarders of local and

regional settlement councils.

DISPLACEMENT OF PALESTINIAN PEOPLE BY ISRAELI

POLICY

Since 1967, Israel has pursued a strategy of destabilising East Jerusalem.

This has included physically isolating East Jerusalem with the building of

„the Wall‟, land expropriation and demolition of houses, revoking the

residency and social benefits of Palestinians and unequal distribution of

municipal budgets to East Jerusalem. The combination of these effects

has led to a severe deterioration of living conditions for Palestinian

settlers in East Jerusalem. Leading human rights organisations also note

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that at least 28 Palestinian organisations operating in East Jerusalem

involved in educational, cultural and social activities have been closed

down by Israel.

The Israeli government continues to forcibly evict Palestinian settlers

from their homes in East Jerusalem, in clear violation of International

Human Rights Laws, contributing to the changing demographic of the

East Jerusalem population displacement, property destruction and

confiscation.

Inside the Gaza Strip, Israeli military operations have been the main

cause of forced displacement. The Israeli operation in November 2012

saw an estimated 3000 Palestinians displaced as their homes were either

destroyed or severely damaged. In January 2013, 139 structures,

including 59 residential structures, were severely damaged in 20 separate

incidents. There are also a number of cases where Israeli forces have

confiscated or destroyed emergency shelters and other emergency

response items.

THE WALL

Israel began building „the Wall‟ in 2002, citing security reasons including

the plan to stop the flow of potential suicide bombers into Israel from the

West Bank. In 2004 the ICJ concluded that “the Wall and its associated

regime are contrary to International law”. It stated that Israel was

obligated to cease construction of the wall with immediate effect. Israel

chose to ignore this advice, and construction continued.

The wall does not sun along recognised boarders, biut through the

West Bank and acts to actively encircle Israeli settlements; it is believed

that Israel will use the wall route as a de-facto annexation of the lands on

Israeli side. In total, this amounts to around 9.4% of West Bank territory

including some of their most fertile lands. Any Palestinian on the Israeli

side of „the Wall‟ is required to obtain a „permanent resident‟ permit from

Israeli authorities if they wish to continue to live there. Comparatively,

Israeli‟s and foreign visitors have unrestricted access to the same areas.

Palestinian farmers whose lands lie within the Israeli side of the wall

must apply for permits from Israel for access to their land as well as the

right to farm it themselves. They also must obtain permits for any

Palestinian workers on the land. Both sets of permits have proven to be

difficult to obtain from the Israeli authorities.

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EXPLOITATION, ENDANGERMENT AND DEPLETION OF

PALESTINIAN NATURAL RESOURSES

Israel controls almost all Palestinian water resources and exploits around

89% of the available water, leaving only 11% to the Palestinians. Recent

figures indicate a per capita consumption at below 70 litres per day for

Palestinians in the West Bank, while Israelis living in illegal settlements

enjoy access of up to 450 litres per day. Wells and springs that are

available to Palestinians are generally degraded, as the Israeli authorities

deny Palestinians permits for installing, upgrading or protecting their

water sources to provide sufficient quantities, while they simultaneously

continue to drill deeper and more efficient wells for Israeli use.

Furthermore, the construction of „the Wall‟ has damaged, destroyed or

made inaccessible vital sources of water, such as wells, cisterns and

springs, which, once damaged, can rarely be repaired or replaced owing

to planning restrictions. In addition, Palestinians are denied access to

what are supposed to be shared water resources, such as the Jordan River.

The targeting of water sanitation and hygiene facilities by the Israeli

authorities, including basic systems and facilities funded by international

donors, was increased in 2012. In the first nine months of 2012, 33 water

infrastructure facilities and 16 sanitation infrastructure facilities were

demolished, affecting over 1,500 persons.

