Waging Peace, Pages 51-52

Economic Conditions and the Future Of Palestine

THE PALESTINE CENTER in Washington, DC hosted an Oct. 29 talk and presentation by Palestinian entrepreneur and former Minister of National Economy Bassem Khoury. The Israeli “colonialist enterprise is the single greatest threat not only to the establishment of a viable Palestinian state but to its economic viability and, therefore, to peace,” Khoury explained.

An immediate and complete halt to settlements, including settlement activity in East Jerusalem, is the only way to preserve the integrity of the peace process, he argued. The current Israeli government, however, fails to recognize this and is attempting to exchange economic peace for political peace.

While emphasizing that the two are not mutually exclusive, Khoury noted that the concept of economic peace has been used before and has proven to be unsuccessful. Citing the income differentials in the post-Oslo period, he confirmed that insufficient economic progress has been made in the absence of political peace. In fact, widening income differentials (Israeli income is now 25 times that of Palestinian income) and worsening economic conditions are the result of the closure regime, which Khoury described as “the main obstacle that faces Palestinian economic recovery.”

Restrictions to access, movement, and direct links between the occupied territories have considerably stifled any attempts to stimulate the Palestinian private sector. Khoury added that the closure regime has reduced the Palestinian economy’s ability to efficiently translate foreign aid funds into economic growth. “Aid alone,” he contended, “cannot solve the woes of the Palestinians.”

The restrictions of the closure regime prevent the Palestinian economy from meeting domestic demand. The injected aid funds, therefore, primarily are used to purchase Israeli and Chinese goods and services—a process that stimulates the economies of Israel and China, but not of Palestine. Khoury equated the paradoxical effect of aid to “trying to heat or air-condition a room with all the windows and doors open.”

He further predicted that the Palestinian economy will benefit even less from international aid in the future, as major donors turn inward, attempting to hasten economic recovery at home. This unfortunate reality, he argued, only reinforces the urgent need to put an end to the closure regime. Under current conditions and with forecasted reductions in the level of assistance, “jumpstart[ing] the private sector and...the local economy” appears increasingly difficult.

Khoury expressed particular concern on the issue of Jerusalem, which he warned was “a new Gaza in the making.” The closure regime has isolated Arab East Jerusalem from its natural economic partners in Gaza and the West Bank. Economic indicators confirm a trend toward ghetto conditions. Unemployment among Arabs Jerusalemites has reached 25 percent, Khoury said, which is roughly 15 percent greater than the unemployment rates in Ramallah or Bethlehem.

Moreover, differentials between Jewish and Arab Jerusalemites are more pronounced. Municipal budget allocations, for example, are vastly disproportionate in favor of Jewish residents. “The 34 percent of the [Arab] population receives only 8 percent of municipal budgets,” he pointed out, “as compared to 92 percent of the budgets received by the 66 percent [the Jewish population].”

In light of these facts and the ongoing attacks in the Haram al Sharif area, Khoury told his American audience that Americans and the international community alike “all need to stand up” to counter the intensification of Israeli policies on Jerusalem. Furthermore, he said, efforts must be made to encourage Palestinian unity and the democratic process.

For more information visit <www.thejerusalemfund.org>.

—Andrew Blakely