Essays — December 2009

Trading Up

‘There is no Palestinian Mandela,’ writes Ari Shavit in Ha’aretz. Journalists and commentators of all stripes have long bemoaned the absence of such a leader to take the Palestinians peacefully towards independence. But while a unifying leader is lacking, policies to build domestic and international trade may be the more decisive factor in achieving de facto statehood. In the West Bank, an entrepreneurial, well-educated private sector is eager to work and grow. Small businesses in Nablus and Ramallah bustle for profits, selling everything from olives and lemons to mobiles phones and marble. They want economic freedom, and may be about to move a step closer to their goal.
The Fatah-led Palestinian Authority (PA) is in the early stages of membership talks with the World Trade Organisation (WTO), the Geneva-based, multilateral institution that regulates virtually all international trade. ‘The PA dreams of full accession to the WTO,’ said former economics minister Basim Khoury at the United Nations in September. ‘It will be an engine for reform and an engine of statebuilding.’
WTO membership would, in time, have a transformative effect on the Palestinian economy. WTO members can take their domestic goods and services into foreign markets without excessive trade barriers. WTO status indicates a stable trade environment — because disputes are resolved transparently in an international arena — which, in turn, encourages foreign investment. Most importantly, from Israel’s perspective, WTO membership is politically benign. Other Arab nations in the WTO  such as Saudi Arabia, Egypt and Jordan all enjoy stable relations with Western countries and Israel, compared to the likes of Iran, a WTO outsider. Saudi Arabia dropped boycotts on some Israeli goods as a membership condition and was restricted from boycotting Danish goods during the Mohammed ‘cartoon’ controversies last year.
The WTO bid is part of a wider strategy, advanced by PA Prime Minister Salem Fayyad, which reverses the logic of the Arafat era and Hamas today. Rather than seeking political recognition first, and building the nuts and bolts of a state after, Fayyad wants to erect the institutional foundations of statehood first in the belief that the declaration of statehood will inevitably follow (the PA could join the WTO without achieving statehood, like Taiwan for instance. But, of course, the benefits would be limited in this case).
A US-trained economist, Fayyad realises that economic growth is at the heart of a de facto state, and in the West Bank there are tentative signs of it. Internal security has improved following the PA’s crackdown on Hamas militants. Israel responded with small but positive steps to ease the checkpoints, which hinder movement, strangling many aspects of trade and business.
Checkpoint opening times have been extended at Nablus, Ramallah, Qalqiliya and Jericho, and some checkpoints are now left unmanned. There has been considerable improvement in Nablus’ trade situation, said Omar Hashem of the Nablus Chamber of Commerce. Tourism is on the rise in Ramallah, where two new hotels are being built. Trade between the PA and Israel grew 17% last year.
Bashar Masri, a Palestinian entrepreneur with businesses spanning financial market services, IT, and real estate acknowledges a tangible shift. ‘Better internal security throughout the West Bank means people are going out more, and spending more. Areas like Ramallah are booming,’ he says. Masri’s journey between Ramallah and Nablus used to take up to four hours, now it is 45 minutes most of the time.
He hopes to exploit this window of opportunity, spearheading a project to build a new city called Rawabi, 9 kilometres from Ramallah. ‘This is the largest project undertaken in Palestine’s history,’ he said. Rawabi will house 40,000 people and has secured $500 million funding from the Qatari sovereign wealth fund, and construction will provide 10,000 jobs over the next five years. Creating local jobs is an urgent priority. (Currently there are between 70-80,000 unskilled Palestinian workers who are forced to cross the hellish checkpoints every day to work in Israel. Former farmers, they have no access to their own land, either because it has been confiscated or for fear of attack by vigilante settlers. While the easing of checkpoints has enabled internal travel within the West Bank,the checkpoints into Israel have not been eased. Now they have all been computerised and passage is only granted to those who have obtained permits from Israel. The permit system itself bears all the hallmarks of the occupation and despite being run by a supposedly Civil authority is, like most things, run by the military and the secret service.)
Masri is opening other businesses too, including a start-up IT company. For the first time for many years, he has been able to lure Palestinians who had emigrated elsewhere — mostly to the Gulf — to return to work with him. ‘In the Gulf they earned $10,000 a month and here they earn $3,000-$5,000. But they are home’.
