Reading_ECOFIN_STUDY GUID

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READING INTERNATIONAL

MODEL UNITED NATIONS

2ndAnnual Conference

29th

November1stDecember

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 ofthe Economic and Financial committee at Reading International ModelUnited Nations conference 2013. Together with yourselves and my co-chair this committee will have the chance to face some of the mostimportant topics that have an impact on the human financial life. Thetopics for the Economic and Financial Committee this year revolvearound emerging trends that will have an immense impact on the globaleconomy.

Firstly we have the opportunity to discuss the topic of taxevasion and tax havens. Recent events have demonstrated that countriesfrom all over the world face a growing problem in collecting taxes tofund 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 thewelfare state. Though markets have become more integrated, taxstructures have remained nation-specific. Open borders have createdexaggerated tax competition, which in turn has led to a race to the bottomin taxation of companies and high incomes.

Furthermore we will talk about the Permanent sovereignty ofthe Palestinian people in the Occupied Palestinian Territory, includingEast Jerusalem, and of the Arab population in the occupied Syrian Golanover their natural resources. Israeli settlements in the Occupied

Palestinian Territory and the occupied Syrian Golan not only are illegalbut also constitute an obstacle to peace. The international communityshould exert all possible efforts to ensure the implementation ofinternational law and relevant United Nations resolutions. These effortsshould include providing support for initiatives that seek to end the Israeliviolations of international law in the occupied territories, especiallyIsraeli settlement activities, as a first step towards a final and justresolution to the conflict that ends the occupation and allows theattainment 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 experienceis your participation. Your vision and your professionalism will make theECOFIN one of the best committees of Reading Mun. It is our

responsibility to guide you and we are at your disposal. Please do nothesitate to contact us we are here to help you to answer to your questionsand 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 thisNovember.

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 decisionto move headquarters to New York City in the United States. It is thesecond of six main committees that make up the General Assembly. The

Economic and Financial Committee foremost focuses discussion on theeconomic and financial policies regarding growth, trade and developingsectors of the world economy. The second committee also takes intoconsideration special situations regarding LDCs, Less DevelopedCountries, and LLDCs, Land-Locked Less Developed Countries.

Structure and ResponsibilitiesECOFIN 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 openfor all 192 member states of the United Nations to attend.The Second Committee works to draft resolutions that seem to fit theneeds of all of its members best. ECOFIN takes great consideration

when coming upon special cases like LDCs and LLDCs when in sessionand is able to take action upon the resolutions. To ensure efficiencyduring session, the second committee is continuously updating itsworking methods and practices to ensure better debates and discussion onthe floor.

TOPIC A: Deali ng with tax havens and combating money launder ing

and tax evasion through i nternational cooperation.

1)Definition of the tax havens

There is no precise definition of a tax haven. The OECD initially definedthe 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 byresearchers. Also, a number of other jurisdictions have been identified ashaving tax haven characteristics.

Formal Lists of Tax Havens

The OECD created an initial list of tax havens in 2000. A similar list wasused in S. 396, introduced in the 110th Congress, which would treat firmsincorporated in certain tax havens as domestic companies; the only

difference between this list and the OECD list was the exclusion of theU.S. Virgin Islands from the list in S. 396. Legislation introduced in the111th Congress to address tax haven abuse (S. 506, H.R. 1265) uses adifferent list taken from IRS court filings, but has many countries incommon. The definition by the OECD excluded low-tax jurisdictions,some of which are OECD members, that were thought by many to be taxhavens, such as Ireland and Switzerland. These countries were includedin 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 bygeographic location. These tax havens tend to be concentrated in certainareas, including the Caribbean and West Indies and Europe, locationsclose 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 andNevis, 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,eCyprus,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,NauruTonga,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 CountriesBecome Tax Havens? Journal of Public Economics, Vol. 93, 0ctober2009, pp. 1058-1068; Tax Justice Network, Identifying Tax HavensandOffshore Finance Centers:http://www.taxjustice.net/cms/upload/pdf/Identifying_Tax_Havens_Jul_07.pdf.The OECDs gray list is posted athttp://www.oecd.org/dataoecd/38/14/42497950.pdf.The countries in Table 1 are the same as the countries, with the exceptionof Tonga, in a recent GAO Report, International Taxation: Large U.S.

