Thursday, September 16, 2010

Settlements Or Economic Peace: An Interim Report

Readers of this blog know the importance of Israel cultivating, or at least getting out of the way of, the Palestinian private sector. Without an evolved civil society, subtended by sustainable businesses, the prospect of a Palestinian state at peace with Israel and itself is purely hypothetical.

Two reports have been released today, one by the World Bank, the other by PalTrade (sponsored by the Norwegian government), which ought to give us pause. Both point to genuine progress, but progress that is neither fast enough to outrace social discontent, nor fast as it would be if Israel got out of the face of Palestinian entrepreneurs--that is, without policies designed to protect the settlement project.

Keep these reports is mind as you read press coverage about the snags in the final status talks as we approach September 26, when Israel's settlement "freeze" is set to expire or be extended. Settlements are not just little communities that may, or may not, be allowed to stay in place owing to land swaps. They are destroyers of Palestine's business ecosystem.

First, the World Bank report summary, focusing on macroeconomic conditions:

Washington: September 16, 2010 -- Economic growth in the West Bank and Gaza is likely to reach 8% this year but largely thanks to external financial aid while the critical private sector investment needed to drive sustainable growth remains hampered by restrictions on movement of people and goods.

The report, released ahead of the AHLC meeting scheduled for September 21 in New York, emphasizes the need for strong institutions and private sector-led growth to underpin any future Palestinian state. The report also applauds the efforts of the Palestinian Authority in institution-building and delivery of public services. Starkly missing, however, says the report, is the sustainable economic growth required for the PA to reduce its donor dependence.

“We commend the Palestinian Authority for recent results under its reform agenda,” said Shamshad Akhtar, Vice President of the Middle East and North Africa Region. “These include increased efficiency of the social safety net system that is now one of the most advanced in the region, improved fiscal standing through greater revenue collections and a decrease in recurrent expenditures and an improved security situation in the West Bank.”

The West Bank and Gaza economy continued to grow in the first half of 2010 and is likely to reach 8% this year. But external financial aid is its primary driver. Private investment, particularly in the productive sectors, has yet to increase significantly. This is attributed to important Israeli restrictions still in place: (a) exports from Gaza remain prohibited; (b) access to the majority of the West Bank’s land and water is severely curtailed; (c) East Jerusalem – a lucrative market – is beyond reach; (d) the ability of investors to enter into Israel and the West Bank and Gaza is unpredictable; and, (e) many critical raw materials to the productive sectors are classified as “dual-use” (civilian and military) and their import entails the navigation of complex procedures, generating delays and significantly increasing costs.

“Action can, and should be taken to remove the remaining obstacles to Palestinian private sector development,” said Mariam Sherman, World Bank Country Director for the West Bank and Gaza. “Our analysis highlights important areas holding back private investment and we hope our work in this report can provide some momentum to address these challenging – but surmountable – issues. Without this, economic growth will not be sustainable growth, the PA will remain donor dependent and its institutions, no matter how robust, will be unable to underpin a viable state.”

The PA is making steady progress in implementing its reform including controlling the growth of the public payroll, reducing electricity subsidies and improving public financial management, said Nasir. The World Bank is committed to supporting the PA’s reform agenda but its ultimate success depended upon the PA carrying out promised reforms, the Government of Israel relaxing closures to allow private sector growth, and the international donor community providing full support for the PA’s recurrent budget.

Second, the PalTrade report summary, focusing on the information and telecom sector:

Ramallah: September 16, 2010 -- The Israeli restrictions retarding development of the Palestinian private sector remain a central obstacle to the establishment of an economically viable Palestinian state. Public spending, largely financed by donor aid, is the primary driver of the recent rebound in the West Bank economy. Remaining Israeli limitations on access to markets, on exploitation of natural resources, and on imports of critical raw materials continue to discourage the private investment required for sustainable growth.

