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Across the West Bank it is olive harvesting season. And usually this is a joyous occasion. Not this season. Things feel more grim because the Palestinian economy, according to some analysts, is on the verge of collapse.

Here's NPR's Anthony Kuhn.

ANTHONY KUHN, BYLINE: Amal Karajeh and her husband, Basem, comb through the leaves and branches of an olive tree in the yard of their house in the West Bank village of Deir Ibzie.

(SOUNDBITE OF OLIVES FALLING)

KUHN: The plump green olives rain down on the ground, where they're collected in plastic sheets and buckets. Both of the Karajehs have taken time off from their jobs to harvest the olives. She's employed by the Palestinian Authority's statistics bureau; he works for a local telecommunications company.

Amal Karajeh says the government is behind in paying her salary. She says people around her are eating less meat, they're in a lot of debt and they're angry because of the financial stress they're under.

AMAL KARAJEH: (Through Translator) If the government let them, people would explode in its face. But people are restraining themselves, because of the land and because of the olives. Before, employees just waited for their salaries. That's the wrong strategy. They must go back to farming the land. They must depend on themselves.

KUHN: Her husband, Basem, explains that most of the family's 100 olive trees are next to the Israeli settlement of Dolev. He says that since the second Palestinian uprising in 2000, the Israelis have only allowed him to harvest and tend to his olive trees once a year. If he goes more often, he says, the Israelis may arrest or attack him.

BASEM KARAJEH: (Foreign language spoken)

KUHN: Ten or 15 years ago, before the coming of the Palestinian Authority, he says, during the Israeli period, life was easier. This problem will never be solved, he says, shaking his head.

Khalil Shiha is director general of the Palestinian Agricultural Development Association, which helps Palestinian farmers. He says the olive harvest serves not only as an economic safety net; it also symbolizes his people's ancient ties to the land.

KHALIL SHIHA: The olive tree is a symbolic tree for peace and for freedom. This is why Palestinians insisted in cultivating the olive trees and trying to expand the cultivating of these trees everywhere.

(SOUNDBITE OF OLIVES IN OLIVE PRESS)

KUHN: Local farmers empty bags of olives into a press to make oil in Ramallah. Ramallah is the West Bank's administrative center and the base for the Palestinian Authority, which some observers believe is on the verge of bankruptcy. Until recently, foreign aid helped cover the Palestinian Authority's roughly $1 billion annual deficit.

But Tel Aviv University economist Yitzhak Gal says the donors have lost hope of progress in the Israeli-Palestinian peace process, and donations have dropped by half since mid-2010.

YITZHAK GAL: They're fed up of pouring more and more and more money, and no hope. Because if Israel is not ready to change this set of impediments, there is no chance for sustainable economic development in Palestine, so they will be dependent on external aid forever.

KUHN: One of the biggest problems is that Israeli policy forces West Bank Palestinians to import food, fuel and other necessities from Israel at Israeli prices. Israel's per capita GDP of more than $30,000 per year is about 10 times that of the West Bank. Gal says that Palestine ranks among the region's poorest economies.

GAL: Taking into consideration real cost of living, Palestine's economy ranks much below Jordan, much below Egypt, more or less like Yemen, Sudan, these kind of countries.

KUHN: But, Gal says, the West Bank's links with the Israeli economy that are problem, Gal says, is the dependence on Israel that's the problem. For example, the 1993 Oslo Accords authorize Israel to collect sales taxes and duties on imports into Palestine, and then give the revenue to the Palestinian Authority.

But on Sunday Israel said it would withhold $100 million of those revenues, apparently to punish the Palestinian Authority for successfully upgrading its status at the U.N. last week. It's this sort of punishment, Gal worries, that could be the final straw for the tottering Palestinian economy.

Anthony Kuhn, NPR News, Jerusalem.

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