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Fuad Abu Hamed, the IMF & the Palestinian economy

22 September 2010
3 Comments
Categories: Business, Israel, Palestinians

21C is an excellent Israeli website. It recently featured Fuad Abu Hamed, a rags-to-riches story of the Palestinian economy. His latest success in training Palestinian women has won him an award from the Hebrew University in Jerusalem. His bio is impressive.

But does one individual triumph should not allow to draw conclusions about the rest of the Palestinian economy?

The World Bank, the IMF and many other international institutions have spent much of the past decade producing streams of stats on the Palestinian economy. The latest report has come from the UN Conference on Trade and Development (UNCTAD), which estimates that the gross domestic product (GDP) rose by 6.8 per cent in 2009.

Encouraging, but the documented concluded that: –

….. the Palestinian economy is loosing some $800 million a year as the result of the Israeli closure and blockade policies, and that the 2008-2009 Gaza War drained a further $1.3 billion from the territory’s economy. 

….. the per capita Gross Domestic Product (GDP) was still 30 percent below what it was 10 years ago and at least 30 percent of the Palestinian workforce remained unemployed. Some 80,000 jobs are lost each year due to the Israeli closure and blockade policies, the report found.

“Basically the Palestinian economy has lost a third of its productive base that was there 10 years ago,”  ….

Sad. Gaza specifially, a historically fertile region with an educated population, suffers from high unemployment. But there is another side to the equation of logic.

Much of the economic growth has been registered in the West Bank, where a decrease in violence has enabled roadblocks to be removed. Nearly 2 years ago, a small but growing Israel Palestinian Chamber of Commerce was initiated through Ramallah. Tony Blair is actively encouraging tourism projects. Boutique shops in Ramallah, a cinema complex in Jenin, an emerging stock market – times are a changing.

So, the IMF et al are correct that Israeli restrictions impede Palestinian growth. that’s a given in any war scenario. But they conveniently forget that the policy is forced on Israel out of security concerns – the week of September 7th alone saw another 9 rockets fired at Israel. And as proven repeatedly, once there is a demonstration to show peace, Israel removes the impediments and in rolls the money.

As I said logical; simple and obvious. But there is also another reason why Palestinians find their economy lagging behind others.

I am not referring to the continuous corruption or the disappearing millions of foreign aid or the on-going funding of incitement against Israel – all resulting in the abuse of the generosity of Western taxpayers.

It is the internal lawlessness of Palestinian society, often exploited by a ruthless leadership, that appears to cause desperate harm to the average Palestinian’s financial status. Last week, the Ramallah-based Palestinian Independent Commission for Human Rights issued a damning press release of on the subject of repression. For example: –

….. on September 15, 2010 the (Palestinian) police shut down the Restaurant Hotel and Café of the Orient House ….. …

ICHR has monitored several incidents like these during the same period, as the General Investigation Force disrupted on 7/9/2010 a cultural event organized by the Cinema Forum in the gallery of Asamak Restaurant, ……

On 12/9/2010, a force of the General Investigation Unit disrupted a cultural eve organized by the Association of Community Colleges Graduates in the gallery of Al-Bieder. ….

On 5/9/2010, the Attorney General ordered a jockey club closed in the area of Shiekh Ajlin in Gaza city for (21) days claiming it doesn’t have the necessary licenses.

On 2/9/2010, the police shut down the Restaurant and Café Shop of “Sma Gaza” for three days because it let women smoke water pipe (“Nargile”).

I bet that Fuad Abu-Hamed does not love Israel. However, he has found a non-violent way to better the lives of his fellow Palestinians. His story is just one example of what can be done effectively, splicing aside the rhetoric of Hamas and the spin of exploitive NGOs.

It would seem that there is a Palestinian economy waiting to be noticed. Could it be that the interests of politicians are preventing it from shining through?

Sustaining the Gaza economy

21 July 2010
2 Comments
Categories: Business, Palestinians

Like many things in Gaza, the truth about its economy is covered up amongst the spin of interests groups and their supporters. Even the IMF and World Bank surveys, are often prepared by locals, who are suspected of having a ‘less-than-objective’ agenda.

As I observed a few days ago, the inherent contradictions were brought to light by the visit to the region of EU foreign policy chief, Ashton. In order to combat what she saw as a humanitarian crisis, she announced another aid package. Yet, on the same day, the people of Gaza were treated to a brand new shopping mall.

What’s really going on?

Back in May, before the flotilla fiasco, the Financial Times was already reporting that: –

Some argue that Gaza’s tunnel economy is becoming a victim of its own success. … the remaining tunnels, about 200 to 300 according to most estimates, have become so efficient that shops all over Gaza are bursting with goods.

Branded products such as Coca-Cola, Nescafé, Snickers and Heinz ketchup – long absent as a result of the Israeli blockade – are both cheap and widely available. However, the tunnel operators have also flooded Gaza with Korean refrigerators, German food mixers and Chinese airconditioning units. Tunnel operators and traders alike complain of a saturated market – and falling prices. “Everything I demand, I can get,” says Abu Amar al-Kahlout, who sells household goods out of a warehouse big enough to accommodate a passenger jet.