Corporations and Federal Contractors with Subsidiaries in JurisdictionsListed 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 ofthe countries in Table 1 did not appear on the earliest OECD list. Thesecountries 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 OECDs original list and itsblacklist. OECD subsequently focused on information exchange andremoved countries from a blacklist if they agree to cooperate. OECDinitially examined 47 jurisdictions and identified a number as not meetingthe criteria for a tax haven; it also initially excluded six countries withadvance agreements to share information (Bermuda, the Cayman Islands,

Cyprus, Malta, Mauritius, and San Marino). The 2000 OECD blacklistincluded 35 countries; this list did not include the six countries eliminated
http://www.taxjustice.net/cms/upload/pdf/Identifying_Tax_Havens_Jul_07.pdfhttp://www.taxjustice.net/cms/upload/pdf/Identifying_Tax_Havens_Jul_07.pdfhttp://www.taxjustice.net/cms/upload/pdf/Identifying_Tax_Havens_Jul_07.pdfhttp://www.oecd.org/dataoecd/38/14/42497950.pdfhttp://www.oecd.org/dataoecd/38/14/42497950.pdfhttp://www.oecd.org/dataoecd/38/14/42497950.pdfhttp://www.taxjustice.net/cms/upload/pdf/Identifying_Tax_Havens_Jul_07.pdfhttp://www.taxjustice.net/cms/upload/pdf/Identifying_Tax_Havens_Jul_07.pdf


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due to advance agreement. The OECD had also subsequently determinedthat three countries should not be included in the list of tax havens(Barbados, the Maldives, and Tonga). Over time, as more tax havensmade 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, rarelycan it be defined as a `pure tax haven. The central feature of a haven isthat its laws and other measures can be used to evade or avoid tax laws orregulations of other jurisdictions.

-The minimization of tax liability is also an important element of taxhavens. 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 orsignificantly low tax rate to non-residents or legal entities owned byforeign individuals.

-Pure tax havens have laws tailored to the aforesaid objectives, aimingto attract the financial and corporate services business. Said sectorconstitutes a large portion of their economic output.

-What is more, secrecy is at the core of their operations. There are twotypes of secrecy:

(i)bank secrecy: limited access to banking/financial institutioninformation as far as tax collection is concerned;

(ii) secrecy of legal entities: lack of information availability oncompanies, corporations, trusts, foundations, or other legal entities.Concealed information includes (but is not limited to) data onshareholders of a company, beneficiaries of a trust or individuals incharge of controlling the use of assets and financial accounts.

As a conclusion, defining a tax haven may be more complicated than itseems. Generally, low tax rates and the presence of financial andlegislative 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 foreignsubsidiaries until it is repatriated to the country parent as dividends,

although some passive and related company income that is easilyshifted is taxed currently under anti-abuse rules referred to as Subpart F.(Foreign affiliates or subsidiaries that are majority owned country ownedare referred to as controlled foreign corporations, or CFCs, and many ofthese related firms are wholly owned.) Taxes on income that is repatriated(or, less commonly, earned by branches and taxed currently) are alloweda credit for foreign income taxes paid. (A part of a parent companytreated as a branch is not a separate entity for tax purposes, and allincome is part of the parents income.)

Onemethod of shifting profits from a high-tax jurisdiction to a low-taxone is to borrow more in the high-tax jurisdiction and less in the low-taxone. This shifting of debt can be achieved without changing the overalldebt exposure of the firm. A more specific practice is referred to asearnings stripping, where either debt is associated with related firms orunrelated debt is not subject to tax by the recipient. As an example of theformer 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 betweenaffiliates. To properly reflect income, prices of goods and services sold

by related companies should be the same as the prices that would be paidby unrelated parties. By lowering the price of goods and services sold byparents and affiliates in high-tax jurisdictions and raising the price ofpurchases, income can be shifted.

5)The Consequences: Estimated Tax losses

Half of the world trade appears to pass through tax havens, althoughthey account for only 3% of the worlds GDP. The value of the assetsheld offshore, either tax-free or subject to minimal taxes, is at least USD11 trillion -over one third of the worlds annual GDP. Consequently, anestimate for the U.S in 2010 put corporate tax losses in the range of $10to $20 billion13. That said,large-scale and reputable corporations do notusually 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 oftenchallenged by tax officials and have developed a response mechanismin case of potential allegations.

