The United Nations warned on Monday that Israeli restrictions on the Hamas-run Gaza Strip are pushing the local economy to the brink of collapse with production reduced to 11 percent of capacity.
Published as world donors met in Paris to agree a record aid package to stabilise the Palestinian economy, it was the fourth international report in a week about the difficulties in Gaza since Hamas seized power in June.
"The private sector in the Gaza Strip is on the verge of collapse with no scope for recovery unless the strict imposed closure regime on the Strip is lifted," the United Nations Development Programme (UNDP) said.
Its conclusions are based on the results of a survey conducted during the first week of December when the agency interviewed the owners of 319 private businesses in the Gaza Strip over the telephone. Gaza's economy is producing only 11 percent of its total estimated capacity, the report said-down from 46 percent before Hamas's violent seizure of power and from 76 percent before it won parliamentary elections in 2006.
Since the June take-over, Israel has tightened already tough restrictions on the territory, banning nearly all exports, limiting imports to humanitarian goods and slashing the amount of fuel it supplies to the walled-off enclave.
The measures are aimed at halting rocket attacks launched from Gaza and at putting pressure on Hamas, which is pledged to Israel's destruction and is considered a terrorist organisation by Israel and the West.
But the measures have caused private sector revenues to plummet, with average monthly sales per business dropping from 10,000 dollars (7,000 euros) before the June take-over to 3,000 dollars today, according to the UNDP. "Since June, 78 percent of the surveyed businesses have laid off a considerable number of their employees," the report said.
The report comes as Palestinian president Mahmud Abbas hoped to win pledges for 5.6 billion dollars (3.85 billion euros) at a major donors' conference in Paris to underwrite a Palestinian state and stave off severe hardship.
Palestinian development plans include funding for projects in Gaza, but Abbas no longer has any power there and Israel has said Palestinian economic recovery must go hand in hand with improvements in security.