A month later, The Economist confirmed that life in Gaza was far different than what Ashton et al is led to believe.

American investors of Palestinian origin are set to open Gaza’s first mall. Land prices in Gaza city have shot up. Saudi investors have asked management consultants to look for opportunities.

The Palestinian news agency, Maan, is an excellent source of news. If you click on its Gaza page, you will see a typical spread of anti-Israel features. Understandable. And in-between, you can also learn how new cars are about to be sold in Gaza. Evidently, there is a lot of spending power in Gaza.

Maybe the real question is who has access to this financial wealth? In early July 2010, the Palpress news agency released a report in Arabic about Hamas corruption in Gaza. As a (google-supplied) translation reveals:

 Hamas movement in the Gaza Strip a chronic crisis because of corruption, its ugliest forms, in all joints of political and military, from its Prime Minister Ismail Haniyeh, who continues with his family to buy apartments and land through the military wing ” Qassam Brigades, “all the way to junior government officials who receive bribes from citizens burdened because of the Israeli blockade.

So we have NGOs and the EU claiming water and health situation in Gaza is not up to standard. We have consuming spending going through the roof. And the top politicos are on a roll.

In order to sustain this economy, three things need to happen. First, Hamas must maintain its autocracy. Second, Western taxpayers must be prepared to contribute generously, and at the expense of other important causes. Finally, the international media must continue to ignore such contradictions, just as it has failed to report on the new mall.

What Israeli spin cannot hide about the Palestinian economy

18 July 2010
4 Comments
Categories: Business, Israel, Palestinians

  On 14th July, the EU announced increased financial support for the Palestinians.

The European Commission has agreed an additional financial package worth € 71 million for the Occupied Palestinian Territory, topping up the € 224 million already allocated by the EU in the 2010 European Neighbourhood and Partnership Instrument, as well as a reinforcement of humanitarian aid for Palestinian refugees.

For Catherine Ashton, the EU top foreign policy official, Israel has not done enough to help the poverty of the Palestinians. And many claim that the situation in the West Bank is not much better. Citing charities like Save The Children Fund, bloggers say that West Bank prosperity is  a myth.

Boring stats reveal that in absolute terms Gazans received only 12 tons per month of food aid – far less than Zimbabwe, Ethiopia or any of the other hot spots. Put that into “loaves of bread per head”, and suddenly Palestinians have received 10 times more than their “competitors”.

Sounds wrong? Well have a look at these photos. On the same day that Ashton was moaning about poverty in Gaza, a brand new shopping mall was opened in the area. Some kind of computer imagery ploy? Not if you check out the website of the mall.

And no, these are not isolated situations, taken out of context. Here is how one Syrian blogger compared many Arab countries to what he has witnessed in Gaza.

And as for the West Bank, it is not just the luxury car business that is booming. The end of Plaetinian led violence has seen a return to the choices of normal consumer spending.

The biggest demand is for their four-wheel-drive models, but prestigious European cars are also selling well. The Al-Bustami company, for example, deals exclusively in German cars such as BMW, Mercedes and Golf.

What is it that Ashton refuses to acknowledge? Why are Western taxpayers bank rolling this hypocrisy?

Back in February 2010, acclaimed Palestinian journalist, Khaled Abu Toameh, asked the same question.

Donor countries have yet to respond to revelations by former Palestinian intelligence official Fahmi Shabaneh that top Palestinian Authority officials are continuing to pocket millions of dollars, earmarked for financial aid to the Palestinians in the West Bank and Gaza Strip.

“Don’t the Americans, Europeans and Arabs care about their money that is being stolen? If they continue to turn a blind eye to the corruption of the Palestinian Authority, Hamas will eventually take over the West Bank the same way they took the Gaza Strip.”

Nearly a month after Shabaneh, who headed the anti-corruption unit in the General Intelligence Service, revealed in an exclusive interview with The Jerusalem Post that some of Palestinian Authority President Mahmoud Abbas’s close aides and loyalists had siphoned off hundreds of millions of dollars to private bank accounts, decision-makers in the US and EU continue to bury their heads in the sand.

Hamas or PA; Gaza or West Bank;  Ashton and her caring political friends are determined to plough on with their spin, but for the benefit of who?

Gaza after the flotilla – what’s changed?

13 June 2010
3 Comments
Categories: Israel, Palestinians

It is over 2 weeks since Israel launched its raid on the Gaza bound flotilla. It would seem that the diplomatic fall out, especially in Europe, has not gone the way of Jerusalem. Spain for one is asking that the EU secure a change in the so-called blockade procedures by Israel.

Israelis argue that Gaza is full of food and common resources. Over 7,000 truck loads of goods were delivered in 2009 alone plus countless smuggling efforts. To that, you can add the fuel paid for by the EU, electricity and telephone services supplied by Israel, the falling price of cement, and so on.