A number of different approaches have been used to estimate corporatetax avoidance, however, all of these approaches rely on data reported onassets and income. For individual evasion, estimates are much moredifficult because the initial basis of the estimate is the amount of assetsheld abroad whose income is not reported to the tax authorities. Inaddition to this estimate, the expected rate of return and tax rate areneeded to estimate the revenue cost.The Tax Justice Network has estimated a worldwide revenue loss for allcountries of $255 billion from individual tax evasion, basically using a7.5% return and a 30% tax rate.These assumptions would be consistentwith a $33 billion loss for the United States using the $1.5trillion figure. Their worldwide numbers are consistent with $11 trillionin offshore wealth. Their more recent estimates place wealth at $21trillion to $32 trillion, which would double or triple these estimates. Thusthe 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 andsocial movements active in the field of financial criminality founded theEuropean Tax Justice Network (TJN)16 to combat tax evasion.

Such action was taken due to the then-recent economic globalizationwhich inhibited government ability to tax wealthy beneficiaries and largecorporations adequately. The TJN found that said globalizationtendencies have disturbing implications for democracy, public services as

well as individualsmaterial and non-material well-being. At the 2013World Social Forum (WSF) in Porto Alegre, the Network was expandedglobally by Northern and Southern American organizations. The WSF ofMumbai in January 2004 extended it to Asia.Currently, the Network needs support from Africa, so as to furtherenhance 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. Thedocument contains the following important strategic points:

Eliminating cross-border tax evasion and limiting the possibility of taxavoidance, so that large corporations and wealthy individuals pay tax inline with their ability to do so; Increasing citizens influence in the democratic control of taxation andrestricting the power of capital to dictate tax policy solely in its owninterest; Restoring a standardized tax treatment of different forms of income andlifting tax incidence in the case of ordinary citizens; Removing the tax and secrecy incentives that encourage the outwardflow of investment capital from countries most in need of economicdevelopment.

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

A basic barrier to identifying a regulatory breach, and, thus, a tax offence,is the normative variety within jurisdictions. For instance, a certainnumber 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 soughtto 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 collectionbut one of a criminal offence.The aforesaid fact is one area of considerable concern but it pales incomparison with the greater picture of how said inter-governmental

bodies are pressuring governments to change domestic laws. The issue issimply 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 moneylaundering legislation is a question of the express provision of thecounter-money laundering laws, or the interpretation of these laws byCourts. In countries that have all-crime counter- money laundering

laws, it is almost certain that tax crimes will fall within the catch-allprovisions. As a conclusion tax offences fall on the border of what is andwhat not laundering

Money Laundering Case:

If a person who is liable for the payment of a 40% marginal rate ofincome tax receives a 100 salary and fails to declare it, then the 40 ismoney "stolen" from the Treasury. Therefore, they do not launder the100 - they launder the 40. It is the tax evaded that is laundered.One complication that makes this difficult to understand is that, in orderto retain the 40, the individual actually puts the whole 100 through thelaundering process. They have to demonstrate that they received 100legitimately, 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 fundsor just place the money where the launderers need them. Often, the fundsgo through several banks and even different jurisdictions.

Cash deposits:Money launderers need to deposit cash advances to bank accounts priorto wire transfers. Due to anti-money-laundering regulations, they oftenstructure the payments, i.e. break down large to smaller amounts. Thisis also called smurfing.

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

phone cards or other similar items), which are also involved in transferservices. 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 fromone region to another, or even to different jurisdictions.

Gambling:Casinos, horse races and lotteries are ways of legalizing funds. Themoney launderer can buy (for dirty cash) winning tickets or, in thecase of casinos, chipsand redeem the tickets or the chips in a clean

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

Insurance policies:Money launderers purchase single premium insurance (with dirty cash),redeem early (and pay some penalty) in order to receive clean checks todeposit. Longer-term premium payments might make laundering evenharder 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, wherelaundering funds can be added to legitimate revenues. Cash-intensiveoperations, such as restaurants, are especially well-suited for laundering.

Shell corporations:Money launderers might create companies exclusively to provide coverfor 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 receiveclean checks on the balance from the bank

ATM operations:Banks might allow other firms to operate their ATMs (i.e. to maintain andfill them with cash). Money launderers fill ATMs with dirty cash, andreceive 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 ofcountries and having to deal with huge amounts of lost revenues, declaredzero tolerance towards tax havens. The era of bank secrecy is over,officials leaving the G20 Summit stated. Despite the fact that measureswere 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 theinternational communitys expectations. Niels Johannesen and GabrielZucman researching on BIS data stated: so far, the G20 tax havencrackdown 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, butonly upon request. Each year, Her Majestys Revenue and Customs(HMRC) automatically receives millions of reports from British banksabout 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, theHMRC can request information from Swiss authorities only if they have awell-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 signedmore than 700 upon request information exchange agreements. Why isthere, however, approximately as much cash in tax havens today as therewas several years ago? Bank deposits held by foreigners in tax havensamounted to around $2,700 billion in 2009, according to the Bank forInternational Settlements. This figure has slightly increased today.Evidently, there has been no substantial repatriation of funds since theLondon G20 in 2009.Tax evaders, on the other hand, have been quick in responding to theupheavals caused within the offshore operations world after 2009. Theyhave tried to secure their income and reserves from taxation by doingexactly what they did before. The only difference is that, currently, theytend to avoid tax heavens that have signed upon request informationexchange agreements.

