By Samah Sabawi
In 2008 Netanyahu announced during his election campaign that he plans to ‘weave an economic peace alongside the political process which will give a stake in peace for the moderate elements in the Palestinian society’. (1) Since its election, the Netanyahu government has made “economic peace” central to its policies in the West Bank. This is not a coincidence. At a time when Palestinian civil society and grass roots solidarity groups are calling for an economic war on Israel, the Apartheid State has waged economic peace in order to undermine its efforts by seeking normalization with Palestinian and Arab businesses as well as Palestinian and Arab leaders. In order to understand what Israel is offering and the kind of trapping that has been laid out for Arab and Palestinian investors, we must first take a look at Israel’s history of economic manipulation.
Contrary to all the hype that surrounds economic peace, it is important to acknowledge the fact that it represents more of the same old policies Israel has pursued in the Occupied Territories for decades. Since 1967, Israel has faced the same dilemma it does today; annex Gaza and the West Bank and form one geo-political and economic unit, one State and integrating the Palestinian population into Israeli society; or comply with international law and withdraw from the territories occupied and later have two political and economic units, two states, one Palestinian and one Israeli living side by side. Since 1967, Israeli politicians have chosen neither option. They wanted the land and the resources but not the people. So instead, they’ve opted for a course that falls somewhere in between. The Israeli government decided upon (limited) economic integration and practical elimination of the Green Line. ([2) This was the beginning of Moshe Dayan’s Open Door Policy – an older version of what is today Netanyahu’s Economic Peace. Dayan’s policies were based on the assumption that close economic dependency would prevent Palestinians from contesting Israeli occupation by force. (3)
To foster this economic dependency, Israel isolated the West Bank and Gaza strip from the rest of the world. Palestinians in the OT were only allowed to trade with Israel (and in limited amount of agricultural goods with Jordan). (4) Israel monopolized the Palestinian captive consumer market flooding it with Israeli goods and products and at the same time through various tariffs and regulations, it restricted the entry of Palestinian products into Israel. Palestinian workers were allowed to work in Israel as cheap laborers but they were not afforded many of the worker’s rights afforded to Israeli workers doing the same job. Israel also strangled the Palestinian economy by placing restrictions on investment in agricultural and industrial productions. For Palestinians who wished to build a factory or import equipment a permit from the Israeli military governor was needed but was rarely attained. Israel’s policies yielded clear results; between 1970-1993, Israel accounted for 90% of the West Bank and Gaza Strip’s exports, and 70% of their imports and became the major source of employment for Palestinians. Desperate for work Palestinians were willing to work on Israeli settlements and Industrial Zones in poor conditions in low paying jobs most of them earned 30-50% less than Israelis working in the same occupation and sector.
When the first intifada began, it should have served as a clear indication to Israel that economic dominance and control cannot dampen a people’s dreams of equality and nationhood. If anything, it was the poor conditions, the low pay, the lack of civil rights and the blatant double standards in dealing with the Palestinians that sparked the first intifada. And it was the first intifada that brought about what became known as the Oslo years. A new phase in Palestinian Israeli politics but not necessarily a better one.
Oslo was supposed to pave the way for reducing Palestinian economic dependency on Israel until the creation of a Palestinian state. The Palestinian National Authority was established and became responsible for the economic management of the OT starting in 1995. As part of its mandate, they were to create and implement policies related to industries, business, finance, employment and taxes amongst a long list of other things. But as time progressed, it became clear that economic management under the suffocating grip of occupation was not possible. The PA had no authority over the land they managed, its boarders, its air and its sea. With a few minor exceptions, all goods imported by the Palestinians were made to pass through Israeli controlled areas first and were subject to Israeli Custom Duties and Trade Policies. And as settlements grew at more than double their rate prior to Oslo, an Israeli policy of checkpoints, curfews and closures prevented Palestinian workers from accessing their jobs in Israel and from getting to and from their work places even within the territories. This lead to a decrease in Labor reliance on Israel but it meant an increase in Palestinian unemployment. Then came the apartheid wall separating farmers from their land, doctors from their clinics, teachers from their schools etc…While the Palestinian economy continued to disintegrate, territorial fragmentations worsened and unemployment and poverty increased.