One Israeli blogger, David Frankfurter, has described this scenario as “Liar, liar, pants on fire.” Elsewhere, he gives expression to what many Israelis feel. If the world wants a new attitude to Gaza, then writes Frankfurter: –

…..rules need to be formulated, which are simple, straightforward and easy to understand. Whatever Gilad Shalit (kidnapped by Hamas and not seen for nearly 1,500 days) has free access to, this will be allowed into Gaza….  Whatever he is denied will also be denied.  That includes visiting Red Cross staff. And access to medical care in Israel.  And guns.  And bullets…. Let Hamas draw up the list.

But there is another side to this argument. Check out what the Palestinians are saying about Gaza. For example, leading journalist Abu Khaled Toameh has commented how Hamas will ban the intended forthcoming municipal elections.

This is no isolated policy move. The May 2010 report from the Palestinian Independent  Commission for Human Rights documented 20 Gazan deaths in one month alone related to suspicious circumstances or the result of undue force. Similarly, there were 12 reports of torture, harassment of journalists, attacks of private property including UN facilities, and so on.

I was personally informed about the ransacking of the Sharek Youth Offices, where daily raids from government supported entities have resulted in destroyed and confiscated equipment. As a Sharek press statement observed in commenting on the flotilla incident: –

We do not accuse any particular party but stress that armed groups have taken these actions in the name of national security.  Nevertheless, the government in the Gaza Strip has not taken any significant action and has continued to disregard the violations experienced by Sharek and indeed all civil society institutions.  Given that those who carry out the violations do so in the name of the government in the Gaza Strip, we would like to highlight the following:

  • The government of the Gaza Strip is responsible for providing for the security and safety of its citizens and institutions, in particular against direct violations against them.
  • The fact that a group uses a name other than that of the government does not absolve the government from liability in these matters even if the groups are not related to the security or armed forces of the government in Gaza.
  • The efforts by international activists in the Freedom Flotilla to break the siege of Gaza and the attention of the world’s media on the siege has been used as a distraction and a cover to settle scores with any individual or organization arguing for unity, reform, development, freedom and justice in the Strip.  Such an action is a flagrant violation of the rights of the citizens of Gaza who remain steadfast in the face of the siege and Israeli aggression.

With all the efforts being made by our supporters abroad to break the Israeli siege, we believe we must also draw their attention to the ‘internal’ siege, imposed upon us from within through confiscations and the daily withdrawal of freedoms.  

We do not accuse any particular party but stress that armed groups have taken these actions in the name of national security.  Nevertheless, the government in the Gaza Strip has not taken any significant action and has continued to disregard the violations experienced by Sharek and indeed all civil society institutions……… 

You have the feeling that much of this abuse was around before the flotilla incident and will sadly continue in the months to come. So why is Israel to blame? Plus ca change, n’est ce pas?

 

How Gaza missed a US$1 billion deal

6 June 2010
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Categories: Business, Israel, Palestinians

The second Palestinian Investment Conference in Bethlehem closed at the end of last week. Reports differ, but anywhere between US$500 million and US$1 billion were raised to support Palestinian infrastructure projects. The American government was represented through Obama’s special envoy, George Mitchell.

The fact is that most of the money will end up in the West Bank for two reasons. First, there is no love lost between the Palestinian Authority under President Abbas and the Hamas rulers in Gaza. Fatah and the PLO just do not operate in Gaza.

In parallel, there are logistical and structural issues why Gaza loses out. Over the past few years, violence in the West Bank has reduced substantially. The World Bank reported an 8% spurt in economic growth during 2009. The Ramallah stock market is showing initial signs of trading regularly.

Drive 2 hours south to the Gaza Strip and beneath the rhetoric of Hamas leadership, you find fundamentalism. Even during the fracas with Israeli commandos, Palestinian human rights groups condemned the local leadership for harassment. The Arab Bank has already closed 2 of its 3 branches in Gaza, amid reports of money going missing. And of the 20% of the population listed as refugees, not one family has been relocated to the former Israeli wealthy towns since 2005.

One blogger has described how the Israeli raid of the Turkish flotilla was reported with the full force of Orwellian newsspeak. 6 ships sailed to prevent a human disaster, which does not exist. The Daily Telegraph (UK) quoted Khalil Hamada, a senior official at Hamas’s Ministry of Justice:

There is no starvation in Gaza….No-one has died of hunger.

Yes, the British newspaper also confirms that the Gaza economy is in a very poor condition. Matthew Kalman in Time Magazine reports a similar picture. Hamas is thrilled at the “economy of tunnel goods”,a s it takes its percentages from the profits.

So blame Israel? No blockade and everything will be wonderful? Obvious, but just more Orwellian drivel.

Before the flotilla affair developed into an international crisis, I wrote that:

The flotilla will probably be stopped by the Israeli navy. The passengers will be off loaded, and in turn they will channel their vitriol towards the waiting microphones of the world’s media. And the people of Gaza will continue to buy a plethora of goods under the watchful eye of their fundamentalist Hamas masters.