Merely the fact that tax heavens accepted to discuss informationexchange systems ought to be considered as innovative. Quantitativelyspeaking, however, progress is very modest to start discussing the theend of bank secrecy. There are, however, feasible methods tosignificantly improve tax collection. It takes political will from allcountries to encourage and convince tax havens to sign treatiesinternationally. A truly global agreement would prevent tax evadersfrom transferring their funds from haven to haven.

As an overall conclusion, it is the global communitys responsibility toearn the trust and support of tax havens. At the same time, it must usediplomatic pressure in order to establish information exchange systemsamong tax havens and pertinent international organizations. This would,in turn result in a more efficient tax mechanism and an optimized taxcollection process.


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10)Questions a Resolution May Consider

1. Countries defined as tax havens and/or OFCs exhibit varying levelsof economic performance. Would standardized measures in

response to their activity be efficient or would a case-by-caseapproach 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 signedwith tax havens be further improved?

5. How can other members of the international community contributeto the plan of action already proposed by the G20?

6. How does the presence of the 2nd Committee assist in the fightagainst financial and fiscal crime?

7. What incentives could tax havens and OFCs be provided with so asto 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_Arrangements.pdf

b.) Tax Justice NetworkClosing the floodgateshttp://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 occupiedregions continue to blight attempts to create a peace and stability in theregion. Although the jurisdiction of the ECOFIN committee does notallow it to create a formal and binding peace agreement in the region, itdoes have the power to lay the foundations of a greater peace agreementin the future. If the ECOFIN committee can form an agreement regardingthe sovereignty natural resources in the region as well as liberties towardsthose living in occupied territories to build a solid and sustainableeconomy then, perhaps, further developments can be made in creating alonger and greater peace in whatever way the Israelis and Palestinianschoose for themselves.

THE BACKGROUND

In June 1967, Israel formally annexed 70km2of land from the West Bank

Palestinians, including East Jerusalem and many nearby villages.Currently this land is home to nearly 500,000 Israelis. Underinternational law these settlements are illegal, however Israel disputesthese claims. Furthermore, as Israel insists that this territory should beunder Israeli jurisdiction, yet this has not been recognised by the United

Nations or any other international body. To date, Israel has seized over1000 km

2of Palestinian land, accounting for approximately 40% of the

West Bank and paced it within the jurisdictional boarders of local andregional 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 ofthe Wall, land expropriation and demolition of houses, revoking theresidency and social benefits of Palestinians and unequal distribution ofmunicipal budgets to East Jerusalem. The combination of these effects

has led to a severe deterioration of living conditions for Palestiniansettlers in East Jerusalem. Leading human rights organisations also note


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that at least 28 Palestinian organisations operating in East Jerusaleminvolved in educational, cultural and social activities have been closeddown by Israel.The Israeli government continues to forcibly evict Palestinian settlers

from their homes in East Jerusalem, in clear violation of InternationalHuman Rights Laws, contributing to the changing demographic of theEast Jerusalem population displacement, property destruction andconfiscation.Inside the Gaza Strip, Israeli military operations have been the maincause of forced displacement. The Israeli operation in November 2012saw an estimated 3000 Palestinians displaced as their homes were eitherdestroyed or severely damaged. In January 2013, 139 structures,including 59 residential structures, were severely damaged in 20 separateincidents. There are also a number of cases where Israeli forces haveconfiscated or destroyed emergency shelters and other emergencyresponse 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 theWest Bank. In 2004 the ICJ concluded that the Wall and its associatedregime are contrary to International law. It stated that Israel wasobligated to cease construction of the wall with immediate effect. Israelchose to ignore this advice, and construction continued.

