At 10th anniversary, a far poorer Palestinian Authority

When the doors of the Intercontinental Hotel opened here four summers ago, rooms were sold out and the managers had to turn people away. Today, it does not have a single guest and is kept running by a handful of people who watch the minutes tick by in crushing silence.

"When it's empty like this, every hour feels like a year," moans desk manager Jawdat Barakat, who earns a fourth of what he did in the days when the hotel was bustling. Many clients spilled in from the Oasis Casino next door - a joint Israeli-Palestinian investment which has since been shuttered. When the hotel opened, it employed 184 Palestinians. Only about 25 work here now.

Tourism was once the most promising sector of the Palestinian economy. Now business in Jericho, which bills itself as the oldest city in the world, has itself become fossilized.

Jericho's empty streets are a mirror of the downward spiral across the West Bank and Gaza Strip. Ten years ago this week, Palestinian leader Yasser Arafat gained major civilian powers for the first time as part of the Oslo Peace Accords. The Palestinian Authority (PA) soon gained the power to collect taxes, and run health, welfare, and tourism facilities, taking on the trappings of state- hood. Jericho was the first city from which Israeli forces withdrew, and, some say, the most keen to do business with Israelis.

But since the start of the intifada in late September 2000, the economy has been caught in a vicious cycle. In response to suicide bombings, Israel closed its borders to Palestinian workers, reoccupied cities it had turned over to the PA, and clamped down on Palestinian travel between cities. The latter, say people whose income was dependent on the tourism industry, is the primary reason why Jericho's economy is now virtually bust.

Most indicators point to a worsening of economic conditions - and an ever-rougher road for the PA leadership to survive its worst political crisis. Yet, while prominent Palestinians have become increasingly critical of life under the PA, decrying it as "lawless" and "chaotic," it continues to function as a de facto government - and the largest single employer in the Palestinian economy.

"The PA has managed to pay salaries ... that's the only symbol that it's still functioning," says Mohammed Shtayyeh, the director of the Palestinian Economic Council for Development and Reconstruction (PECDAR) in Ramallah.

The Intercontinental in Jericho wasn't alone in making huge layoffs. Approximately 90,000 people who were working in the Palestinian private sector before the intifada have since lost their jobs. But the loss of wages earned in Israel has hurt the most. Some 166,000 Palestinians used to work in Israel before the intifada, compared to 2,411 who do now, according to PECDAR, which was founded as the economic organ of the PA and is still the conduit for disbursing international donor funds. The salaries of those who worked in Israel brought up to $1 billion a year in remittances into the Palestinian economy.

Now the World Bank puts Palestinian unemployment at 28 percent - PECDAR says it's more than 50 percent. Per capita income, which in 2000 was about $2,000 a year for the West Bank and $1,600 for the Gaza Strip, has dropped to $950 and $650 respectively, PECDAR says. This year, for the first time, half of the Palestinian population will be considered to be living in poverty, according the World Bank's most recent study.

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