The predection came true. Now remember that Egypt also enforces the blockade, because it realises the evil of Hamas. And Monsieur Abbas is certainly not opening the financial taps to Gaza.

If Gaza was not ruled by Hamas, how much freer would its people be? How many churches would then be open? And much money would begin to flow into its economy?

Boycotting Israel’s economy the slow way

30 May 2010
1 Comment
Categories: Business, Israel, Palestinians

I have just read a bizarre banner, beaming out political correctness: “Gaza seize isn’t sweet. Boycott Israeli chocs“.

This was all to do with a small protest in New York. It follows similar efforts led by activists, primarily in Europe. They claim that Israel is not interested in peace with the Palestinians, and therefore should be isolated. Sounds cool, until you examine the childish if not racist hypocrisy of the newspeak.

First, consider how these groups spread the word. Obviously, they use computer and mobile tech. Open up these machines of wonder, anywhere in the world, and you will find loads of Israeli tech inside. Yes, Intel’s current and next round of microchip was developed in Israel.

Try googling www.soluto.com. This Tel Aviv start up has just won Tech Crunch’s prestigious 2010 Disrupt competition. Soluto has designed a software to make computer’s work faster. How long will it take for a hate-Israel activists to latch on to that?

Israel’s tech pervades many aspects of life overseas without people being aware of it. Better Place is a prime exponent of battery cars, maing their way into Europe. The country has the top brains in solar and wind tech. The irony is that green politicians, often noted for their criticism of Israel, have consistently failed to reconcile their rhetoric with facts on the ground.

Palestinian President, Abbas, has claimed this week that he “will deal with the USA but not with Israel”. Bravo, a true practioner of the boycott policy.

And here’s the catch! I thought that making peace was all about getting together, finding a way to talk to each other. Rather than boycotting products, surely it would be preferble to arrange joint exhibitions and displays. I is time for Abbas to sit down with his Israeli conterparts. 

If the Palestinians and their supporters are so afraid of letting Israel’s pluralistic society be exposed to others, what are they afraid of? What hatred is their spin covering up?

Gaza’s floating economy

24 May 2010
3 Comments
Categories: Business, Israel, Palestinians

As I write, at least 9 ships are heading towards Gaza laden with humanitarian aid, activists, European politicians and soundbites. The aim is to help the population of Gaza, which continues to suffer from poverty and high unemployment. In addition, the voyagers and their supporters wish to protest against what they see as Israel’s irresponsible behaviour towards the territory.

If you google the phrase “Gaza economy”, you end up with very few serious analyses of what is the true situation in this tiny fertile strip of land. The Financial Times of London, a leading media beacon in international money matters and no friend of Israel, observes that

…the tunnels below Rafah have offered a unique lifeline to Gazans, who are otherwise deprived of all but the most basic humanitarian supplies. They have also allowed Hamas, the Islamist group that controls the Strip, to replenish its coffers and rebuild its military arsenal, making the tunnels a target for Israel……Branded products such as Coca-Cola, Nescafé, Snickers and Heinz ketchup – long absent as a result of the Israeli blockade – are both cheap and widely available. However, the tunnel operators have also flooded Gaza with Korean refrigerators, German food mixers and Chinese air conditioning units. Tunnel operators and traders alike complain of a saturated market – and falling prices.

This is not an isolated piece of reporting. If you pop into the Roots Club in Gaza, according to Lonely Planet, you can dine on “dine on steak au poivre and chicken cordon bleu”. Tom Gross documented the “after effects” of a previous flotilla, when the arrivals were seen purchasing souvenirs in well stocked shops.

Earlier this month, I wrote that:

According to the World Bank, the Palestinian economy is booming. During 2009, growth in the West Bank reached 8%, although Hamas controlled Gaza saw a more modest development of 1%.

 In fact, the World Bank had previously noted that up to the beginning of the Intifada in September 2000, the Palestinian economy grew at over 5% pa in real terms since 1968, shortly after the beginning of Israel’s control of the region. So, while Israel’s current restrictions cannot help economic growth, you have to wonder if the cause of the poverty lies elsewhere.

Ironically, it was the singer Elvis Costello, who indirectly pointed out the true fallacy. This pop icon has just cancelled a two-date performance tour of Israel in protest at Jerusalem’s continued humiliation of Palestinians. On the day of the announcement, Hamas authorities executed three Palestinians…in front of their own families. Who’s humiliating who?

Similarly, who’s starving who? As one Israeli blogger observed, the Palestinians are the recipients of billions annually in aid. We know the shops are full. The UN confirms that Israel sends in tons of aid near daily.

And then there is the housing issue. According to UN stats, just over 20% of Gazans live in refugee camps. Israeli towns in the Gaza Strip were closed down in 2005. Since then, not one person has been allowed to move out of the camps and into these former settlements. Why?

