mprehensive closures has decreased and, in 1998,
Israel implemented new policies to reduce the impact of closures and
other security procedures on the movement of Palestinian goods and
labor. These changes fueled an almost three-year long economic
recovery in the West Bank and Gaza Strip; real GDP grew by 5% in
1998 and 6% in 1999. Recovery was upended in the last quarter of
2000 with the outbreak of Palestinian violence, which triggered
tight Israeli closures of Palestinian self-rule areas and a severe
disruption of trade and labor movements.

Georgia:
Georgia's economy has traditionally revolved around Black
Sea tourism; cultivation of citrus fruits, tea, and grapes; mining
of manganese and copper; and output of a small industrial sector
producing wine, metals, machinery, chemicals, and textiles. The
country imports the bulk of its energy needs, including natural gas
and oil products. Its only sizable internal energy resource is
hydropower. Despite the severe damage the economy has suffered due
to civil strife, Georgia, with the help of the IMF and World Bank,
has made substantial economic gains since 1995, increasing GDP
growth and slashing inflation. The Georgian economy continues to
experience large budget deficits due to a failure to collect tax
revenues. Georgia also still suffers from energy shortages; it
privatized the distribution network in 1998, and deliveries are
steadily improving. The country is pinning its hopes for long-term
recovery on the development of an international transportation
corridor through the key Black Sea ports of P'ot'i and Bat'umi. The
growing trade deficit, continuing problems with tax evasion and
corruption, and political uncertainties cloud the short-term
economic picture.

Germany:
Germany possesses the world's third most technologically
powerful economy after the US and Japan, but structural market
rigidities - including the substantial non-wage costs of hiring new
workers - have made unemployment a long-term, not just a cyclical,
problem. Germany's aging population, combined with high
unemployment, has pushed social security outlays to a level
exceeding contributions from workers. The modernization and
integration of the eastern German economy remains a costly long-term
problem, with annual transfers from western Germany amounting to
roughly $70 billion. Growth picked up to 3% in 2000, largely due to