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Buying Peace in the Middle East

11/09/2013

On May 26th at the World Economic Forum in Jordan this year, US State Secretary John Kerry announced a bold new plan to tackle the Middle East peace process: a $4 billion economic stimulus package. The money was to come from private foreign investors and would be coordinated by the Office of the Quartet Representative (OQR), headed by former British prime minister Tony Blair. Kerry emphasised the necessity of economic opportunity for peace and stability in the region, and a statement by the OQR outlined the plans for the money. The aim was to double GDP and slash unemployment from 22% to single-digit figures within three years, by spurring job creation and broad-based economic growth through investment in tourism, agriculture, construction and information and communications technology. Both Kerry and the OQR stressed that the $4 billion package was not being proposed as an alternative to a political resolution to the Israel/Palestine question; rather, it was intended ‘to create the positive surrounding environment’ for negotiations and ‘to complement, support and run in parallel with’ that process. On unveiling the package, Kerry stated: ‘The economic approach is absolutely not…a substitute for the political approach. The political approach is essential, and is our top priority.’

Nevertheless, the proposal was met with widespread scepticism by the Palestinian population. Economic advisor to President Abbas, Mohammed Mustafa, stated that the Palestinian leadership ‘[would] not offer political concessions in exchange for economic benefits’; meanwhile, a representative of Palestinian investment firm PADICO called it ‘a trap we should not fall into.’ Another source voiced a lack of faith in the concept based on previous attempts to solve the problem from an economic angle, citing the failure of the Oslo Accord years. ‘The economy will only be used to prolong the status quo,’ he argued. Indeed, he was not alone in this sentiment: residents of the wealthy neighbourhood of Maysoon Heights reportedly felt that Palestinians were being ‘lured with more money from Western donors to delay their search for independence and a state of their own.’

It is undoubtedly easier for the residents of Maysoon Heights than for those living in refugee camps mired in poverty to resist such economic enticement; nevertheless, even in poorer environments there is scepticism about how beneficial foreign investment would actually be to those in need on the ground. The Palestinian Authority (PA) is accused of patronage and corruption by its own people, and there is little faith that Kerry’s package would impact their standard of living. This lack of faith regards not only the Palestinian leadership, but also Tony Blair in his role as Quartet Representative – and therefore manager of the proposed funds. Over the course of his six years in the role, he has gradually lost credibility with the Palestinian nation and has come to be seen as biased toward the Israeli cause, particularly after his refusal to condemn the Israeli assault on Gaza in 2008. More recently, concerns were raised over his conduct when it was found that two of the major contracts he had pushed, one in energy and the other in telecommunications, were for clients of JP Morgan – who pay him £2 million a year as a Senior Advisor.

Although the plan for the Kerry package is still incredibly vague, it is nonetheless rather dubious as to how it will advance Palestinian standing at the negotiating table and thereby be profoundly beneficial to the Palestinian nation. Whilst the OQR has asserted that it sees the plans for the Palestinian economy as a ‘vital part of creating the conditions for the two state solution to succeed’, it provides no further rationale for this argument than the ‘tangible improvements in the living conditions of the people involved’ which might be provided by the stimulus package. This, coupled with its focus on industries such as agriculture, tourism and ICT, is somewhat at odds with the reality of what Palestine needs in order to be a viable independent state – a necessary precondition for the success of a two state solution.

The Oslo Accords of the mid 1990s divided the Palestinian territories (based on the 1967 borders) into three categories: Area A, under full civil and security control of the Palestinian Authority; Area B, under civil control of the PA and joint security control of the PA and Israeli government; and Area C, under full civil and security control of the Israeli government. Although full control over Areas B and C was supposed to be handed over to the PA by 1999, this has not yet occurred. Area C covers more than 60% of Palestinian territory in the West Bank, and is the only major contiguous zone – Areas A and B are composed of ‘islands’ scattered throughout the former. The result is a major logistical impediment. Any construction in Area C requires official permission from the Israeli government, and such permits are notoriously difficult to obtain. Demolitions of Palestinian structures earmarked as illegal are therefore a common occurrence, making infrastructural development in Area C virtually impossible. As one journalist noted in Al-Monitor: ‘It is unclear if and how the initiative will bring about measures to bolster the shattered Palestinian economy. Palestinians do not control their natural resources, borders, movement of people and goods, or currency.’

Thus, it is essential for these issues to be addressed before any ‘tangible improvements’ can occur. This will not require Kerry’s billions, only the honouring of Israel’s commitment as laid out in the Oslo Accords. Handing full civil control of the Palestinian territories over to the Palestinian Authority would allow infrastructural development to occur and subsequently the flow of labour, produce and resources. Only once this occurs might empowering the private sector be directly beneficial to the Palestinian nation. With this in mind, it becomes increasingly clear as to why so many Palestinians are confused about where Western money fits into the equation.

by ICSR research intern Stephanie de Ryckman de Betz