The PIC: Worthwhile or Irrelevant

By Caelum Moffatt

Last week, Palestinian Prime Minister Salam Fayyad announced that the highly anticipated Palestine Investment Conference [PIC], held in Bethlehem between May 21-23, had raised $1.4 billion. The lavishly catered and grandiose spectacle that operated under the slogan of “Palestine is open for business” hoped to act as the second installment of investment in Palestine, emulating the intrigue and support demonstrated at the Paris donor’s conference hosted in December 2007 where $7.7 billion was pledged in endorsement for a development and rehabilitation plan for Palestine. According to the PIC CEO, Dr. Hasan Abu Libdeh, this unprecedented venture aimed at gathering foreign investors, predominantly from the Arab world as well as local Palestinian businessmen and prominent private sector entrepreneurs from around the globe “to share innovative business ideas, forge genuine partnerships… and encourage a developing relationship between Palestine’s public and private sectors”.

With speakers ranging from eminent politicians such as Salam Fayyad, Tony Blair and Bernard Kouchner to established economic minds such as Chairman of the Portland Trust Ronald Cohen, Managing Director of the World Bank Juan-Jose Daboub and Deputy Secretary of the US Treasury Robert Kimmit, all present to offer their pearls of wisdom on the prerequisites to create the conditions for a prosperous economy, the PIC was billed as a mouth watering prospect. These combined with Palestinian business owners and experienced members of the private sector in the Arab world also ensured the PIC received sufficient validation and credibility, contributing to the notion that the conference could manifest as a genuine move to instill real advancements in Palestine and would not simply be a social networking event with complementary incentives.

Furthermore, the agenda of the PIC was rather succinct and comprehensive, covering all aspects of potential Palestinian investment including finance, tourism, agriculture, ICT, manufacturing and one which merged infrastructure, real estate and construction. All sessions were chaired and paneled by a range of experts in their respective fields from all around the world. There were also open sessions on the practical issues and opportunities of investing in Palestine, revitalizing Gaza and east Jerusalem.

Despite the extensive format, this eagerly awaited event in Bethlehem could not escape the standard onslaughts of criticism regularly extended to such pioneering efforts that attempt to instigate change.

The first area of contention voiced by commentators was the prospective benefit of having an investment conference while under an Israeli occupation that substantially restricts movement and access in the region, is partially or fully in administrative/military control of over 90% of the West Bank and is in no position to allow the revitalization of Palestine or permit Palestinians to become more financially viable or independent [64% of Palestinian exports presently go to Israel] as it would greatly weaken their advantageous position as an occupier in any ensuing peace deal. Similarly, in Gaza, Israel controls the border crossings, the sea, the air and the amount of medical, food and electricity supplies that enter the coastal strip. How can there possibly be any chance of investment in Palestine when Israel has such an overwhelming influence in its daily functioning and potential success? Why would Israel alleviate Palestinian restrictions for something that will diminish their grip and work in contradiction to their interests?

Constant reminders of the intrusive and ubiquitous nature of Israeli occupation could be seen throughout the conference. Participants had to drive parallel to the Separation Wall to reach the Intercontinental hotel in Bethlehem for the opening plenary of the conference on day one; if one were to step outside of the Convention Palace on day two to inspect the exhibition displaying goods/projects currently found throughout Palestine ready for investment, one would be able to see not only the Separation Wall strategically placed on an elevated position encircling the Bethlehem area, but would also be able to spot a few illegal Israeli outposts situated at the top of the hill. Lastly, on day three, if any given participant held a West Bank ID like the vast majority of Palestinians and wished to go back to Ramallah and report back to his friends about the positive direction of the Palestinian economy after the conference, he/she would have to travel through Wadi al-Nar checkpoint [one of 600 in the West Bank] and possibly be subject to hours of delays. Our service cab was kept at the Israeli checkpoint for two hours just because our driver made a passing joke about the soldier standing in the heat.

The second point of dispute was the PIC’s apparent avoidance of the present political climate. Throughout the duration of the sessions on the sectors of the Palestinian private industry that require investment, there was a word that failed to pass from anyone’s lips. This taboo word was, of course “Hamas”. The Islamist group, who ousted Fateh forces from Gaza in June 2007, is now the governing body in Gaza locked in an intense confrontation with Israel. To make matters worse, Hamas and the PA are not officially on speaking terms with the PA wary that any dialogue may affect the peace process ostensibly in motion with Israel. Therefore, what value is there in launching an investment proposal for Gaza when Palestine is suffering a most serious internal division which shows no signs of progressing? There is a blockade with next to no access and people are on the brink of humanitarian disaster. Food and medicine cannot even reach Gaza sufficiently let alone private investment projects and funding. Therefore, the coastal strip’s future is very fragile. However, the reason for these points being omitted is not surprising and completely understandable – any foreign investor privy to this information would not dream of investing in an unstable and unpredictable environment, especially not one that is rather more detrimental than conducive to investment.