Palestinians came face to face with Oslo’s failure. This was intensified during the second intifada, the destruction of Jenin, the confinement of Arafat the mayhem in Ramallah and the long list of corruption charges against the PA. It was against this backdrop that the Palestinians went to the polls in 2006 and voted Oslo out by voting Hamas in. The West and Israel boycotted the newly elected government but knew that they needed to reinvent their approach of pacifying the Palestinians through a system of economic dominance. It was then that Bush’s West Bank First Policy began. The underlying assumption of this policy is to reward so called “moderates” in the WB and engage them with promises of economic prosperity in hope that full stomachs will mean a tame population. This while punishing so called “extremists” in Gaza and crushing down resistance by means of economic boycott.
It was in this environment that Netanyahu’s idea of Economic Peace was born. His vision is based on the same assumption as Dayan’s open door policy of the late sixties, and Bush’s West Bank First policy a couple of years ago: Rewarding “moderates” who don’t protest the occupation while starving and making example of those who do. The most questionable aspect of Netanyahu’s plan is to develop "three or four" joint Israeli-Palestinian economic projects or as more commonly known industrial zones along the West Bank border area with the support of Egypt and Jordan.
There is nothing new about building Industrial Zones in the West Bank. In fact, there are already around 18 Israeli industrial zones in the OT and in most cases they are attached to Israeli colonies making them the economic engine of the settlement blocs. (5) It is important to recognize that Israeli Industrial Zones in OT are considered illegal under international law, but they are an attractive lure for Israeli businesses as they receive generous tax reductions from the government, and they deal with minimum environmental and labor regulations. This is one reason why they tend to house a large number of industries that deal with toxic materials and harmful waste. There are no proper checks to ensure Palestinian workers’ rights. So these industries exploit Palestinian workers who make less than one quarter that of what Israeli workers make. (6) Although Palestinian Workers are made to pay for membership in the Histadrut, they are not entitled to become members and are not represented in labor disputes.
Having established the reality of existing Industrial Zones let’s examine what we know about the new Industrial Zones that are coming into being under Netanyahu’s “economic peace” plan. Today, we are looking at the development of 3 or 4 new joint Palestinian Israeli industrial zones in the West Bank. The key words here are Joint Palestinian Israeli. This is significant to the BDS campaign because it introduces a new sinister twist to an already tragic tale. Products made in these Zones will have a “made in Palestine” stamp and therefore these zones will have an advantage that previous Israeli Industrial zones in the OT didn’t, they can now act as gateways to the Arab and World markets which have in the past rejected products made in the Israeli settlements.
The first and largest Joint Industrial Zone is being built near Jenin and it is predicted to be operational by 2011. According to a report by Shir Hever from Alternative Information Center in Jerusalem (AIC) (7) all of the new joint Industrial Zones will have a gate on the Palestinian side where Palestinian workers can come and go and another entrance on the Israeli side where the products go out into Israel for export or sales. Products from these zones can only be exported through Israeli companies. Hever reported that the zones are under strict security control and although they are built on Palestinian land, the security will not monitored by Palestinians but by private companies approved by Israel. Also, that all the Industrial Zones will be walled in by one side by the apartheid wall which is a violation of international law because according to a ruling at the International Court of Justice in the Hague using the wall for any purpose even if it were to help the Palestinians is considered collaboration in a war crime. What was most disturbing in Herver’s report was that the Palestinian worker’s salaries were already set at about 200 Euros/month and it had been decided already that Palestinian workers will not be allowed to join any labor unions. Finally, Herver reported that the companies which will operate in the Industrial Zones are not going to be Palestinian companies but are actually Israeli or international.
