largely the result of the Israeli closure policies - the imposition
of border closures in response to security incidents in Israel -
which disrupted labor and commodity market relationships. In 2001,
and even more severely in 2002, Israeli military measures in
Palestine Authority areas resulted in the destruction of much
capital plant, the disruption of administrative structure, and
widespread business closures. Including the Gaza Strip, the UN
estimates that more than 100,000 Palestinians out of the 125,000 who
used to work in Israeli settlements, or in joint industrial zones,
have lost their jobs. International aid of $2 billion to the West
Bank and Gaza strip in 2004 prevented the complete collapse of the
economy and allowed some reforms in the government's financial
operations. Meanwhile, unemployment has continued at more than half
the labor force. ARAFAT's death in 2004 leaves open more political
options that could affect the economy.

Western Sahara
Western Sahara depends on pastoral nomadism, fishing,
and phosphate mining as the principal sources of income for the
population. The territory lacks sufficient rainfall for sustainable
agricultural production, and most of the food for the urban
population must be imported. All trade and other economic activities
are controlled by the Moroccan Government. Moroccan energy interests
in 2001 signed contracts to explore for oil off the coast of Western
Sahara, which has angered the Polisario. Incomes and standards of
living in Western Sahara are substantially below the Moroccan level.

World
Global output rose by 4.9% in 2004, led by China (9.1%),
Russia (6.7%), and India (6.2%). The other 14 successor nations of
the USSR and the other old Warsaw Pact nations again experienced
widely divergent growth rates; the three Baltic nations continued as
strong performers, in the 7% range of growth. Growth results posted
by the major industrial countries varied from a small gain in Italy
(1.3%) to a strong gain by the United States (4.4%). The developing
nations also varied in their growth results, with many countries
facing population increases that erode gains in output. Externally,
the nation-state, as a bedrock economic-political institution, is
steadily losing control over international flows of people, goods,
funds, and technology. Internally, the central government often
finds its control over reso