Economic emptiness in Palestine and Israel
|Sunday, August 22,2010 11:46|
|By Sam Bahour|
Israelis and Palestinians have agreed to enter direct negotiations (yet again) in Washington on September 2. The Obama administration is sure to hail this as a significant breakthrough. Jerusalem, refugees, settlements, and borders will all be on the table. But substantive Palestinian economic growth must also be addressed with guarantees that the Palestinian economy won't be choked off as is currently the case.
The lead-up to these talks saw both Palestinian and Israeli leaders touting economic growth as a prelude to moving the political process forward. The growth they cite is hard to comprehend.
Palestinians were dispossessed from 78 percent of our homeland, 60 percent of Palestinians are internally displaced or dwell in refugee camps just hours from their homes and properties, 1.5 million Palestinians in Gaza survive under siege conditions, hundreds of thousands have been illegally detained by Israel, and the economy is micro-managed by a foreign military. Yet leaders, foreign and domestic, laud the temporary West Bank economic growth that results from a brief respite in a harsh crackdown.
I relocated from a comfortable life in Ohio to be part of building a Palestinian state. I advise some of the most strategic investors in Palestine. If my experience as a business consultant is any indication, Palestine's investment community remains in a wait-and-see mode. More peace talks will not spark the significant investments required to build an economy that can serve an emerging state. Serious state-building economic development requires land, water, access, movement, ports, and spectrum, which Israel remains in full control of today. My clients, and many like them, refuse to be misled, yet again, by another round of empty talk from politicians as settlements go up in East Jerusalem.
Following the last meeting with Prime Minister Netanyahu at the White House, President Obama declared, "…if we continue to make progress on that [economic] front, then Palestinians can see in very concrete terms what peace can bring that rhetoric and violence cannot bring – and that is people actually having an opportunity to raise their children, and make a living, and buy and sell goods, and build a life for themselves, which is ultimately what people in both Israel and the Palestinian Territories want."
Fine words, but he ignores entirely the context of occupation and domination. What Palestinians "ultimately" want is their freedom and independence.
Israel, in extolling its virtues, skips the fact that the land and water it has acquired required military aggression in 1948 and 1967, compounded by the further illegal annexation of Jerusalem in 1980. Without the U.S. bankrolling Israel – approximately $3 billion per year – and exonerating Israeli military adventurism, its economy would be as feeble as its politics.
Palestinian banks hold over $8 billion in assets. Private sector credit from the banking sector was $1.56 billion at the end of January 2010. The loan-to-deposit ratio was 36 percent. To compare, the world average loan-to-deposit ratio hovers around 87 percent. Forty companies are listed on the Palestine Securities Exchange with a total market capitalization of approximately $2.4 billion. This is one of the smallest, yet most profitable, exchanges in the world. I estimate that 100 more companies would publicly list if indications on the ground pointed to a real end to occupation. And we have scarcely tapped the potential of Palestine's diaspora community. What Palestine needs is not more peace process but an end to military occupation, which is delaying real progress.
A report titled, The Untapped Potential, conducted by the Peres Center for Peace and PalTrade (Palestine Trade Center) in December 2006 tried to quantify the missed economic opportunities if occupation persists. It noted, "The value of Palestinian exports could cumulatively rise to some US$11 billion per annum (compared to US$500 million in 2005). The cumulative contribution to the Palestinian GDP (in value added terms) would amount to approximately US$8 billion, thereby tripling the GDP from some US$4 billion in 2005 to approximately US$12 billion."
But it is not only Palestine that stands to gain by ending the occupation. The Israeli economy would benefit significantly as well. Regarding Israel, the report noted, "The value of Israeli exports could cumulatively rise by over US$17 billion…Israeli employment would potentially benefit from the creation of more than 400,000 new jobs. In value-added terms, the contribution of economic cooperation to the Israeli GDP is estimated at approximately US$12 billion; this is the equivalent to approximately 10% of the current Israeli GDP."
From the American side, President Obama is not in this peace-making effort alone. Like Rep. Baird, every member of Congress has a responsibility to put aside the tired politics of the Israel lobby in the interest of pursing a more equitable approach to the conflict. Arming and massively funding one side of the conflict will almost certainly result in Israel refusing to negotiate in good faith and further entrenching its military occupation.