The wall does not sun along recognised boarders, biut through theWest Bank and acts to actively encircle Israeli settlements; it is believedthat Israel will use the wall route as a de-facto annexation of the lands onIsraeli side. In total, this amounts to around 9.4% of West Bank territory

including some of their most fertile lands. Any Palestinian on the Israeliside of the Wall is required to obtain a permanent resident permit fromIsraeli authorities if they wish to continue to live there. Comparatively,Israelis and foreign visitors have unrestricted access to the same areas.Palestinian farmers whose lands lie within the Israeli side of the wallmust apply for permits from Israel for access to their land as well as theright to farm it themselves. They also must obtain permits for anyPalestinian workers on the land. Both sets of permits have proven to bedifficult 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. Recentfigures indicate a per capita consumption at below 70 litres per day forPalestinians in the West Bank, while Israelis living in illegal settlementsenjoy access of up to 450 litres per day. Wells and springs that areavailable to Palestinians are generally degraded, as the Israeli authoritiesdeny Palestinians permits for installing, upgrading or protecting theirwater sources to provide sufficient quantities, while they simultaneouslycontinue to drill deeper and more efficient wells for Israeli use.Furthermore, the construction of the Wall has damaged, destroyed ormade inaccessible vital sources of water, such as wells, cisterns andsprings, which, once damaged, can rarely be repaired or replaced owingto planning restrictions. In addition, Palestinians are denied access towhat are supposed to be shared water resources, such as the Jordan River.The targeting of water sanitation and hygiene facilities by the Israeliauthorities, including basic systems and facilities funded by internationaldonors, was increased in 2012. In the first nine months of 2012, 33 waterinfrastructure facilities and 16 sanitation infrastructure facilities weredemolished, affecting over 1,500 persons.The increased pressure on available water resources, combined with the

blockade and continued Israeli military strikes, has damaged waterresources, exacerbating the water crisis in the Gaza Strip. Palestinians inGaza have resorted to over extraction from the coastal aquifer. This hascaused 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 humanconsumption. The four wastewater treatment plants in the Gaza Striphave limited treatment capacity and efficiency.82 As a result; about 89million litres of untreated or partially treated sewage are dischargeddirectly into the sea every day, posing a potentially serious health and

sanitation hazard. The sanitation crisis is further compounded byapproximately 40,000 cesspits in use in Gaza, of which 84 per cent aremanually emptied by household members owing to the lack ofconnections to the sewage network. In 2012 alone, three childrendrowned in pools of open sewage that cannot be adequately addressed aslong as the blockade hinders sanitation development.In the West Bank, excluding East Jerusalem, only 31 per cent ofPalestinians are connected to the sewage network. Only one wastewatertreatment plant is operational owing to the Israeli authorities refusal to

grant the necessary permits for the development of sanitation andwastewater treatment infrastructure. As a result, almost 40 to 50 million


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cubic metres of sewage each year reach natural drainages as untreatedsewage. Israeli settlements in the West Bank, including East Jerusalem,generate 54 million cubic metres of domestic wastewater annually, withmuch of it entering the environment untreated. Apart from wastewater,

solid waste from the settlements is dumped without restriction onPalestinian lands, fields and side roads, or is burned. Several pollutingindustries were relocated from Israel to the West Bank, includingaluminium, tanning, plastics and electroplating, and do not abide by anyenvironmental laws. The industrial waste produced by these industriesand other Israeli industries located in the West Bank is disposed of on thenearby Palestinian agricultural lands, thereby constituting a threat to theenvironment. The wall also obstructs the flow of surface water, withtrapped water causing flooding and the degradation of adjacentagricultural lands, especially since Palestinians are not permitted toapproach and clear the blockages in drainage pipes under the wall.The construction of the wall has caused physical separation as well ascompaction of the soil, uprooting of trees and loss of agricultural land.The uprooting of trees leaves soils exposed and exacerbates landdegradation. Farmers have been compelled to leave their lands barren

because of the wall, losing a valuable source of reliable income andexposing the soil to erosion. The construction of the wall has also alteredand 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 rarespecies potentially disappearing altogether. About 22 terrestrial animalspecies are also under the threat of extinction, as the wall negativelyimpacted habitat fragmentation and prevented the movement of mammalsfor food and mating.

ECONOMIC & SOCIAL CONDITIONS INSIDE THE WEST

BANK

The economic growth in the West Bank and Gaza Strip continues to beunsustainable and restrained by the policies of the Israeli occupation,namely restrictions on movement and access. Reflecting the slowdown ineconomic activity, unemployment in the West Bank and Gaza remainedstubbornly high and rose to 22.9% in the fourth quarter of 2012 from 21%during the same period in 2011. This indicates that labour-intensivetradable sectors are excessively and disproportionately impacted byIsraeli 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 of2012 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 highunemployment in the West Bank can be attributed, among other things, tolow levels of private sector investment, particularly in the areas whereinvestment is highly restricted.

