Authority - even more degraded than in the West Bank. An anticipated
Israeli withdrawal from the Gaza Strip in 2005 may offer some
medium-term opportunities for economic growth. The beginning of the
second intifadah in September 2000 sparked an economic downturn,
largely the result of Israeli closure policies; these policies,
which were imposed in response to security interests in Israel,
disrupted labor and commodity relationships with the Gaza Strip. In
2001, and even more severely in 2003, Israeli military measures in
Palestinian Authority areas resulted in the destruction of much
capital plant, the disruption of administrative structure, and
widespread business closures. Including the West Bank, the UN
estimates that more than 100,000 Palestinians out of the 125,000 who
used to work in Israel or in joint industrial zones have lost their
jobs. International aid of $2 billion to Gaza Strip and the West
Bank in 2004 prevented the complete collapse of the economy and
allowed some reforms in the government's financial operations.
Meanwhile unemployment has continued at half the labor force.
ARAFAT's death in 2004 leaves open more political options that could
affect the economy.

Georgia
Georgia's main economic activities include the cultivation
of agricultural products such as citrus fruits, tea, hazelnuts, and
grapes; mining of manganese and copper; and output of a small
industrial sector producing alcoholic and nonalcoholic beverages,
metals, machinery, and chemicals. 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, achieving positive GDP growth and curtailing
inflation. However, the Georgian Government has suffered from
limited resources due to a chronic failure to collect tax revenues.
Georgia's new government is making progress in reforming the tax
code, enforcing taxes, and cracking down on corruption. Georgia also
suffers from energy shortages; it privatized the T'bilisi
electricity distribution network in 1998, but payment collection
rates remain low, both in T'bilisi and throughout the regions. The
country is pinning its hopes for long-term growth on its role as a
transit