Palestine Pulse

Palestinian industrial parks: Boon or bondage?

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Article Summary
The Jenin industrial project is scheduled to start operating this year, with opponents claiming that such projects are in direct conflict with the Palestinian Authority's goal of becoming a fully independent and sovereign state.

RAMALLAH, West Bank — Palestine's industrial parks are flourishing, which proponents believe will boost the economy and bring new jobs. Critics, however, see the projects as economic appeasement that will ultimately give Israel more control over Palestinians, rather than bring independence through negotiations and political solutions.

The Jenin Industrial Free Zone, one of the largest industrial parks in Palestine, is scheduled to begin operating this year. It was built on 230 acres of Jezreel Valley agricultural land in the city of Jenin, after a dispute was resolved between the farmers who owned the land and the Palestinian government, according to the Palestinian Industrial Estates & Free Zones Authority.

The Palestinian government expropriated the farmers’ lands, as per the Law of Appropriation No. 2 of 1953. They were paid $10 million as compensation after an agreement was signed Sept. 10 between Palestine, Germany and Turkey as funders of the project, and a Turkish contractor hired to handle the park's infrastructure.

The German government offered $5 million in support of the project, and the government-owned Kreditanstalt fur Wiederaufbau bank in Frankfurt agreed to lend the Palestinian Authority (PA) more than 14 million euros ($15 million) to develop surrounding infrastructure.

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Mekorot, Israel's national water company, will provide about 2,000 cubic meters (530,000 gallons) of water a day, while the US Agency for International Development paved a 1,700-meter (1-mile) road for the project.

The Jenin Industrial Free Zone project — which will include agro-food companies with advanced technology and light-industry companies — was launched in 2000 following the Palestinian Cabinet’s decision to appropriate nearby land in the villages of Burqin and Jalamah. At the time, some farmers filed a lawsuit against President Mahmoud Abbas and Prime Minister Salam Fayyad rejecting the land appropriation on the grounds that it would destroy the region, which is known for agriculture.

However, after the outbreak of the second intifada in September 2000, work was halted until 2008.

Since 1999, the PA has sought to establish industrial parks for exports under Law No. 10/1998 to attract Arab investment to the areas. Arab investment is seen as a potential driving force to revive and develop the Palestinian economy and as the primary means of creating jobs and introducing advanced technology to Palestine.

The industrial parks project includes the Gaza Industrial Estate, which began operating in 1999 and includes food, wood, plastics and aluminum companies; the Jericho Agro Industrial Park, launched in 2014 and funded by the Japanese government; the Bethlehem Industrial Estate, supported by the French government and launched in 2013; and the Jenin Industrial Estate, financed by Germany.

The PA also relied on international funders to help it establish investment projects, prepare their infrastructure, receive technical aid and support in the production process, and deliver Palestinian products to the markets of these countries.

Abeer Odeh, the national economy minister and head of the board of the Palestinian Industrial Estates & Free Zones Authority, told Al-Monitor that the Palestinian government allocated $10 million to begin work on the Jenin Industrial Estate project’s infrastructure. He said some factories and companies in the Jericho Agro Industrial Park, the Bethlehem Industrial Estate and in the Gaza Industry Estate have been launched, saying this "now offers 4,200 job opportunities to Palestinians.”

Odeh added that the Jenin Industrial Estate “is the largest industrial estate in Palestine and its work will focus on agro-food high-tech and light industries and agriculture. It will offer about 5,000 jobs for people in the city and 15,000 for workers living outside the city. It will have a significant impact on the national economy with all the new job opportunities and factories whose efficient production will be good enough for export.”

Odeh said the Palestinian government is seeking to build new industrial parks in the cities of Tulkarm and Hebron and prepare the necessary infrastructure for potential factories in Palestine through partnerships with the Palestinian private sector or international developers and supporters.

The industrial parks project has sparked a debate — since 1998 when Law No. 10/1998 on industrial free zones was passed — between supporters, such as governmental parties and businessmen, and opponents, such as environmental organizations. The PA and its private-sector supporters believe industrial parks to be a pillar in the project of building a state that would strengthen the Palestinian economy and achieve sustainable development.

Critics think the projects emphasize Israel’s presence and legitimize it, as they make Palestinians more submissive and dependent on Israel. Israel controls the freedom of movement, and thus the exportation process, as well as the transfer of tax funds. These projects, critics say, also provide Israeli companies with a legal way to penetrate the Palestinian economy by establishing their own branches in the parks, which are located on the Palestinian territories of 1948 and the West Bank.

Iyad Riahi, a researcher on economic and social policies at Al-Marsad in Ramallah, told Al-Monitor that “some [critics] expressed reservations on the industrial sites project considering that it entails further dependency on Israel, which controls roads, ports and bridges and also collects taxes. [With this project], Israel will have more control over us."

Riahi said, “The industrial projects are established in Area C on the border between the occupied lands of 1948 and 1967 under Israel's control. Thus Israel's approval was necessary to launch these industrial parks. Israel is well-aware of the benefits it will reap in this regard at the political and economic levels. Moreover, these cities will not be subject to the sovereignty of the PA, but will fall under the direct control of the funding countries. The JIE [Jenin Industrial Estate], for instance, will be under the supervision and control of the Turkish developing company, which will contract with a private security company to preserve stability in the city, regardless of the Palestinian security or police."

George Kurzum, a development and environment expert at nonprofit job training group Ma’an Development Center in Ramallah, told Al-Monitor, “The industrial areas are parts of joint ventures. Those projects were imposed on the PA, by virtue of the agreements signed with Israel such as the Paris Protocol, which stripped the PA from all powers or jurisdiction over these estates.”

“Most of the factories and enterprises expected to be built in the [Palestinian] industrial parks will not be owned by Palestinian or Arab parties. They would be owned by foreign and Israeli companies, and therefore these facilities will not contribute to the Palestinian national economy, as products will not be sold in the local market. In addition, these areas will be used for commodity fraud and forging of the source countries' certificates, so as to circumvent boycotts in international markets,” Kurzum added.

“With the exception of the PA taking advantage of the direct revenues and taxes paid by these facilities, their strategy does not reflect the Palestinian territories’ economic and development needs, as they [factories] are affiliated with their original companies in Israel, the US and Europe, where their products are marketed."

Kurzum claims the process of turning fertile agricultural land into industrial parks will only benefit foreign operations with a local presence and Israeli private capital, in addition to some influential Palestinian officials seeking their own capitalist interests.

On the criticism targeting the Palestinian government and the industrial parks project, Odeh said the PA is seeking to revitalize the areas and exploit their development potential, especially the water available for agriculture and industry, to develop the national economy and reduce unemployment with new job opportunities.

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Found in: west bank, palestinian authority, jericho, jenin, israeli-palestinian relations, industry, foreign investment, bethlehem

Ahmad Melhem is a Palestinian journalist and photographer based in Ramallah for Al-Watan News. He writes for a number of Arabic outlets.

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