To say that things are getting worse in Gaza, one of the poorest places on Earth, is a bit like saying it is getting hotter in hell. But over the past few years, things have gotten significantly worse in this sliver of Palestinian territory along the Mediterranean Sea—with alarming implications for the prospect of a comprehensive Middle East peace.

Since September 2000, when the current Palestinian uprising against Israeli occupation began, the Gazan economy has entered what the World Bank calls “one of the deepest recessions in modern history.” The joblessness rate among males aged 15-24 is 43 percent and as many as 70 percent of job market entrants are unemployed. These conditions are creating a generation of isolated and disaffected youth.

While Gaza’s precipitous economic decline predates the intifada, it has been greatly accelerated by Israel’s policy of “closure,” according to the World Bank and the United Nations. Closure prohibits Palestinians and their goods not only from entering Israel, Egypt and Jordan, but also from moving between Gaza and the West Bank—and, often, from moving within Gaza itself. These “internal” closures are imposed, in part, to protect the Jewish settlements in Gaza and the settler bypass roads linking the settlements to Israel proper. The growth rate of Gaza settlements has nearly tripled to 4.3 percent since Israeli Prime Minister Ariel Sharon announced his plan to “disengage” from the strip in December 2003.

In addition to economic blight, Gaza has been buffeted by continuing Israeli incursions and a newly intensified power struggle among the competing security services of the Palestinian Authority and various political factions. This conflict has climaxed in recent weeks in a spasm of kidnappings, resignations and attacks on PA officials and institutions.

Israel’s stated plan to withdraw from the Gaza settlements in 2005 will do little to reverse the downward spiral in the territory. Under Sharon’s plan, Israel will retain control of Gaza’s borders, seas and natural resources. Given these conditions, World Bank officials note the disengagement plan will have “no positive impact on the economy at all.” In fact, recent World Bank projections show that the poverty rate in Gaza will increase from the current 64 percent to an even more shocking 72 percent—disengagement or no disengagement.

The uncertainty created by the proposed unilateral Israeli withdrawal has also unnecessarily fomented infighting among security services and militant factions, with ordinary Gazans caught in the middle. It is therefore unsurprising that according to a recent poll, 64 percent of Palestinians do not support Sharon’s withdrawal plan.

Arafat’s leadership has only compounded the crisis. He is a corrupt leader who has concentrated power and abused human rights for his own narrow political interests. The same could be said of some figures challenging Arafat. Clearly, a new generation of Palestinian leadership is required—and desired by the Palestinian people. However, reform cannot emerge under conditions of occupation.

The Bush administration supports unilateral Israeli “disengagement” from Gaza, going so far as to sanction Israeli settlements in the West Bank and deny the right of return for Palestinian refugees to encourage Israel to carry out the limited plan. For this ill-advised position, the United States has paid an incredible price in international public opinion, only to see the promised withdrawal made conditional and delayed even further.

Bush’s stated commitment to a Palestinian state should begin with a demand that Israel withdraw completely, giving the Palestinians control of their borders, resources and economy. An Israeli withdrawal from Gaza—as well as the West Bank—is not only required under international law, but is a necessary first step for peace and self-determination for both peoples.