Economic output in the Gaza Strip declined by about one-third between 1992 and 1996. This downturn was attributed to Israeli closure policies and, to a lesser extent, corruption and mismanagement by Yasser Arafat. Economic development has been hindered by Israel refusing to allow the operation of a sea harbour. A harbour was planned to be built in Gaza City with help from France and The Netherlands, but the project was bombed by Israel in 2001. Israel said that the reason for bombing was that Israeli settlements were being shot at from the construction site at the harbour.[84][85] As a result, international transports (both trade and aid) had to go through Israel, which was hindered by the imposition of generalized border closures. These also disrupted previously established labor and commodity market relationships between Israel and the Strip. A serious negative social effect of this downturn was the emergence of high unemployment.
Backyard industry
Israel's use of comprehensive closures decreased over the next few years. In 1998, Israel implemented new policies to ease security procedures and allow somewhat freer movement of Gazan goods and labor into Israel. These changes led to three years of economic recovery in the Gaza Strip, disrupted by the outbreak of the al-Aqsa Intifada in the last quarter of 2000. Before the second Palestinian uprising in September 2000, around 25,000 workers from the Gaza Strip (about 2% of the population) worked in Israel on daily basis.[86]
The Second Intifada led to a steep decline in the economy of Gaza, which was heavily reliant upon external markets. Israel—which had begun its occupation by helping Gazans to plant approximately 618,000 trees in 1968, and to improve seed selection—over the first 3-year period of the second intifada, destroyed 10 percent of Gazan agricultural land, and uprooted 226,000 trees.[87] The population became largely dependent on humanitarian assistance, primarily from UN agencies.[88]