Overall wage growth lagged behind inflation, leaving 2011 average realwages 8.4% lower than their level five years earlier. Real wages havefallen over the past decade at all education levels. For example, amongthose with five years of schooling, real wages were about 30% lower in2009 compared to 1999 and among those with 16 to 18 years ofschooling; wages in 2009 were lower by 10%. In 2011 slightly more thanone 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 GazaStrip). 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 GazaStrip). One significant feature of poverty in the West Bank and Gaza isthat many Palestinians have consumption levels that are just above the

poverty line, implying that in the event of an economic shock they couldeasily fall below the poverty line. Furthermore, more than 5,000Palestinian businesses in Jerusalem have closed their doors since 1999.

The withholding and redirection by Israel of tax revenues itcollects on behalf of the Government of Palestine, and the decline indonor support observed in 2011 and 2012 had a negative impact ongrowth and exacerbated a deep fiscal crisis. In November and December

2012 Israel temporarily withheld Palestinian tax revenues as a punitivestep in light of the November vote admitting Palestine as a non-memberObserver State to the UNGA. This led to the delay of the payment ofsalaries to civil servants, who have embarked on strikes in protest sincemid-December 2012.The key long-term constraints blocking the emergence of a strongeconomy are the loss of Palestinian natural resources, land and water tooccupation and settlements, and the isolation of Palestinian producersfrom 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 improvedthroughout the Occupied Palestinian Territory, these gains are uneven andtemporary in nature. More than 40% of Palestinian households areclassified as food insecure or vulnerable to food insecurity. After

assistance, 1.3 million Palestinians (27% of Palestinian households) arefood insecure and unable to meet their basic food and household


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expenses. In the West Bank, post-assistance food insecurity still reaches17%, while these rates in the Gaza Strip reach up to 44%. In the GazaStrip, UNRWA distributes food to over 700,000 refugees. Withoutimprovements in the economy, which can only come about with the

lifting of the blockade, that figure could rise to over 900,000. The WorldFood Programme distributes food aid to an additional 300,000 personsbut even so, about 44% of recipients of food assistance remain foodinsecure.

THE OCCUPATION OF THE GOLAN HEIGHTS

As with East Jerusalem, Israel took control of the Golan Heightsafter the 6 day war in 1967. In 1981 Israel formally annexed the area. Inresponse, the United Nations Security Council passed resolution 497ruled this Israeli annexation as null and void and its status as part of Israelwould not be recognised under International Law. Today, an estimated19,000 Israelis live in the Golan area in 33 settlements which accountsfor roughly half of the population of the area with the other half beingSyrians who have remained.Israel persists in implementing legal and administrative measures to

provide socioeconomic incentives, security, infrastructure and socialservices to settlers residing in the occupied Syrian Golan (which amountsto the illegal transfer of its population into occupied territory), whereas

the five remaining Syrian villages of the occupied Syrian Golan aredeprived of physical space for organic growth. In the village of MajdalShams, approximately 11,000 Syrian citizens live in 1,200 houses. Asnew construction is not authorized, houses are either renovated or newfloors are added, without the requisite permits, to accommodate thegrowth of these households.Syrian residents of the occupied Syrian Golan suffer from inequalityregarding access to land, housing and basic services. The CitizenshipLaw continues to impact family ties for Syrians in the occupied Golan,

which continue to be disrupted as a consequence of the territorys illegalannexation 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 disadvantagedposition. Israeli settlements continued to receive the allotted share of 750cubic metres of water per 1km2of land, while the Syrian producersreceived 200 cubic metres. The cost of the water supply for agriculture tothe 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 tothe 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 GolanHeights by issuing a license to prospect to a United States-Israeli energycompany.

CONCLUSION

Israeli settlements in the Occupied Palestinian Territory and the occupiedSyrian Golan not only are illegal but also constitute an obstacle to peace.The international community should exert all possible efforts to ensurethe implementation of international law and relevant United Nationsresolutions. These efforts should include providing support for initiativesthat seek to end the Israeli violations of international law in the occupiedterritories, especially Israeli settlement activities, as a first step towards afinal and just resolution to the conflict that ends the occupation andallows the attainment of the inalienable rights of the Palestinian people,as guaranteed by international law.

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