The United Nations, Israel and the Palestinian Authority have reached a stop-gap deal to allow reconstruction work to begin in the war-ravaged Gaza Strip, UN Middle East envoy Robert Serry has said.

The deal on Tuesday came as a World Bank report outlined dire economic prospects for Palestinians after the July-August conflict with Israel.

The UN-sponsored reconstruction agreement could help curb Palestinian economic deterioration in Gaza, which since 2007 has been controlled by Hamas.

Serry described the deal as temporary, and urged its speedy implementation.

"[This] must get up and running without delay, as an important step towards the objective of lifting all remaining closures, and a signal of hope to the people of Gaza," he said, predicting that donor confidence would also be boosted.

Serry said the UN brokered the deal "to enable work at the scale required in the Strip, involving the private sector in Gaza and giving a lead role to the Palestinian Authority in the reconstruction effort."

The agreement would provide "security assurances through UN monitoring that these materials will not be diverted from their entirely civilian purpose," Serry added, apparently alluding to Israeli demands that cement and other imports not be used to build Hamas command bunkers or cross-border attack tunnels.

The 50-day Israeli military campaign in July-August on Gaza has left at least 2,100 Palestinians dead, most of them civilians, including hundreds of children. On the Israeli side, 66 Israeli soldiers and five civilians were killed in battles with Palestinian fighters.

Israeli bombing turned large areas of the Mediterranean enclave of 1.8 million people to rubble.

Shrinking economy

Palestinian President Mahmoud Abbas said in a recent report that reconstruction work would cost $7.8 billion - two and a half times Gaza's gross domestic product - including $2.5 billion for the reconstruction of homes.

The World Bank said on Tuesday that the war would contribute to a reversal of seven years of growth in the Palestinian economy, now expected to shrink by nearly four percent this year.

The bank also said the downturn was also a result of restrictions on the flow of goods into Gaza by Israel and neighboring Egypt, and a drop in foreign aid to the Palestinian Authority.

Gaza’s economic growth, spurred largely by international donor funds, has been decelerating since 2012 and slowed to less than 2 percent in 2013 but could rebound strongly in 2015 if Gaza reconstruction gets under way, the bank said.

"The conflict and humanitarian tragedy in Gaza has made an already struggling Palestinian economy worse and put further stress on the fiscal situation of the Palestinian Authority (PA)," the report said.

Egypt will host a donors' conference on October 12 to raise reconstruction funds, and donor nations to the Palestinian Authority are due to convene on the sidelines of the UN General Assembly next week in New York.

PHOTO CAPTION

Israeli bombing of the Gaza Strip in July-August turned large areas of the Palestinian enclave to rubble [Reuters]

Aljazeera