Lastly, some analysts claimed that the conference attendees were not taking into consideration the negative long term implications of seemingly positive short term investments. If investment does thrive in Palestine and the economy begins to flourish while under occupation, what are the consequences of this success? The worry is that firm investment in specific areas of the West Bank will simply entrench the occupation, allow different regions within the West Bank to become more financially independent and subsequently more viable. With the existence of Israeli pockets of control, the West Bank projects will have severe limitations on growth and expansion, therefore once the regions begin to prosper and push their boundaries, they will be cut off and isolated from each other, further indirectly implementing Israel’s policy of segregation and creating more facts on the ground that make a contiguous state more unfeasible.

Undoubtedly, the Israeli occupation and the duopoly in Palestine are of paramount importance and monumental obstacles to prosperity. It is imperative that they are factored, measured and solved in order for Palestine to progress, but the real aim of the PIC was to disprove the myth that Palestine is a hub of inactivity, a barren third world land with a stagnant economy, incapable of producing, cultivating, modernizing or prospering without significant deliveries of foreign aid.

In this respect the conference was productive. Information on the capacity available in Palestine was greatly stressed at the PIC disproving the notion that Palestine is an infant when it comes to development and investment. In finance, Palestine is enjoying a 3.3% growth rate, set for a 500,000 increase in the work force over the next five years with 66% of the population under the age of 25 and a stock exchange that regularly outperforms its regional competitors. The banks in Palestine have up to date banking regulations, compliant with international standards. There are already projects in the pipeline on affordable housing, loans and mortgage assistance sponsored by international investment companies who allayed the presupposed risks felt by private investors prohibiting them from investing in Palestine. In addition, 26 projects worth an estimated $1 billion are currently ready to be begun immediately in the infrastructure, real estate and construction sectors; projects which aim to capitalize on the tourism, manufacturing and ICT are being constructed and deployed while the diverse options inherent in Palestinian agriculture are already receiving support from USAID and MIGA.

Specific attention was given to the untapped potential of Gaza. With its geographical location on the Mediterranean, a sea port and airport which could be opened for service relatively quickly if required, its offshore natural gas, mild climate for agricultural produce and its highly skilled workforce desperate for labor, Gaza does not need handouts but rather a boost to reestablish the prosperous economy that was apparent in the past. There are presently 24 projects worth approximately $2 billion in furniture, pharmaceuticals, construction, garments and many more ready to be launched. A major victory of the conference was securing the attendance, through the Israelis, of 122 businessmen from Gaza who were able to converse with foreign investors concerning prospects for investment in the coastal strip.

Naturally, one would be naïve to completely relegate Israeli occupation and the duopoly in Palestine to the dark confines of memory or delve into the hype of investment without hesitation. However, predetermining the conference as doomed to inevitable failure is equally as naïve. The fact that the PIC concentrated, even waxed lyrical, more on the “potential” of Palestine rather than the current “reality” is not an instance of the PA betraying the Palestinian people by rushing from point A to point C or adopting a delay mechanism to secure more money, but a necessary ploy to increase awareness and transparency on the future of Palestine. Not once in the conference did speakers promote the idea of investment as a forgone conclusion with minor obstacles and there was no inclination of false hope promised for Palestinians. After all, there is no harm in inviting a plethora of people from a vast spectrum of countries to see the dilemma facing Palestinians first hand. Palestine is one of the places where people surrender their preconceptions and convert once they are enlightened into the true intricacies of the Palestinian position and after the correct information has been divulged.

The foundations and the conditions must be prearranged, the projects devised and the investment guaranteed so that Palestine can hit the ground running when the opportunity finally arises. Having said this, many forms of investment, such as the ICT sector, are not restricted or hindered by checkpoints or border crossings. More important than anything else is that Palestine must remain in the minds of the international community to make sure the cause is not abandoned or forgotten. If this means regular conferences akin to the PIC have to be scheduled then so be it, as they continue to attract interest and sponsorship as well as stiffening the resolve of those involved and consolidating the Palestinian position.

(This article was originally published in MIFTAH – www.miftah.org – June 2, 2008)

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