Economic Development Under Fire

The Palestinian economy is one of the many, but less often discussed, victims of Israeli military aggression on Palestinian towns, cities, villages, and refugee camps. Before Israeli prime minister Ariel Sharon was elected, the Palestinian economy was engaged in an internationally acknowledged pattern of growth. This growth started to be realized despite the fact that during the first several years after Oslo, the Palestinian standard of living actually decreased because of Israeli closures and land appropriation for illegal settlement building. The Office of the United Nations Special Coordinator in the Occupied Territories (UNSCO) reported, “In the spring of 2000, the International Monetary Fund (IMF) and the Palestinian Authority (PA) Ministry of Finance projected that the Palestinian economy would continue to grow as it had since 1997 and that real growth rates for GDP and GNP for the Palestinian territory would reach 5 and 6 percent respectively.” Today the Palestinian economy is in shambles.

Israeli war propaganda, which the U.S. administration has blindly adopted, proclaims that Palestinians and the Palestinian Authority initiated a campaign of terror against Israel by creating the Palestinian Intifada. This myth is the most naked form of misinformation and media spin aimed to cover Israel’s war crimes against Palestinian civilians. Both the numbers themselves as well as U.S. contractors working with the United States Agency for International Development (USAID), which has worked side by side with Palestinians for years in both public and private economic sectors, can attest to the falsity of this myth.

In the midst of the current backdrop of political, economic, and social chaos it may be hard to imagine that an economic development component has remained active in the Palestinian Authority areas of the West Bank and Gaza Strip throughout the past 19 months. Since Prime Minister Sharon was elected, Palestinian cities have been under a choking military and economic blockade. Domestic travel and trade have been made nearly impossible, and Israeli state assassinations have had 3 million Palestinians living in constant fear. During these 19 months, over 1,000 Palestinians have been killed at the hands of Israel. This latest Israeli onslaught is only another chapter in Israel’s attempt to destroy the emerging State of Palestine. However, the tanks have yet to withdraw and the Israeli actions have backfired. Now the world can see what Palestinians have endured for the past thirty-five years.

The international media has so far preferred to focus on those Palestinians who have fled the indiscriminate Israeli shelling and Israeli assassination campaigns to relocate in the West or to other Arab countries. However, to understand the resilience of the Palestinian community is to take a more detailed–albeit less dramatic–look at what is happening on the ground behind the bleak daily headlines.

Economic development projects are being built, investments are being made, and efforts continue to be exerted to forge the difficult path toward development. The resilient Palestinian business community views the deteriorating situation on the ground as yet another, although major, challenge to economic dependence–one that business communities in the U.S., UK, or UAE will never face. Nevertheless, building an independent economy is part and parcel of this Intifada.

Palestinian investors entered the Palestinian economy in full-force following the 1993 Oslo Peace Accords. At the time, three major investment groups were created, mainly by Palestinian Diaspora and Palestinian Authority funds. The Palestine Development and Investment Company (online at www.PADICO.com) is a $200 million holding firm with 12 subsidiaries. The Arab Palestinian Investment Company (online at www.APIC-PAL.com) is a $100 million holding firm with 11 subsidiaries. The Palestinian Commercial Services Company (online at www.PCSC-PALESTINE.com) is a $300 million government-owned, private sector engaged holding firm. In total, these three investment companies employ and feed over 20,000 Palestinian mouths. All three of these companies, as well as many other smaller ones, still exist and await an Israeli military withdrawal to pick up the pieces and continue to build Palestine’s economy, despite disastrous ramifications to their business feasibility because of Israeli military and economic domination.

In addition to making available the investment funds necessary for state building, these firms–along with other locally active Palestinian economic players–recruited a mini-army of Palestinian Diaspora technocrats, who were employed to transfer the necessary knowledge to local businesses. Israel’s current aggression is clearly an attempt to scare them off and thus implement a long-term Israeli strategy of “voluntary transfer”–where Palestinians leave Palestine on their own will, thus creating a third Palestinian exodus: this time away from the media cameras.

One project waiting for the tanks to roll out of Ramallah so work can proceed is the first chain of modern shopping plazas in the Palestinian Authority areas. This is the company that I manage. The Arab Palestinian Shopping Centers (APSC) broke ground for its first plaza in the Palestinian City of Al-Bireh, 8km North of Jerusalem, on April 1, 1999. April Fool’s Day was a coincidence but could not have been a better choice given the difficulties that the firm has had to face.

On September 28, 2000, the Israeli prime minister made his infamous and provocative visit to desecrate Jerusalem’s holiest Moslem site. On the same day, APSC was being traded for the first time ever on the Palestine Securities Exchange (online at www.P-S-E.com). I was in Tel Aviv that day at the COMDEX Information Technology Exhibition. It was the first time ever that the Palestinian information technology community, led by the Palestinian Information Technology Association (online at www.pita-palestine.org), had set up a wing in an Israeli exhibition to show off the emerging Palestinian knowledge industry–software firms, communication firms, research and development firms, and Internet firms. Those days proved to be yet another calendar coincidence that had much more hidden significance than any of us could have imagined. On September 29, 2000, the second Palestinian Intifada (Uprising) against Israeli military occupation began.

Another project that I have had the honor of being involved with was the founding of the first Palestinian private sector telecommunications company. When the Palestinians took over their own telecommunications sector after Oslo, it was a 400-person operation with an ailing infrastructure. Today, the Palestine Telecommunications Company (online at www.PALTEL.net) is a blue chip Palestinian firm employing over 2,000 Palestinian men and women operating a state-of-the-art network. It has turned a profit every year. Paltel, too, is waiting for Israeli tanks to roll out of Palestinian towns to repair the damage and move on toward statehood.

Over the past eight years, the Palestinian Authority has been enthusiastically preparing for industrial zones to be built on the border with Israel in hopes that joint Israeli-Palestinian economic projects would help cement a lasting peace. Palestinian President Yasir Arafat created an entire organization within the Palestinian Authority to make this effort succeed, the Palestinian Industrial Estates and Free Zones Authority (online at www.piefza.org). USAID provided funding to start the capital-intensive development process and many Palestinian private sector entities were aligned to realize the project. Today many of these industrial estates lie in ruins, victims of Israeli tanks and helicopter gunships.

Many, including myself, warned the Palestinian Authority and Palestinian private sector that premature linking of the emerging Palestinian economy with the much more developed and politically motivated Israeli economy would weaken any future political negotiations. Their reply was that Israeli business concerns being involved with Palestinians would safeguard any projects. Unfortunately their view has not been borne out. Today, Israeli foreign minister Shimon Peres, who was a leading voice promoting Palestinians to link their economy with Israel and Israeli investors, is now openly part of the Israeli leadership that is systematically destroying, not only the Palestinian economy, but everything that has been accomplished since Palestinian President Yasir Arafat signed on the dotted line on the White House lawn in 1993.

Any resolution to the current impasse short of a full end to all forms of the illegal Israeli occupation and the creation of a viable Palestinian state allows Israel to maintain control over the faucet handles on Palestinian economic development. This time around, however, Palestinian business leaders will not have any illusions about the motivations of their Israeli neighbors.

Before relocating to Al-Bireh, Palestine from Youngstown, Ohio, I hung in my office a poster from an unknown author. The current business environment in the West Bank, Gaza Strip, and East Jerusalem has led me to recreate the poster and hang it once again, this time with a surreal sense of reality. It reads, “Build for Eternity and Be Ready to Move in 24 Hours.” With its remarkable capacity for regeneration, the Palestinian business community has done just that.