by Ghanem M. Nuseibeh
11 September 2012
London – On Monday, Palestinians demonstrated against worsening economic conditions in the West Bank, decrying spiraling costs for fuel and soaring unemployment. Amid the burning tires, protestors called for an end to unequal economic arrangements that leave the Palestinian economy largely dependent on Israel.
However, this crisis provides an opportunity. Political maneuverings in recent decades have proved insufficient to bring Palestinians and Israelis together. But economically, both have much to gain from equality and commercial integration.
Israel is eager to be recognised by the Arab world and to halt the international boycott movement against Israeli goods. In pursuit of this, Palestine can become Israel’s main corridor to the Arab world. The key to Israel’s regional emancipation, therefore, lies in cooperating with the Palestinians, not bypassing them.
But to achieve this, Palestine’s economy must be liberated. Palestine’s private sector must be allowed to grow and it must be allowed to trade freely with the rest of the Arab world.
Israel stands only to gain from a liberated Palestinian economy. Cooperation with the Palestinians will bring not only political benefits, but access to unexplored markets for Israeli goods. Israel’s high-tech industry is world-renowned, and Palestinians have the potential to become a leading force in this area. Current collaboration between Palestinian and Israeli information technology (IT) companies is partially responsible for the fact that IT contributes to 5 per cent of Palestinian GDP. This collaboration is an example of how an equitable arrangement can be a win-win situation for both sides.
Palestinians are one of the Arab world’s most resourceful peoples, establishing thriving businesses across the region. In the Occupied Territories, Palestinians have thrived in industries as diverse as construction, pharmaceuticals, technology, education and food processing – despite the constraints of living under occupation.
Together, Palestinians and Israelis can offer the Arab world a range of value-added products, from agricultural produce to high-tech innovations and a highly skilled job market. Unlocking the tourism potential of Arab visitors can also be of great value to all parties.
Yet although there are businesspeople on the Israeli side waiting to develop relations with Palestinians, the restrictions imposed by the Israeli Occupation set the glass ceiling for the Palestinian private sector very low. Hundreds of roadblocks in the West Bank hold up consumer goods, car imports and building materials. A complex bureaucratic system of permits makes it difficult for most Palestinian businesspeople to travel out of their cities.
The Palestinian leadership is also at fault for not encouraging the private sector. Rather than actively pursuing foreign investment in emerging Palestinian businesses, it is directing almost all its focus toward seeking foreign aid.
As a result, almost one-third of the Palestinian GDP is derived from foreign aid – one of the highest percentages in the world. Much of this aid is spent on running essential services such as health, education and security. In other words, most donor money is used to keep public services operating at a minimal level, with very little left over to invest in the private sector – a necessity for an independent economy.
Nonetheless, despite the Occupation and scarce resources, Palestinians have established more than ten universities in the Occupied Territories, including Al Quds University, which my father founded almost twenty years ago in Jerusalem, and which now boasts one of the Arab world’s leading medical schools. Given the chance, the economic liberation of Palestine can be transformative for the Palestinians and for the whole region.
What is needed is economic liberation that accompanies, rather than replaces, a political solution. This can begin immediately. Palestinian officials should give priority to securing exports of Palestinian goods to Arab states. At the same time, Israeli assurances should be sought to enable the transport of goods.
If additional Palestinian exports reach $2 billion annually, this would be equivalent to almost half the current Palestinian GDP, reviving the Palestinian economy and leading to a natural reduction of the public sector burden.
An added benefit is that, with mutually beneficial business relations, Palestinian public opinion may become more favourable towards Israel and presumably vice versa. A viable and economically strong Palestinian state is essential for Israel’s political survival in the region.
The driver for pursuing an independent Palestinian state must be economic, as this is an area where the interests of both Palestinians and Israelis overlap. The recent economic protests in the West Bank illustrate why both sides must push for economic liberation.
###
* Ghanem Nuseibeh (@gnuseibeh) is from Jerusalem. He is the founder of Cornerstone Global Associates and a Senior Visiting Fellow at King’s College London. This article was written for the Common Ground News Service (CGNews).
Source: Common Ground News Service (CGNews), 11 September 2012, www.commongroundnews.org
Copyright permission is granted for publication.