Pending a political solution to the conflict, the outlook for the permanent easing of many of these restrictions remains uncertain. Throughout the interim period following the signing of the Oslo Accords in 1994, and especially after the tightening of the closure regime over the past decade, development agencies have sought to encourage industry that is relatively less dependent on Israeli policies.

At first glance, Information and Communication Technology (ICT) appears to meet this criterion because it requires relatively less physical infrastructure and is particularly suited to telecommuting. But the role of ICT in the Palestinian economy remains marginal, making up just 4.9% of total Palestinian GDP. This share grew by only 1.9% since 1999, despite a sharp increase in public sector computerization, relatively high rates of household internet penetration and the launch of a second cellular operator. A comparison with Jordan underscores the untapped potential of this sector: ICT share of the Kingdom’s GDP is 14%, compared with 10% in 2005.

A new report by PalTrade -- the Palestine Trade Center -- asserts that Palestinian ICT is underdeveloped because the basic network infrastructures it requires remain absent. Expansion and development of these is vulnerable to some of the Israeli restrictions retarding the development of other industries: Impediments on access to natural resources and on imports of critical materials. Israel has not met its commitments to release sufficient frequencies and continues to limit construction in Area C (60% of the West Bank) of the physical infrastructure required for efficient exploitation of the limited bandwidth currently available to Palestinians. In addition, import of telecommunications equipment is severely restricted.

These conditions position Palestinian ICT firms at an extreme disadvantage compared to their Israeli competitors. The latter have unfettered access to advanced wireless broadband networks and their coverage extends to most of the West Bank’s population centers.

According to the report, improvement of the current policy environment requires intensive and regular Israeli-Palestinian cooperation. The only institution with the authority and capacity to facilitate cooperation -- the Joint Technical Committee – has not met since 2000, however.


Potter said...

I just don't understand how there can be negotiations while settlement activity goes on- I mean any activity in territories captured in ‘67. Palestinians have already shown enough to warrant such a freeze, that they that can control the violence. And by and large they have, which is a feat considering that harsh conditions largely remain.

I'd like to see a referendum in Israel on whether to continue settlement activity, since this issue is so pivotal. I don't think Netanyahu has the courage.. or even the desire.

These reports, cited above, seem important because there are those who argue that actually moving forward -not merely stating a position in favor moving forward to two states- is entirely in the hands of the Palestinians. That is, when they get their act together, end divisions that Israel cannot end within it's own polity.

MJ Rosenberg says it simply here. I look to Netanyahu with little hope.

AlsoI like Daniel Byman's suggestions How To Deal With Hamas. I think he has an elaboration on this in Foreign Affairs Magazine.

Y. Ben-David said...

Why are you worried about Netanyahu? Olmert just announced that in his new autobiography he offered the Palestinians virtually EVERYTHING in the "solution everyone knows the terms of" that is so holy to the Israeli Left. They rejected it. They did not make a counter-offer. Why didn't they take it and make a counter-offer? BECAUSE THEY DON'T ACCEPT THE HOLY "SOLUTION THE TERMS OF WHICH EVERYBODY KNOWS". Even if Israel were to announce a permanent settlement freeze, it wouldn't bring peace any closer, it would simply stimulate yet another Palestinian demand for another unilateral concession as a precondition for continuing the talks.

Potter said...

Y Ben-David. You expound myth. About Olmert's offer, it was made as he was ready to leave office. He did not have the support needed, nevermind the inadequacy of the offer which you even suggest.

Why is Netanyahu prime minister now if there was support for this offer? Why, if there was support for this in Israel didn't Netanyahu work it out with Abbas? Where is the continuity from one so called genuine generous offer to the next? The peace tables and offers come and go to beef up reputations and mark time and fabricate stories about "we offered". Olmert can say whatever he wants in his book, Mr. Ben David. And you can argue it and your myths that support that. But that does not make it so. And it makes you one of the number in Israel who would most likely be voting against any real agreement, still manufacturing what amounts to phony excuses. But the truth is that Israel needs a peace/compromise as much as Palestinians want one. But do not expect them to settle for less that what is fair. If the offer is too far away from fair and just and has no support- it's theater.

