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Kerry Plan Ignores Palestinian Economic Independence

The economic plan brought forward by US Secretary of State John Kerry still keeps the Palestinian economy dependent on Israel.
U.S. Secretary of State John Kerry (C) is joined by Israeli President Shimon Peres (L) and Palestinian President Mahmoud Abbas at the World Economic Forum on the Middle East and North Africa at the King Hussein Convention Centre, at the Dead Sea May 26, 2013.  REUTERS/Jim Young  (JORDAN - Tags: POLITICS BUSINESS) - RTX101SB

During and after communicating with journalists in international and Arab media, I noticed a number of my colleagues gearing up for intensive coverage of the economic plan that was announced at the Dead Sea on Sunday, May 26. Some called it the Kerry Plan, in reference to US Secretary of State John Kerry. Others preferred to call it “Kerry’s dish.” Some pulled back, providing abbreviated coverage, while others ignored the matter entirely.

This may be attributed to the fact that, after analyzing the events, they discovered how limited their significance truly was. Indeed, it resembled nothing so much as the famous story about the third caliph, Umar bin al-Khattab, who chanced upon a woman placing a stone into water in an attempt to deceive her hungry children into believing she was preparing their supper. That way, they would endure through their hunger until, eventually, sleep overcame them.

Palestinian and Israeli businessmen announced during the World Economic Forum in the area of the Dead Sea in Jordan an initiative they called “Breaking the Impasse.” Kerry remarked, “This plan for the Palestinian economy is bigger, bolder and more ambitious than anything proposed since Oslo over 20 years ago.” He described the plan as “transformative” and not “incremental,” drastically changing the face of the conflict. Perhaps Kerry’s intense fervor for the plan is what drew attention to it and has made many believe it to be his plan.

In order to put the plan in its proper context and grasp the extent of its importance, one might approach it from two angles. First is the immediate milieu and the events that it has produced. Second is an analysis of the prospects for success and their likely impact.

Businessmen began this initiative before Kerry took office as the US secretary of state. It is not directly related to him or his office whatsoever. According to an analysis by Al-Monitor's Dalia Hatuqa last week, the plan was first unveiled in June 2012 at the World Economic Forum held in Istanbul.

There, Palestinian and Israeli businessmen agreed to produce a document pressuring the Israeli government and the Palestinian leadership to return to negotiations. This document was intended to convey the message that they — the private sector — are suffering the losses and paying the price of the current political disputes. This was emphasized by the fact that Palestinian businessman Munib al-Masri, who participated in the platform announcing the initiative, also hosted a similar gathering at his home in Nablus at the end of last year, bearing the same name as the initiative itself: “Breaking the Impasse.” At that time, renowned businessmen participated in the meeting, some of whom invest in Israeli settlements. It seems that Kerry weighed in by coordinating with former British Prime Minister Tony Blair, the Quartet representative who now owns a consulting firm that provides economic services, including mediation between corporations, businessmen and governments.

After taking office, Kerry came to oversee the businessmen’s meetings and encourage them. For example, he noted that one businessman spent 14 hours in conversations regarding the initiative in the West Bank, and then traveled to Jerusalem to celebrate his 69th birthday.

The bottom line is that Kerry is neither the proprietor of the original plan nor its engineer. However, this does not mean that he has no role at all, nor that he will not serve another function. In addition to encouraging and putting pressure on the Israeli and Palestinian governments to facilitate investment projects, Kerry can persuade the governments of Gulf Arab states to play a role in investment in the West Bank and Gaza Strip, or possibly in cooperation with joint Israeli-Palestinian projects, and promote them.

The second approach to the Dead Sea declaration is regarding the initiative’s impact and meaning. The secretary of state of the world’s superpower will not likely take an interest in the economy of Palestine as such, but rather its impact on the political aspect of the Arab-Israeli conflict. There is no doubt among politicians that there is a connection between the political settlement and tranquility on the one hand and the economic plans of the Palestinians on the other hand. Especially, since the Palestinian Authority has endured a financial and economic collapse in recent years, which has threatened its very existence.

However, the relationship between the economy and calm in the Palestinian streets has never been particularly close. For instance, the first intifada occurred under relatively comfortable economic conditions for Palestinians in the West Bank and Gaza. The outbreak occurred in the wake of considerable economic growth during the preceding years, averaging  a rate of about 9%. Even in the years before the second intifada in 2000, high growth rates were recorded, in addition to several projects that were then flourishing and others that were in the pipeline. This means that the improvement in the economy is not necessarily guaranteed to prevent eruption of the political and security situation, even if we agreed that the deterioration of the economic situation increases the chances of tension. Such a conclusion was indicated in a study issued by the Peres Center for Peace in 2009, under the title “Economic Peace: Alternative or Illusion?”

There is also a misconception that real economic growth is necessarily linked to obtaining sovereignty. In this sense, the growth of tourism in the Palestinian territories, for example, does not require significant diplomatic efforts. Perhaps what is most needed is Palestinian control of the border to allow entry of Palestinians from abroad, as well as Arab Muslims and Christians. This highlights other quintessentially political issues, such as those pertaining to the agricultural sector, which requires open borders to export its products. The needs of the agricultural sector also require that Palestinians are allowed to use water from those wells owned by Palestinian farmers, and that Israelis are prevented from using it. This brings the whole issue of development back to the policy arena, and to one central  question: Does Prime Minister Benjamin Netanyahu’s government intend to accept Kerry’s proposal? This is very unlikely, since it would collide with the interests of the settlers and with competing economic sectors that support Netanyahu.

Some signs indicate that the development Netanyahu intends is that which supports certain export sectors beneficial to the Israelis. An example of this is when Netanyahu was asked about an economic peace plan four years ago —  among the details of which was the establishment of dozens of factories in the West Bank near the borders of 1967 — where Israelis would supply the investment and local Arabs would provide cheap labor. But Arab agriculture remains in decline while the settlers’ farms prosper, especially given the booming infrastructure that provides them with water and withholds it from the Palestinians. Also, tourism projects remain linked to Israeli companies that control all aspects of tourists’ movement while impeding their communication and dealings with Arab shops, restaurants and hotels.

This also presents a question about guaranteeing the fruits of these investments. The idea is based on the private sector making investments, which means every businessman will make his own calculations and studies before embarking upon a project. Perhaps he will invest, perhaps he will not. This in turn diminishes the importance of the plan and leaves it bereft of practical meaning. It is reduced to vague talk about improving the investment climate in the Palestinian territories by inserting Israeli businessmen with Palestinian consent.

Palestinians have significant opportunities for growth in sectors such as agriculture and tourism. However, the Palestinians do not seem to be in a position that affords them control over their own affairs and economy. Instead, it renders them dependent, within the regulations of the Israeli economy. These projects could also complicate prospects for a two-state solution as they would entail further Israeli interference within a relationship defined by Palestinian dependency. All of this would mean a distorted, dependent economy, continued settlement and a lack of freedom of movement and development in accordance with national choices and agendas. Hence, all of this will only serve as a recipe for renewed conflict.

It remains true that there is no clear plan, and ideas put forth so far do not discuss independent Palestinian economic development.

Ahmad Azem is the director of Palestine and Arabic Studies at Birzeit University.

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