The flotilla will probably be stopped by the Israeli navy. The passengers will be off loaded, and in turn they will channel their vitriol towards the waiting microphones of the world’s media. And the people of Gaza will continue to buy a plethora of goods under the watchful eye of their fundamentalist Hamas masters.

Promoting minority economic sectors: Israeli case study

10 May 2010
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Categories: Business, Israel, Palestinians

Governments around the world are berated for not helping small businesses, which statistically generate over 90% of a typical economy’s wealth.  And it is only a further small step for politicians to ignore the needs of minority groupings.

In the past few months, Israel has launched a major campaign to tackle this problem. It has been spearheaded by the Export Institute, an arm of the Ministry of Industry.

The Arab Business Conference in Nazereth proved to be a launching pad for a multi year strategy, supported by a budget of hundreds of million of shekels.  The fund will provide consultancy services, training and marketing facilities to export focussed firms in the Arab sector. Significantly, the conference was attended by both Palestinians and Israeli Arabs.

On its own, this strategy will not be enough to drive forward the Arab economy. However, to be fair, Israel has invested considerable resources in the past year in assisting the Palestinian economy. A 5 chapter report from the Ministry of Foreign Affairs details some of the recent measures taken: –

For example, in 2009, trade between the two areas increased by nearly 3%, despite the recession. Over 5% more Palestinians were employed in Israel. Several crossing points, such as Gilboah-Jalamah, have been upgraded, facilitating the transfer of goods. Numerous water disposal and / or sewage improvement projects were implemented. The list of public and commercial initiatives is extensive.

Of equal significance is that despite the upsurge in terrorist activity in early 2010, these projects continue to operate and have even been extended. For example, more commercial crossing points are being developed, such as on the 443 road between Jerusalem and Modi’in.

Argue that this is not enough, and you may have a point. However, these are excellent starting points. They need to be supported by similar efforts on the Palestinian side. They serve as a lesson for many other economies around the world.

Are Palestinians losing the economic peace?

6 May 2010
2 Comments
Categories: Business, Israel, Palestinians

According to the World Bank, the Palestinian economy is booming. During 2009, growth in the West Bank reached 8%, although Hamas controlled Gaza saw a more modest development of 1%.

Much of this change has been associated with the reduction in violence directed against Israel. Many remember how at the beginning of the Intifada, 125,000 Palestinian labourers lost their salaries overnight, as Israel was forced to close the border with Gaza. And these were relatively high value jobs, a shortfall which has never been fully made up.

In parallel, Israel’s economy is also doing well today. Yuval Steinitz, the Finance Minister, is looking at 4% growth in 2010. Andrew Stanley, head of the EU Commission in Israel, “said that he is fascinated by the dynamics and resilience of the Israeli economy, which proved to be one of the markets to note the fastest recovery from the global financial crisis.” 

It has been long accepted by all sides of the peace process that Israel will have to help and encourage the Palestinian economy in years to come. Clearly, it has the capacity to do that.

But then comes a catch! The Palestinian Authority (PA) has begun to lead a campaign which boycotts Israeli products, specifically those made in the West Bank.

This policy was kicked off with the official support of Prime Minister Fayyad, back in January 2010. He attended a televised burning of Israeli products, ironically close to the anniversary commemorating Kristallnacht.

This week, the campaign was taken into Arab towns inside Israel, which are also being encouraged not to buy Israeli products.

And there are now moves by the PA to stop all Palestinians working on what are determined as settlements – effecting roughly 25,000 people – and their dependents…and those who they buy goods from.

And that’s the point. It sounds wonderfully politically correct not to “support the enemy”. But there is no spare capacity inside the Palestinian territories to take up the slack. Just look at the Gaza debacle mentioned above. In an agricultural economy with a small population, the fall out will only be painfull. 

None of this furthers the cause of peace. If Fayyad, his cabinet, Hamas and all the rest really want a long term relationship with Israel, it is time for the rhetoric of violence to be replaced by ploughshares. Otherwise, thousands of newly poverty-struck Palestinians will be driven back to hidden stocks of weapons.

Here we go again?

Palestinian & Israeli economies moving in similar directions

10 April 2010
1 Comment
Categories: Business, Israel, Palestinians

Friends and colleagues have mentioned that the Israeli and Palestinian economies are going through a quiet period. No sensational news. No major international investments.

Nothing could be further from the truth.

Look at the stock exchanges in the region. The Palestinian market, located in Nablus and in Ramallah, is being plugged by Barings. In Tel Aviv, the market has climbed over 100% and is back at its previous all-time high of November 2007.

The West bank economy is clearly benefitting from a decrease in local violence. Tourism is up 50%. A new industrial park near Bethlehem is being supported by the French government. And Israel has admitted that it owes the Palestinian Authority hundreds of millions of shekels in back payments – a nice unexpected windfall.

In parallel, local consumption in Israel has been on the move. H&M recently opened large premises in Tel Aviv and in Jerusalem, with queues for the changing rooms taking over 30 minutes. IKEA’s furniture shop in Netanya is one of the most successful in the corporation, and their second Israeli outlet is proving just as popular.

