The future looks grim for the lawless and impoverished Gaza Strip unless its internal security disputes are quickly resolved and its economy is not frozen out by Israel if it pulls out as planned in 2005.
The Gaza Strip, occupied by Israel since 1967 along with the West Bank and east Jerusalem, is one of the most densely populated places on earth.
According to latest World Bank figures, 70 percent of the 1.3-million population are living below the poverty line and unemployment stands at 44 percent. Around 60 percent of the population is under 18 years of age.
With the growing economic crisis, Israeli-imposed restrictions on internal travel, regular deadly incursions by the Israeli army and its own intra-Palestinian power struggles, Gaza is in trouble.
"The Palestinian economy remains severely depressed compared to its pre-intifada level four years ago," a recent World Bank report said.
Palestinian gross domestic product is 23 percent lower than in 1999. Taking population growth into account, real GDP per capita is some 35 below the level before the Palestinian intifada or uprising broke out in September 2000.
"An unemployment rate of about 25 percent in 2003, compared to 10 percent at the eve of the intifada, further reflects the fact that the Palestinian economy functions well below its potential," the report said.
"Young people are particularly hit by unemployment: 37 percent of young people were unemployed at the end of 2003, against 14 percent on the eve of the intifada in September 2000," it added.
Stability and access to world markets are the key to Gaza's future success, said Lionel Brisson, director of Gaza operations for the UN Relief and Works Agency for Palestine Refugees (UNRWA), which provides essential aid to some 635,000 Palestinians in Gaza.
"To see it positively I have some difficulty unless both conditions are met," Brisson told AFP.
The repossession of the 21 Israeli settlements in Gaza after the planned 2005 pullout of Israel troops and the 8,000 settlers there, will not give the territory a massive financial boost, Brisson said.
"The only possible way for Gaza to develop is through an indispensable link with the Israeli economy."
But Raji Sourani, director of the Gaza-based Palestinian Centre for Human Rights, said Israeli Prime Minister Ariel Sharon's Gaza disengagement plan was "not an end to occupation, rather a continuing denial of human rights."
"The plan envisages no Palestinian workers in Israel, no import-export through the port, and no connection with the West Bank through Israel.
"Gaza will not be part of the Israeli economy. Ultimately it will be an appendix to the Egyptian economy. This can only worsen unemployment and poverty and will lead to a mass exodus of Palestinians from Gaza, (reducing the population) from the current 1.3 million to half a million in two or three years time."
More than 45,000 Palestinians from Gaza worked in Israel before the intifada, "providing the main source of income and supporting around 450,000 persons," said Brisson. "Now there are none."
"And domestically, who is likely to invest in a country with no sea port, no airport and no cross-border access into Israel?"
The Erez industrial estate, which once housed up to 800 factory units and employed thousands of Palestinians, has also been shut down and relocated across the border in Israel.