Masri’s ambition gives an indication of what West Bank entrepreneurs are achieving when given an inch. And sadly, an inch is all it currently is. The decommissioned checkpoints, for instance, are not quite decommissioned. ‘The structures have come down, but often there are soldiers by road sides. This gives you a feeling they are still here, so it’s a very shaky opening. And as a businessman, this uncertainty is a problem’.
The stuttering thaw in the checkpoints is symptomatic of a larger uncertainty which prevents businesses in the West Bank embarking on grander projects like Rawabi. There exists little clarity over where Israel’s eastern border could lie. Netanyahu rejects the 1967 borders becoming Israel’s eastern border today, arguing that it makes Israel militarily vulnerable. He wants to keep control of Area C — covering the settlements, the strategically important Jordan Valley — a natural barrier to rocket fire — and the high ground around Jerusalem and overlooking Israeli cities along the Mediterranean coast. The settlements are a particular issue. Netanyahu will neither restrict the natural growth of the government-endorsed settlements nor dismantle the illegal ones. Combined, this awkward geography hinders projects like Rawabi.
‘The town needs a road connecting it to Ramallah. That will be one of the selling points’ says Masri. But the proposed road crosses Area C. Eighteen months ago, the Israel Defence Minister agreed to let Masri begin the planning. ‘We received all the necessary approvals, environmental, geological and the rest. But until today, we still have no final word from Israel about it. We lobby, through the PA, and we’ve been promised it will happen, but for sixth months — nothing’. The delay is preventing 1,600 new jobs, he estimates. ‘We could be at the height of construction now’.
Rawabi’s delay is a powerful reminder of the limits to Netanyahu’s relief plan. Without strong conciliations on Area C, there is a low ceiling on how far business and trade can go. And it does not only affect major infrastructure like Rawabi. Illegal Jewish settlers veering deeper into PA territory have recently taken to sawing down Palestinian olive trees, an important produce in the local economy. Netanyahu’s failure to crack down on such vandalism — let alone to dismantle settlements that are illegal even under Israeli law — means enterprise both large and small continues to operate under extreme duress which, in turn,  makes the WTO bid look rather premature. The West Bank private sector is capable of seizing the potential of wider markets, but they have to be able to dispatch goods reliably and honour contracts. They also need a port or an airport of their own; their nearest ports at the moment — Ashdod and Haifa — would place all their new trade under Israeli control.
Eventually, this impasse could have broader political implications. Fatah’s legitimacy is fragile. The improved situation in the West Bank has given them some strength, but there is deep scepticism about Israel’s readiness for peace given its failure to freeze the settlements, let alone dismantle them. Abbas’ reputation has also been damaged by his recent delay over a vote regarding the recommendations of the UN ‘Goldstone’ report on war crimes during the Gaza conflict, and Fayyad was not elected, meaning he enjoys no democratic mandate (though he is ardently campaigning for one now).
Elections for the leadership of the PA are planned for next summer. A June poll by the Palestinian Jerusalem Media and Communications Center found support for Hamas waning following the ruination of Gaza. In September, a survey carried out by pollsters Charney and the International Peace Institute (IPI) agreed, giving Fatah 45 % of the parliamentary vote and 24 % to Hamas. While this appears a strong lead for Fatah, in a head-to-head election Abbas would have defeated Hamas leader Ismail Haniyeh by just 52 %. This poll clearly shows that the settlements are the swing factor. Asked what would constitute a primary confidence-building shift in the peace process, a majority of Palestinian respondents — 28% — said the evacuation of Israeli settlements and outposts.
If that is not achieved, Hamas’ star could quickly rise. Bassam Abu Sharif, a former Arafat aide, claimed at a September press conference in Ramallah that ‘the Palestinians are preparing themselves for an intifada’. Prof Moshe Maoz at Jerusalem’s Hebrew University also acknowledged that ‘another intifada is quite possible’. Hamas won a landslide in the 2006 election and their support is currently dampened but not dead. Adept at running local hospitals and charitable organisations, and poor compared with many of Fatah’s wealthier leaders, they are well placed to capitalise on a shift of mood. And that shift looks likely. Israel currently opposes the WTO bid, as does the US (all other WTO members approve). This is a deeply disappointing approach, endorsing the Palestinian despair that the PA has no autonomy and that Israel does not want a Palestinian state.
I ask Masri how he and other businesspeople stay motivated to pursue projects like Rawabi in the midst of such an uncertain political atmosphere, both internally among the Palestinians and between the Palestinians and Israel. ‘I believe it’s a duty of every Palestinian to put up with the frustration and build the nation we have always dreamed of building’ he responds.

Leave a Reply