The export market has also taken on a new aspect. While Israel is noted for its innovation and hightech applications, several Israeli retail chains can be found overseas. Clothing, fast food, cosmetics – Israeli shops are pushing themselves into new markets. And Israel’s film industry has been represented at the Oscars for the past three years consecutively. There is life beyond the conflict.

American and Israel may be having a spat. The PA and Hamas may be arguing over who is responsible for Gaza’s power shortage. And quietly, millions of people are trying to put the violence behind them and get on with their own lives – good for the economies and good news for investors.

Has Obama delivered his masterpiece?

26 March 2010
4 Comments
Categories: Israel, Jerusalem, Palestinians

Israel’s Prime Minister, Bibi Netanyahu, walked into a trap, created out of his own ego. President Obama simply closed the door, tight. Elegant and simple. In the eyes of the White House, Bibi has finally to revert from spin to substance.

Reading the papers, many argue that all Bibi has to do is to carry out the Road Map, which previous governments had already committed to. Yes, there are a few tag ons, but they would happen sooner or later anyway.

And why was the Road Map of 2002 not carried out? Without going in to the whole time line, the Palestinian leadership stuck with the Intifada, which turned out to be a series of unacceptable sporadic and inhuman attacks against Israeli citizens. Jerusalem was forced into a series of military responses. In parallel, the trust, which developed via the Oslo Accords and Nobel Peace Prizes was replaced with doubt and deep suspicion. The violence had to cease before there could be an effective return to the negotiating table.

Obama is pushing aside a decade of terror, forcing Israel to dismiss literally overnight all its misgivings. He is demanding that Israel freeze all West Bank activity including in East Jerusalem, as well as the release hundreds of deemed terrorists from prisons.

In return, the Jewish State is offered the promise of peace. Tens of percent of its wealth will be released from the military sector and devoted to social issues. Its sports teams will compete in Asia. Arabia will open up to trade and other delights. Europe will cease its diplomatic coldness. A brave new world could be around the corner.

So if Bibi delivers on what Obama demands, assumedly it will be left for Obama to convince the members of the Arab League to come to the party. And we all know that we are talking about a group, which remains united on one issue only – its common distrust if not demonic hatred of Israel.

What will this mean in practice? Will Syria stop encouraging Hizbullah in Lebanon from attacking Israel’s northern border? Will Hamas, which has held an Israeli soldier captive for 1,400 days without one visit from the Red Cross, respond to calls to open itself to pluralism? Will Saudi Arabia finance the peace plan, when it has rarely honoured monetary promises to the Palestinians?

And President Abbas cannot be ignored. Here is the man, whose heroic path in the Palestinian resistance movement was engraved in his planning of the massacre at Munich in 1972. Yes, Munich, the same city where Chamberlain had signed away the deaths of millions decades earlier. For all Obama’s pressure on Bibi, Abbas has yet to say openly and unreservedly and repeatedly if he is prepared to recognise Israel, unconditionally.

Obama is a man of sincerity. The health bill has its critics, but it will be bringing a major improvement to the lives of millions, very belatedly. To have lost the Congress vote would have meant a loss of credibility and power for the president. To fail in the Middle East will mean the loss of some Jewish votes and maybe the eventual demise of the one democratic state in the region, but not much more than that.

So the question is not as the media would have us believe when it asks how much pressure is on Bibi. What interests me more is if Obama will deliver on his peace promise or has he will he be handing over Washington to the ghosts of Munich past?

Palestinian economy – new achievements

23 March 2010
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Categories: Business, Israel, Palestinians

Talk about the rights and wrongs of the Palestinian economy, and you automatically get caught up in the crossfire of Middle East protagonists.

The story of UN Secretary General, Ban Ki-Mon, is a great example. Visiting Gaza a few days ago, he condemned Israel’s blockade of the territory. In parallel, it could be asked why he did not condemn Egypt’s blockade from its side of the border? The Jerusalem Post newspaper, quoting UN stats, questioned if there is a true humanitarian crisis in Gaza.

And so on. However, there are certain facts, which cannot be disputed. The West Bank under the control of the Palestinian Authority had a boom year in 2009, even when international economies were in free fall. The World Bank suggests 8% growth in just 12 months.

Is there more potential to be released? Surely. And the Palestinians have finally realised: Israel relaxes the security measures when there is less violence, ensuring greater freedom of movement. Everyone benefits. Simple.

Move over to Gaza, and the Hamas regime has not delivered economic prosperity. In fact, the local authority has now even began to control who will receive a haircut and by whom.

Meanwhile, Israel continues to allow the transfer of cash to international organisations operating in the Gaza Strip and the transfer of shekels to pay the wages of Palestinian Authority employees (about 70,000 in number).  And it continues to supply around 70% of the electricity needs of the area. 

The bottom line is that the Palestinian economy is split in two. The West Bank is replacing violence for higher income levels. In Gaza, the intensity of the official hatred for Israel is matched only by the high levels of unemployment.