The increased pressure on available water resources, combined with the

blockade and continued Israeli military strikes, has damaged water

resources, exacerbating the water crisis in the Gaza Strip. Palestinians in

Gaza have resorted to over extraction from the coastal aquifer. This has

caused the water table to drop below sea level and saline water and other

pollutants to intrude, rendering 90 to 95% of the water unfit for human

consumption. The four wastewater treatment plants in the Gaza Strip

have limited treatment capacity and efficiency.82 As a result; about 89

million litres of untreated or partially treated sewage are discharged

directly into the sea every day, posing a potentially serious health and

sanitation hazard. The sanitation crisis is further compounded by

approximately 40,000 cesspits in use in Gaza, of which 84 per cent are

manually emptied by household members owing to the lack of

connections to the sewage network. In 2012 alone, three children

drowned in pools of open sewage that cannot be adequately addressed as

long as the blockade hinders sanitation development.

In the West Bank, excluding East Jerusalem, only 31 per cent of

Palestinians are connected to the sewage network. Only one wastewater

treatment plant is operational owing to the Israeli authorities‟ refusal to

grant the necessary permits for the development of sanitation and

wastewater treatment infrastructure. As a result, almost 40 to 50 million

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cubic metres of sewage each year reach natural drainages as untreated

sewage. Israeli settlements in the West Bank, including East Jerusalem,

generate 54 million cubic metres of domestic wastewater annually, with

much of it entering the environment untreated. Apart from wastewater,

solid waste from the settlements is dumped without restriction on

Palestinian lands, fields and side roads, or is burned. Several polluting

industries were relocated from Israel to the West Bank, including

aluminium, tanning, plastics and electroplating, and do not abide by any

environmental laws. The industrial waste produced by these industries

and other Israeli industries located in the West Bank is disposed of on the

nearby Palestinian agricultural lands, thereby constituting a threat to the

environment. The wall also obstructs the flow of surface water, with

trapped water causing flooding and the degradation of adjacent

agricultural lands, especially since Palestinians are not permitted to

approach and clear the blockages in drainage pipes under the wall.

The construction of the wall has caused physical separation as well as

compaction of the soil, uprooting of trees and loss of agricultural land.

The uprooting of trees leaves soils exposed and exacerbates land

degradation. Farmers have been compelled to leave their lands barren

because of the wall, losing a valuable source of reliable income and

exposing the soil to erosion. The construction of the wall has also altered

and destroyed the natural habitats of a number of species, threatening

biodiversity and depleting ecosystems. Common floral and faunal

species are under serious threat of becoming rare, with some very rare

species potentially disappearing altogether. About 22 terrestrial animal

species are also under the threat of extinction, as the wall negatively

impacted habitat fragmentation and prevented the movement of mammals

for food and mating.

ECONOMIC & SOCIAL CONDITIONS INSIDE THE WEST

BANK

The economic growth in the West Bank and Gaza Strip continues to be

unsustainable and restrained by the policies of the Israeli occupation,

namely restrictions on movement and access. Reflecting the slowdown in

economic activity, unemployment in the West Bank and Gaza remained

stubbornly high and rose to 22.9% in the fourth quarter of 2012 from 21%

during the same period in 2011. This indicates that labour-intensive

tradable sectors are excessively and disproportionately impacted by

Israeli occupation policies.

Unemployment has been much higher in Gaza (averaging 33.5% in 2010

and 2011) than in the West Bank (17% in 2010 and 2011). By the end of

2012 this pattern persisted; the West Bank unemployment rate was 18.3

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per cent, while it stood at 32.2 per cent in Gaza. The persistence of high

unemployment in the West Bank can be attributed, among other things, to

low levels of private sector investment, particularly in the areas where

investment is highly restricted.

Overall wage growth lagged behind inflation, leaving 2011 average real

wages 8.4% lower than their level five years earlier. Real wages have

fallen over the past decade at all education levels. For example, among

those with five years of schooling, real wages were about 30% lower in

2009 compared to 1999 and among those with 16 to 18 years of

schooling; wages in 2009 were lower by 10%. In 2011 slightly more than

one of four (25.8%) individuals in the West Bank and Gaza were living

below the poverty line (17.8% in the West Bank and 38.8% in the Gaza

Strip). Similarly, about 12.9% of individuals were living below the deep

poverty line in 2011 (7.8% in the West Bank and 21.1% in the Gaza

Strip). One significant feature of poverty in the West Bank and Gaza is

that many Palestinians have consumption levels that are just above the

poverty line, implying that in the event of an economic shock they could

easily fall below the poverty line. Furthermore, more than 5,000

Palestinian businesses in Jerusalem have closed their doors since 1999.

