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Uprising losses to Israel declining

JERUSALEM - The Palestinian uprising in the occupied West Bank and Gaza Strip cost Israel up to $1-billion in direct losses in its first two years but now has much less impact on the economy, Israel's largest bank says. Bank Hapoalim said in a newsletter Sunday that its researchers estimated total direct costs from lost growth and production at between $800-million and $1-billion dollars - $600-million to $700-million of it during the first year.

The revolt against Israeli rule erupted in December 1987. In the first full year construction and tourism were hit hard and army reservists were forced to serve longer.

"But these effects faded during 1989, and their influence on the overall economy, at less than 1 percent of gross national product, became marginal," the bank said in a monthly report.

The uprising, or intifada in Arabic, meant a loss of about 1.5 percent of Israel's $42-billion dollar economy in 1988 and between 0.5 and 1 percent last year, the bank said.

A bank spokeswoman said Monday that Israel's gross domestic product grew only 1.1 percent last year - down from 1.7 percent in 1988. She said this was caused mainly by government austerity and the restructuring of industry.

Palestinian strike days have cut the number of Arab workers entering the Jewish state, where they form much of the building labor force, and Israeli-made goods have been boycotted in the occupied territories.

Israeli troop strength in the territories has fallen from the early months of the uprising but remains higher than before the revolt began.

The bank said its researchers found "the situation in all these sectors improved in 1989 compared to 1988 as Israeli producers and employers learned to make alternative arrangements, and the labor market responded to the new conditions."

Palestinian absenteeism fell, and other workers were replaced with Israelis or new machinery, the bank said. The higher costs were offset by improved quality and productivity.

But the bank said there were other costs to the economy, which is suffering low growth and unemployment at a 22-year-high of more than 10 percent, caused by the revolt. The bank said "indirect costs, such as the political and economic uncertainty generated by the unrest," negatively affected investment decisions.