Meanwhile: I have added a series of selected facts taken from the World Bank report and official Israeli sources.

  • Trade between Israel and the West Bank dropped by 4.05% in 2009 as compared with 2008, and constituted 70% of all the trade of the West Bank. The volume of trade with Israel stood at 13,594 million NIS.
  • The total trade of the West Bank grew by 2.75% in 2009 as compared with 2008. The total trade (including Israel) stood at 19,310 million NIS in 2009.
  • Palestinian imports from the world (not including Israel) registered an increase of 25% in 2009 as compared with 2008.
  • Palestinian exports to the world (not including Israel) registered a drop of 2.3% in 2009 as compared with 2008.
  • In 2009, Israel transferred to the Palestinian Authority (after deduction of payments owed by the Palestinians) 4,272 million NIS as compared with 3,918 million NIS in 2008. The increased amount constitutes another indicator of the growth in the Palestinian Authority’s economic activity.
  • Other indicators point at the growth of economic activity: an increase of 41% in truck movement between Israel and the West Bank; an increase of 29% in fuel consumption and of 7.6% in diesel fuel consumption in mid-2009 in comparison with the parallel period in 2008. The significant rise in automobile imports into the West Bank is also continuing.
  • A survey undertaken by the Palestinian Bureau of Statistics among businesspeople in the West Bank and the Gaza Strip in December 2009 points to an increase in optimism among manufacturers and businesspeople.

 Steps Taken by Israel to Support Palestinian Economic Activity

  •   Increasing the hours when the Allenby Bridge Terminal is open to the passage of goods and pedestrians
  • Upgrading the Gilboa-Jalameh crossing point in the northern part of the West Bank for vehicular traffic (opened on 13 October 2009). About 1500 cars enter the West Bank through this crossing point every weekend. Since the crossing point was opened to vehicles, the economy of Jenin has grown by 30-35%. The income deriving from the entry of Israeli Arabs into the towns of Jenin, Tulkarm, Jericho, and Bethlehem is estimated to be around 8 million NIS every weekend. In November and December, over 30,000 vehicles entered through the Gilboa crossing point alone. The permit for Israeli Arabs to enter the West Bank with their vehicles through various crossing points constitutes a significant contribution to the local economic activity.
  • Removal of roadblocks and barriers: Since 2008, the number of major checkpoints was reduced from 41 to 14. From April 2008 until today 209 roadblocks were removed. Ten of the barriers that were removed this past January are on Route 60, the major north-south artery in the West Bank.
  • This past year considerable sums of money were invested in upgrading the crossing points for goods between Israel and the West Bank, so that they could manage the movement of trucks in short periods of time and with efficiency. During 2010, 8 million dollars have been invested (with USAID funding) in upgrading the Gilboa and Shaar Ephraim crossing points for goods.
  • Beginning in January 2010, the hours of operation at the Tarqumiya crossing point for goods were extended, a measure which enables Palestinian merchants to increase the number of shipments which are sent on a daily basis to Israeli ports.
  • The quadrilateral dialogue headed by Japan to establish an agro-industrial zone in Jericho is continuing. An additional meeting will be held on 17 March.
  •  Israel is acting to assist the French initiative to establish an industrial zone in Bethlehem and is acting in full cooperation with the French President’s envoy to move the project forward.
  • Israel maintains close working ties with the Quartet’s Envoy, Tony Blair, and his team to handle and promote economic projects and measures that support economic activity, including the issue of the access road to the town of Rawabi.
  • The Israeli security network maintains close ties with General Dayton and is doing all that it can to assist the process of building the capabilities of the Palestinian security forces. Israel participates in a quadrilateral monitoring forum which convenes pursuant to the Berlin Conference and discusses subjects pertaining to the development of Palestinian capabilities in civilian security as well as in building capabilities pertaining to the law and to the judicial system.

The Gaza Strip

There is no shortage in the Gaza Strip, due in part to the flow of goods and raw materials through the tunnels.

  • Recently, the entry of glass into the Gaza Strip began, to enable the repair of homes that were damaged during Operation Cast Lead against Hamas. More than 100 trucks carrying glass have entered thus far into the Gaza Strip and this is continuing.
  • Israel has advanced contacts with the UN Secretary-General’s envoy, Robert Serry, to approve the carrying out of humanitarian infrastructure projects in the Gaza Strip, with emphasis on water and sewage.
  • Israel enables strawberries and carnations to leave the Gaza Strip for markets abroad.
  • Israel enabled in recent months the entry of cement and construction materials for the reconstruction of buildings and for various humanitarian projects. From May 2009 through January 2010, 1,352 tons of building materials entered the Gaza Strip. Israel approved the entry of an elevator for the maternity hospital al-Awad (15 February).
  • Recently, Israel arranged the matter of transferring social security payments to beneficiaries in the Gaza Strip.

Israel’s natural response – Teva

19 March 2010
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Categories: Business, Israel, Jerusalem, Palestinians

Teva in Hebrew means nature, like wild rolling fields. It is also the name of one of Israel’s largest companies, quoted on NASDAQ.

