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Economic Peace Before a Political Solution in Israel, Palestine

Following dismayed reactions to Secretary of State John Kerry’s Israel/West Bank visit, both sides debate prioritizing economic peace, writes Adnan Abu Amer.
Abdullah Yaseen, a freelance web programmer, works on his laptop at al-Najah University campus in the West Bank city of Nablus April 8, 2013. Fledgling Palestinian high-tech firms hope they can now help revitalise the economy, making the West Bank more resistant to Israeli controls on land and the movement of goods and people and less dependent on fickle foreign aid flows, which are blighting the public sector. Picture taken April 8, 2013. To match Feature PALESTINIANS-HITECH/     REUTERS/Mohamad Torokman (

During his recent trip to Ramallah and Tel Aviv, US Secretary of State John Kerry failed to achieve any real breakthroughs in the stagnant negotiations between the Palestinians and the Israelis, despite the satisfaction expressed by the two sides on the round of talks that he had with Palestinian President Mahmoud Abbas and Israeli Prime Minister Benjamin Netanyahu. On the one hand, they do not want to cut the remaining, tenuous ties between them. On the other, they are extremely keen not to anger the US administration at the beginning of its second term.

Official silence

Kerry declared at the beginning of his third visit in less than two weeks that at this stage his efforts will be focused on making progress in the economic situation in the West Bank by make use of all the abilities and development assistance organizations. According to Kerry, improving the economic situation will create a favorable atmosphere for political progress while economic recovery will help create an atmosphere of trust between the two parties.

It should be noted that in one way or another, the US suggestion means that it accepts the orientation declared by Netanyahu four years ago, which first and foremost provided for “economic peace” between the two peoples. Therefore, on the eve of US President Barack Obama's recent visit to Israel, Israel released Palestinian tax funds and the US administration pledged to offer half a billion dollars to contribute to calming the situation in the West Bank following the strikes that have taken hold there, and may spin out of control and turn into a popular uprising.

Despite the initiative made by the Palestine Liberation Organization, the reference of political power [in Palestine] to reject any ideas to achieve “economic peace” with Israel, on the grounds that “the peace process is political par excellence,” cannot be deemed as a definitive rejection. In fact, it was not announced by senior negotiators such as Saeb Erekat, or official speakers such as Bassem Abbas, which means that the Palestinian official silence on the “economic development” project advanced by Kerry can be regarded as a form of acceptance for the next stage!

However, there is a Palestinian conviction according to which promoting economic support in order to make progress in political talks is a proven failure, because one cannot establish a strong economy under the occupation, while the [main] issue is primarily about the national liberation of Palestinians living under occupation and the return of those [living] in exile.

Moreover, the Palestinian Authority (PA) is suffering from successive financial crises in the [struggle] to pay the salaries of public employees. The Paris Agreement is also very unfair and unbalanced as it made the Palestinian and Israeli economies interdependent, giving Israel the right to withhold tax funds that are levied on goods flowing into the Palestinian territories, thus turning these funds into a tool to exert pressure. In other words, it can withhold and release these funds whenever it wishes.

This prompted Munib al-Masry, the prominent Palestinian businessman in the West Bank, to declare that Palestinians will not accept economic peace as long as their territories are occupied. Masry added that prioritizing economic peace undermines the credibility of US efforts and deprives them of their integrity. What is required is to end the occupation, not to achieve economic development that would prolong it and waive the legal and political rights of the Palestinian people, as any economic development that is acceptable by the Palestinians would be one that resists the occupation and works to end it.

Failure in advance

For further clarification, the theory of "economic peace" calls for building business relationships between Israel and the West Bank in a bid to set the stage for a future political settlement. Israel needs calm and security, whereas the Palestinians need economic prosperity.

According to a political document issued by the Peres Center for Peace, economic improvement should walk hand in hand with the political process through an administration headed by a special Israeli minister, one who carries out joint projects with the Palestinians in coordination with the international community, the Quartet and the PA, and with the support of a team of economic experts, all of whom work to establish and implement economic projects in the Palestinian territories.