When Netanyahu first proposed “economic peace”, the PA was very critical. In March 2009 Saeb Erekat the chief Palestinian negotiator wrote in the Washington Post “Rather than ending the occupation, Netanyahu has proposed an "economic peace" that would seek to normalize and better manage it. Instead of a viable Palestinian state, his vision extends no further than a series of disconnected cantons with limited self-rule.” (8) Also, Salam Fayyad who is the Prime Minister of the PA and a former International Monetary Fund economist insisted that the conflict was a political one that required a political solution. His direct quote to Haaretz was "Even though I am an economist by profession and I appreciate the importance of the economy very much, the solution is not to be found in money or in industrial zones. I am interested not in redefining the occupation but in ending the occupation." (9)
Yet the reality on the ground is telling us a different story. While the PA seemingly refuses to “talk” with the Israelis until they see a settlement freeze, we are seeing reports of monthly Joint Economic Committee meetings between Israeli Vice Prime Minister and Minister for Regional Development Silvan Shalom and the Palestinian Minister for National Economy Bassem Khoury. (10) We are also hearing from the Israelis success stories of Palestinian Israeli joint business ventures. This raises many questions in the minds of Palestinians and justice advocates everywhere. The Palestinian Authority needs to address these questions: Will these joint economic ventures help the Palestinians or will they “redefine the occupation” with a “made in Palestine label”? How much jurisdiction will the Palestinians have over the Industrial Zones? Will Palestinians have open-free access to import and export outlets (airport, seaport, and land borders)? Do we risk legalizing the presence of Israeli industry on Palestinian occupied land? Do we risk sacrificing the rights and dignity of our working class by denying them worker’s rights and memberships in labor unions?
The Palestinian Authority needs to be accountable not only to its wealthy class of Palestinian investors and would-be profiteers, but to all Palestinians especially those who linger in the refugee camps, and who will be exploited as disposable cheap laborers. The need for economic viability and job creation in the West Bank, and the excitement of the private sector over the idea of building a strong Palestinian economy can be understood, but how much do Palestinians stand to lose when our policies are no better than those of our occupiers.
Palestinian Civil Society was clear in its calls for justice and equality through the implementation of a global Boycott Divestment and Sanctions campaign against Israel, a campaign that is gaining great momentum. Arab and Palestinian normalization of business relations with Israel and trading Palestinian legitimate rights for short-term economic gains that will only benefit a select class will no doubt undermine these efforts.
– Samah Sabawi is a writer playwright and poet. She was born in Gaza and is currently residing in Melbourne Australia. She contributed this article to PalestineChronicle.com.
 “Netanyahu: Economics, not politics, is the key to peace” Raphael Ahren. Haaaretz Nov 21, 2008.
 “Israeli Policy towards the Occupied Palestinian Territories: The Economic Dimension, 1967-2007.” Arie Arnon The Middle East Journal
 “A Palestinian View: repeating old mistakes” Ghassan Khatib. Bitterlemons.org Septmeber 3, 2007.
 “The Palestinian Economy and the Oslo “Peace Process" by Leila Farsakh Research fellow at the Trans-Arab Research Institute, Boston.
 Industrial Zones and Israel’s Colonial Strategy Fact Sheet Canadians for Peace and Justice in the Middle East.
 Although an Israeli Supreme Court recently ruled that Palestinian settlement workers are entitled to the Israeli minimum wage, the Israeli Ministry of Industry has claimed that this ruling does ‘not expand to the criminal enforcement of the state’.
 Shir Hever from Alternative Information Center in Jerusalem (AIC).
 “Israel’s Step Back From Peace” The Washington Post March 2009.
 “Palestinian PM: Settlement building will destroy peace process” By Akiva Eldar, Haaretz Correspondent 18/11/2008.
 Permanent Mission of Israel to the United Nations Press Release Israel-Palestinian joint economic committee convenes.