by Sam Bahour
20 May 2019
President Donald Trump is taking part in an all-out attempt to batter the Palestinians into political surrender, and his weapon of choice is money. In full coordination with the Israeli government, he is overseeing a global campaign to ensure funds supporting Palestinians are drying up. Everything from Palestinian hospitals in East Jerusalem to health care and education for Palestinian refugees are on the receiving end of the cuts. In the bullseye of this attack is the Palestinian government.
So when CNN reported on Sunday that the Trump administration would be hosting an “economic workshop” in Bahrain to encourage capital investment in the West Bank, Gaza, and the region — the first part of the president’s so-called “Deal of the Century” — it sounded like more of the same.
The plan is said to address four major components: infrastructure, industry, empowering and investing in people, and governance reforms “to make the area as investible as possible.” While on paper all of this sounds fine and well, it may very well be the first step in the collapse of Trump’s peace plan.
The unforeseen silver lining is that the U.S. has lost any remaining influence it had on Palestinian society. As the U.S.-monopolized peace process was driven to total collapse, past U.S. administrations understood that keeping USAID funds operating in the West Bank and Gaza Strip gave the U.S. some sort of financial clout, after losing any semblance of political credibility. Now that Trump has closed the USAID mission in Tel Aviv, which previously served the West Bank, Palestinians are free to think without a noose of U.S. funding around their necks.
The Trump administration is not letting up. With its newly-announced workshop, it seems the White House will be dangling billions of dollars to get the Palestinians to accept the plan.
Speaking last week at the Washington Institute about the administration’s upcoming Middle East peace plan, President Trump’s son-in-law and senior adviser, Jared Kushner, said, “I think we developed a good business plan.” As someone who formulates real business plans for a living, I understand that if one works according to misguided assumptions, even the best of business plans will fall flat on their faces.
Kushner seems to be missing the point entirely: Israel is addicted to Palestine’s economy, and without overcoming that addiction, there is no chance for any grand “business plan” to succeed. Moreover, his “in-depth operational document,” which he calls “realistic, executable…and will lead to both sides being much better off” is borderline hallucinatory, given the fact that it dismisses the need for the establishment of a Palestinian state.
Israel’s determination to maintain full control of the Palestinian economy for over five decades has become a major hurdle in getting it to realize that its occupation must come to an end. And like recovery from other addictions, this one will require external support. That support needs to be based on third states holding Israel accountable to save it from itself, rather than building a “business plan” to try and paint life under the boot of Israeli military occupation as somehow beautiful.
Here, in addition to human rights, we speak of economic rights, too: our rights to our economic assets — land, water, natural gas wells, our Dead Sea and Mediterranean Sea shores, borders, and the like — and the ability to employ them within a Palestinian-defined economic development plan, free from Israeli or donor agendas. Dumping more humanitarian and developmental funds into Palestinian coffers will not solve the conflict.
Structural dependency
From the start of the military occupation of the West Bank and Gaza Strip 51 years ago, Israel systematically linked the territory’s economy to that of its own. Before the Oslo Accords, this forced linkage was most apparent in Israel’s restriction of Palestinian business and its control of the freedom of movement of Palestinian labor. For nearly a decade prior to Oslo, Israel issued work permits to tens of thousands of Palestinian workers to allow them to enter Israel to find work. Palestinian labor was found in Israeli construction, agriculture, hotels and the like.
Treated as a second-class labor force, Palestinian workers were exposed to conditions that allowed Israeli businesses to benefit from lower wages without being subject to Israeli labor law. Many Palestinian workers even found themselves building the illegal Israeli settlements that threaten the very existence of Palestinian communities. For Palestinians, being able to work — anywhere — while under Israeli occupation was a matter of survival. For many, it still is.
The Israeli occupation authorities also levied taxes on the occupied and used a portion of these taxes to flood the Palestinian areas with Israeli-made infrastructure and goods. This created further Palestinian dependence on the occupier’s economy.
The Oslo Accords were followed by an economic arrangement called the Protocol on Economic Relations, signed in Paris on May 4, 1994. Just as the Oslo agreement itself kept intact Israeli control over all key aspects of Palestinian life, the Paris Protocol institutionalized the occupier’s economic interest as part of what was meant to be a framework for a peace agreement.
Following the Oslo agreements, the role of state donors in funding Palestinian “development” turned into an international underwriting of the Israeli occupation, reducing and often removing the financial costs of military occupation. Knowingly or not, donor funding had an accomplice-type role in allowing the situation to reach the place it is in today.
Although donor money fueled the Palestinian economy, at no time did donors view the development of the private sector as the highest priority in building a viable Palestinian society. Donors assisted in the creation of sector trade associations and provided a certain level of assistance, but a strategic approach to the private sector, namely reducing structural dependency on Israel, never materialized.
Many in the international community were quick to criticize the growing number of Palestinian public sector workers, but few, if any, had the foresight to see that a strong Palestinian private sector was the only way to provide an alternative to public employment. Those who did realize this ignored it for the most part, since it would mean challenging the Israeli occupation and the restrictions placed on the Palestinian economy that come with it.
All the while, Israel was going forward with its unilateral settlement enterprise, which severely damaged the Palestinian private sector and left the Palestinian Authority playing catch up for its own survival. This left the Palestinian private sector to deal on its own with Israeli restrictions on Palestinian society.
After being structurally linked to the Israeli market for decades, Israel’s decision to unilaterally separate — or “disengage,” as it was called — from the Palestinians left the private sector with few options other than following the Israeli plans. Initially, Israel attempted to eliminate Palestinian labor employed in Israel, which increased the unemployment rate in the West Bank and Gaza overnight. After applying this shock to the marketplace, Israel decided to re-engage Palestinian labor and today issues as many permits as it had during the decade before Oslo, perhaps even more. All this in the service of the Israeli economy — not that of Palestine.
Furthermore, the separation wall’s land grab has separated Palestinian farmers from their lands, causing great pressure on Palestinian agriculture. Add this to the constant restrictions Israel has placed on land and water, the results of which can be seen in Palestine’s GDP, where agriculture has dropped from 12 percent prior to the Oslo Accords to below 5 percent today.
The foundation of a future state
The viability of any future Palestinian economy must come within the context of a sustainable private sector, one that can create sustainable job opportunities and develop competitive products and services for the local market first, and then for export. The Palestinian private sector must be able to absorb Palestinian university graduates in a knowledge economy, while also absorbing the tens of thousands of construction workers who Israel uses to serve its economy. Similarly, a viable Palestinian economy must be able to feed itself, which requires land and water resources to be free from Israeli control.
The international community has a historic responsibility to Palestinians, especially after so many years of observing the Israeli occupation from afar, and a decade of footing the bill as Israeli violations continue unabated. The challenge today is to remove Israeli military occupation and allow the Palestinian private sector to assume its natural role of becoming the foundation of a future state.