According to Aluf Benn in Haaretz Olmert's offer for 93% of the West Bank ( Israel keeping 7% of the WB) and all of Gaza plus desert near Gaza did not provide for a contiguous Palestinian state with Jerusalem as it's capital. And, at that, ONLY when the PA gained control of all of Gaza would this happen.( I wish I could laugh when I think of how Israel helps Hamas popularity.) The passage between the WB and Gaza would be in Israeli hands.

Also, at the time, an Israeli official said this offer was not real, that there would be no agreement. This was intended for a "shelf agreement". Again, this is theater. Olmert in his book no doubt gives this offer as a boost to his reputation, his legacy.. along with other issues he must account for.

There WAS, by the way, a Palestinian proposal. So no counteroffer was necessary in this case, Palestinians did not feel it worthwhile. You like myths that suit your POV.

PA rejects Olmert's Offer

Y. Ben-David said...

The Palestinians do not "want" peace, as you claim. You say that out of wishful thinking. What they "want" is to eradicate Israel and this is being carried out as a long-term warm of attrition that consists of a combination war, terror and diplomacy-negotiations. That is why there never will be an agreement. Even a "peace mafia" member like former Foreign Minister Shlomo Ben-Ami admits this. He pointed out that when he was conducting the negotiations with them as part of the Barak gov't, the Palestinians NEVER presented a coherent counter-offer and he stated emphatically that they never will. They have not done so now either. In fact reports have pointed out that there are no "negotations" going on now, either. All the Palestininas do is convey their non-negotiable demands to the Israeli side through the American intermediaries.

Remember, just because YOU want a reasonable peace, doesn't mean THEY do.

Potter said...

Ben-David You cannot get rid of those on the other side who DO want a "reasonable peace" by denying that they exist anymore than those on the other side can say that no Israeli wants a "reasonable peace". It's not believable. This view is wishful thinking for those who don't want to give an inch, who think there is all the time in the world (ie never going to be a good moment to give up anything). And it results conveniently in not having to or not being able to make the necessary compromises. At this point, I dare say, we need no big "counter-offers". Palestinians are just not going to settle for less than they are justly due. Anyone who thinking clearly about the future of Israel would point to having an agreement that both sides can live with as the smaller risk to not having one.

Palestinians who may think along the same lines that you do about Israeli's, and those who don't, would also have to compromise and risk. How many will or won't needs to be tested, not assumed. You simply assume what you prefer to assume.

Once there is an agreement by both sides and we have two states, we will be in another world. If Palestinians then want to eradicate Israel (an outsized fear, from my point of view) then Israel has the means to deal- and I dare say will have allies. But you are talking about a very weak young state opting to destroy Israel (and itself in the process) over something much more positive: building nation state, and giving normal life to it's citizens.

Y. Ben-David said...

What the Palestinians say they are justly due is the "Right of Return". They emphasize it all the time. And they aren't going to get it. Thus, there won't be a peace agreement.
I do agree with you that there are Palestinians who do want peace with Israel along "reasonable" lines, but they are not in power and will not be. People like that are dismissed as "traitors" and will never reach positions of power.
The Arab/Israeli struggle is NOT over borders. They touch on the most basic issues of identity, religion and culture. The existence of a Jewish state in the "Dar al-Islam" (realm of Islam) is an unbearable humiliation for the Arab/Muslim world. So while it may be acceptable to have partial, temporary cease-fires with Israel, peace and acceptance are unacceptable, and they view the continuation of the "occupation" as being preferable to a "sell-out" peace agreement. Yossi Beilin quoted a FATAH official as saying this in a recent "Israel HaYom" column.

Potter said...