These projects include agricultural, industrial, tourism and collaborative projects, in addition to employment centers near major cities — so as to exempt Palestinians from working inside Israel — facilitating the transit through the crossings and trying to find foreign investment.

In this context, Palestinians recall that in August 2009, the [recently] resigned Prime Minister Salam Fayyad announced that he would “build, not establish, a state” through economic and development projects, after realizing that the negotiations over the political solution would not prosper. Thus, his strategy has been based on marketing “his plan” through the implementation of a thousand projects, such as digging wells, planting trees, establishing residential buildings and building the city of Rawabi — a plan that was unprecedented in its welcome by Israel.

For this purpose, a meeting was held between Silvan Shalom, the Israeli minister for regional development, and Bassem Khoury, the Palestinian minister of economy, in which they discussed mitigating the ban on the entry of Palestinian businessmen to Israel, increasing the rate of meat exports and dairy product imports from the West Bank to Israel, and establishing common industrial complexes.

Nevertheless, all of the aforementioned has failed to dispel fears. Moreover, the rejection of Fayyad’s economic plan was not on the part of Palestinians alone, as some Israeli circles also did not believe in its effectiveness. According to Dr. Shlomo Brom, a researcher at the Institute for National Security Studies at the University of Tel Aviv, the plan calling to provide Palestinians with economic prosperity instead of negotiating with the authority is not based on realistic foundations; it is impossible to separate the economic situation from the political and security ones, as evidenced by the failure of the Quartet’s efforts thus far to promote the economy in the West Bank due to the restrictions on the freedom of movement, whether for people or goods. He described the economic peace as “a balloon and a hollow idea.”

Moreover, the Palestinian economy cannot flourish under the occupation and barriers, and under the control over lands and capabilities, not to mention the 500 military checkpoints deployed in Palestinian cities and the ongoing blockade on Gaza. In the same vein, Tony Blair, the Quartet’s special envoy, said that talk of economic peace as a substitute for the political process is doomed to fail, as both processes are required to go side by side.  

The absent Gaza

Perhaps a brief historical summary would suggest that economic peace proposals have been previously addressed on the eve of the signing of the 1993 Oslo Accords, when the idea of turning the Gaza strip into the Singapore and West Bank into the Malaysia of the Middle East was promoted.

However, Kerry’s new plan has not specified whether or not the Gaza Strip would be a part of it, or whether this plan would be exclusive for the West Bank. This has raised fears among Palestinians that this plan would be politically reflected on the “geographical and functional sharing,” which Netanyahu along with the Israeli right wing seek to entrench between Gaza and the West Bank in order to preserve the division between them.

Perhaps, this is another reason for Palestinians to fear the acceptance of the economic peace, among other previously mentioned political reasons, especially given the fact that signs of reconciliation between Fatah and Hamas and the geographical unity between Gaza and the West Bank are not visible on the horizon.

This is not to mention that there is a possibility to form a new government to replace Fayyad’s, which would be headed by an economic figure such as Mohammed Mustafa, head of the Palestine Investment Fund (PIF), or Mohammed Shtiyyeh, managing director of the Palestinian Economic Council for Development and Reconstruction (PECDAR), who are both senior economic experts. This would prolong the term of the new government and lessen the chances of the broken reconciliation, which would keep Gaza “uncovered” and excluded from any potential economic plans.

On the other hand, Hamas, which controls Gaza, has been swift to predict the failure of Kerry’s economic peace plan. At the same time, Hamas fears that this plan would further entrench the “new old” Israeli approach in dealing with Palestinians, wherever they are: “the carrot in the West Bank and the stick in the Gaza Strip.” Furthermore, Hamas also fears that this approach would later on find its place at the base of the Israeli economic policy regarding the Gaza Strip, in line with the saying: “Gaza neither dies nor lives.”

Adnan Abu Amer is Dean of the Faculty of Arts, and head of the Press and Information Section as well as a lecturer in the history of the Palestinian issue, national security, political science and Islamic civilization at Al-Ummah University Open Education. He holds a doctorate in political history from the Demashq University. He has published a number of books on issues related to the contemporary history of the Palestinian cause and the Arab-Israeli conflict. Follow him on twitter @adnanabuamer1

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