The withholding and redirection by Israel of tax revenues it

collects on behalf of the Government of Palestine, and the decline in

donor support observed in 2011 and 2012 had a negative impact on

growth and exacerbated a deep fiscal crisis. In November and December

2012 Israel temporarily withheld Palestinian tax revenues as a punitive

step in light of the November vote admitting Palestine as a non-member

Observer State to the UNGA. This led to the delay of the payment of

salaries to civil servants, who have embarked on strikes in protest since

mid-December 2012.

The key long-term constraints blocking the emergence of a strong

economy are the loss of Palestinian natural resources, land and water to

occupation and settlements, and the isolation of Palestinian producers

from regional and global markets, leading to their limited ability to

procure production inputs and to export their goods and services.

FOOD SECURITY

The Food and agriculture organisation of the United Nations

(FAO) maintains that while food security levels have improved

throughout the Occupied Palestinian Territory, these gains are uneven and

temporary in nature. More than 40% of Palestinian households are

classified as food insecure or vulnerable to food insecurity. After

assistance, 1.3 million Palestinians (27% of Palestinian households) are

food insecure and unable to meet their basic food and household

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expenses. In the West Bank, post-assistance food insecurity still reaches

17%, while these rates in the Gaza Strip reach up to 44%. In the Gaza

Strip, UNRWA distributes food to over 700,000 refugees. Without

improvements in the economy, which can only come about with the

lifting of the blockade, that figure could rise to over 900,000. The World

Food Programme distributes food aid to an additional 300,000 persons

but even so, about 44% of recipients of food assistance remain food

insecure.

THE OCCUPATION OF THE GOLAN HEIGHTS

As with East Jerusalem, Israel took control of the Golan Heights

after the 6 day war in 1967. In 1981 Israel formally annexed the area. In

response, the United Nations Security Council passed resolution 497

ruled this Israeli annexation as null and void and its status as part of Israel

would not be recognised under International Law. Today, an estimated

19,000 Israeli‟s live in the Golan area in 33 settlements which accounts

for roughly half of the population of the area with the other half being

Syrians who have remained.

Israel persists in implementing legal and administrative measures to

provide socioeconomic incentives, security, infrastructure and social

services to settlers residing in the occupied Syrian Golan (which amounts

to the illegal transfer of its population into occupied territory), whereas

the five remaining Syrian villages of the occupied Syrian Golan are

deprived of physical space for organic growth. In the village of Majdal

Shams, approximately 11,000 Syrian citizens live in 1,200 houses. As

new construction is not authorized, houses are either renovated or new

floors are added, without the requisite permits, to accommodate the

growth of these households.

Syrian residents of the occupied Syrian Golan suffer from inequality

regarding access to land, housing and basic services. The Citizenship

Law continues to impact family ties for Syrians in the occupied Golan,

which continue to be disrupted as a consequence of the territory‟s illegal

annexation in 1981.

High levels of taxes and restrictions on the use of water put a significant

burden on Syrian farmers, who are thus in an unequal and disadvantaged

position. Israeli settlements continued to receive the allotted share of 750

cubic metres of water per 1km2 of land, while the Syrian producers

received 200 cubic metres. The cost of the water supply for agriculture to

the Syrian farmers is approximately four times more than to the settlers.

Water shortages usually result in the diversion of water resources to the

settlements and, consequently, in some reduction of water provision to

the Syrian farmers. In February 2013 Israeli media reported the intention

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of the Israel authorities to authorize drilling for oil in the occupied Golan

Heights by issuing a license to prospect to a United States-Israeli energy

company.

CONCLUSION

Israeli settlements in the Occupied Palestinian Territory and the occupied

Syrian Golan not only are illegal but also constitute an obstacle to peace.

The international community should exert all possible efforts to ensure

the implementation of international law and relevant United Nations

resolutions. These efforts should include providing support for initiatives

that seek to end the Israeli violations of international law in the occupied

territories, especially Israeli settlement activities, as a first step towards a

final and just resolution to the conflict that ends the occupation and

allows the attainment of the inalienable rights of the Palestinian people,

as guaranteed by international law.