We have been through this regarding the "right of return". You insist that the P position is the hardline. when clearly it is not. And I disagree with you about those in power being those same hardliners. But it is true that they must maintain the "right of return" as part of the final give and take. The "Dar el Islam" argument raised by those who put your argument forward, is, to me, part of the excuse making.

Please don't cite( re Beilin) what I can't read in English. I think I know Beilin's POV.

What you don't get ( or want) is the power of peace and acceptance to render extremists (and maybe you too) impotent. Think Ben-David. Would Palestinians ( who are humans like you and me) reject a peace agreement that was fair to both sides, in favor of living under occupation and war conditions? Would Israeli's for that matter? Yes about sell-out conditions being unacceptable to Palestinians but they have come a long way... that means they won't take less than 22% of historic Palestine, nor no part of Jerusalem as their capital, and need the "right of return" ( meaning- as they are willing to interpret- as return to a Palestinian state with a few back into Israel as Israel permits).

Y. Ben-David said...

Beilin made that statement in order to back his change of policy which used to be for pushing for a final agreement but has now switched to his supporting a "long-term interim agreement", which, of course, the Palestinians will never agree to because they would be accused of selling out "Palestinian rights" in return for some goodies for those at the top who would get to go around the world calling themselves "President" of an "independent Palestine" or go to the UN representing a member state, while meanwhile Israel would go on strengthening itself with international pressure now off regarding the Palestinians, particularly regarding the "right of return" and Jerusalem, because it seems those talking about interim agreements mean leaving Jerusalem out (I believe this regarding Jerusalem because it seems the Israeli Left has finally realized the city can't be divided without it turning into something like Beirut during the Lebanese Civil War.

Regarding the "right of return", the Palestinains WILL NEVER agree to having a massive return of refugees to the West Bank. For heaven's sake, look at a map. There is no room for a couple of million refugees. The current residents there DON'T WANT THEM. They are aliens and have nothing in common with the existing population there.
Israel agreeing to take 10,000 or 100,000 wouldn't help at all, this is a drop in the bucket and would be done presumably to assuage "Palestinian pride" but it wouldn't do that either. The Palestinians insist on full implementation of the "Right of Return" in order to flood Israel with Arabs and to eventually eradicate Israel as a Jewish state.

The Palestinians have made it clear that they will not compromise on this matter, as much as the Israeli Left deludes itself that they will.

Potter said...

Beilin, according his Haaretz article of September 6th 2010 says he has been practical all along, but has not changed his preferences or policy. He is being consistent in saying that if a long term interim agreement is attainable he would be for it, he is not saying that is his preference and this does not mean a change in his policy as you put it.:

Netanyahu was elected a second time, unfortunately. He is miles away from a peace agreement along the lines of the Clinton parameters or the Geneva Initiative. Im not sure he's prepared for an interim agreement, but to me it seems more practical than futile talks about security, the environment, water and the Jewish character of the State of Israel. That's why I propose trying the partial move.
I am not disillusioned. I think the unilateral withdrawal from Gaza was foolish and that an interim agreement is also undesirable. If it were up to me, I would undoubtedly prefer to reach a full peace agreement now as you agree.
The question is whether it is preferable to wait for a prime minister who is prepared to pay the price of peace, or do the most that is possible right now. I prefer not to wait.

I believe the Palestinians want a final agreement though. So since Israel holds the important cards a final agreement is not, Beilin feels, going to happen with Netanyahu. This is NOT because the Palestinians don’t want a reasonable peace. It’s because Netanyahu is unable to deliver one. That is how I read Beilin.

Regarding return, from what I read Palestinians are willing to compromise once the ROR is recognized in principle. After all, Palestinian statehood would be the end result of the dispossession. The Lebanese are moving towards giving Palestinians citizenship. Refugees may very well remain there and in Syria and Jordan. Everyone is aware of those who feel as you do about the horrors of flooding Israel with Arabs, including and especially Arabs themselves. Please stop putting up obstacles that may not be much of an issue when the time comes. A peace agreement brings a new world. Are you afraid of it?

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