Teva has grown in 3 decades from an insignificant local manufacturer to become the world’s largest generic drug producer, with factories on 3 continents. Only this week, it completed the purchase of Ratiopharm, Germany, for nearly US$5.0 billion, beating Pfizer to the finishing line.

Barden Capital Management, Texas, is typical of many such firms. It has consistently held a long position in Teva. Assessing the management, current and future market positioning, price ratios etc, they believe that Teva remains a good hold for some years to come.

Teva represents much of Israel’s commerce in that it is a company that has grown despite the existential problems, which the country continues to face. This week, the Tel Aviv Stock Exchange climbed to within 2% of its record high before the credit crunch arrived. Few other bourses can claim that achievement.

You will be unlikely to read about these successes in your average newspaper. Most reports from Israel  this week focus on the diplomatic spat with America; Israel’s poor management of internal decision-making by a minor committee of civil servants in the housing ministry and Washington’s childish response.

In fact, Washington and its European friends were merely content in blasting Prime Minister Netanyahu. They contrived to ignore how Palestinian President Mahmoud Abbas led a ceremony Ramallah to rename the main public square in honor of Dalal Mughrabi, the woman who in 1978 helped carry out the deadliest single terrorist attack in Israel’s history. All this, the day after the American Vice President had met with Abbas.

And neither did the Western allies condemn calls from Hamas and from the Palestinian Authority to react with violence against a religious Jewish ceremony in Jerusalem’s Old City.

Teva represents Israel’s natural response to these hypocrisies. It shows how the country is prepared to just get on with it. All Israelis want to do is to live their lives in peace with the world, creating a better global community.

Women in Israel

8 March 2010
1 Comment
Categories: Business, Israel, Palestinians

It’s International Women’s Day, and the stats come rolling out. In Israel, we read that only 12.9% of CEOs in leading companies are women, up from 8.4% just 2 years ago. In the army, nearly half of the lower officer ranks are filled by women, roughly commensurate to the gender proportion. By the level of Brigadier-General, only 3% are women.

Good? Bad? Getting better? Better compared to others? However you look at it, there is still much to do. And that comes from a country, which was one of the first to have a female Prime Minister. And but for a few thousand votes, a second lady, Tzipi Livni, was almost installed last year.

Clearly, society has much more to learn. There have been 3 major rape case in as many months involving females still at school. The most recent incident concerned students from a well-to-do neighbourhood. What has not been established is if the number of incidents has increased in recent years or if it is case that more are reaching the attention of the police.

By way of comparison, a women’s rights group in Gaza has documented how females are frequently denied their inheritance. The Palestinian Independent Commission for Human Rights has consistently reported on the abuses of female rights, rapes that have gone without investigation, family honour killings, and more.

An interesting way forward came to light last month. There was a competition for the most sexist Israeli adverts of 2009. The implication was that the ads were of poor taste. If that message gets through to more and more people, then Israel will continue to break down the social gaps between the two genders.

Palestinian economy – new perspectives

24 February 2010
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Categories: Business, Israel, Palestinians

Go to Gaza. Visit a village in the West Bank. You will find people living in poverty, especially compared to most OECD population centres.

Then ask yourself where the money has gone and you will start to find some unusual answers.

Let’s start with Israel and Egypt’s blockade of Gaza. Whatever the sense of this policy, the fact is that Gaza is not short of food or commodities. First, most commentators accept that there over 500 smuggling tunnels available, of which around 100 are in operation at any one time.

To illustrate the effect of these supply routes, according to an article in Hebrew by Gideon Eshet in Yediot Ahronot, the price of cement is lower now than before the blockade. A liter of petrol costs approx 2nis (6.4nis or US$1.70 in Israel), with one shekel going to Hamas “admin costs”.

That the Palestinian Authority (PA) and Hamas leadership are awash with cash is not in doubt. This blog has reported on occasions of the corruption endemic amongst much of the respective leaderships. In a legal settlement last year in America, the PA agreed to pay up to US$200 million in damages. Where did the money come from?

In Gaza, Hamas resorts to cash smuggling as opposed to the printing of money. On the West Bank, controlled by the PA, the World Bank (through Western taxpayers) has been paying for water and electricity bills.

And what about the lack of electricity in Gaza? It seems that the power was paid for by the EU, which was supposed to pay the money to Hamas. In addition, Gaza residents are paying to Hamas. But Hamas does not always pay the supplier (which is mainly….Israel). Thus, every so often Israel reduces the supply. And now even the EU is demanding greater accountability from Hamas, which in turn shouts “oi gevalt” insults against European and Israeli hate crimes. Sic!

All this goes to explain the economic contradiction that Palestinians have relatively high expenditure levels but low GDP.

It is time to move past politically correst slogans. Time for greater transparency. Time for Palestinian leaders to start looking after the financial pockets of their own people.

Palestinian economy – moving ahead?

29 January 2010
1 Comment
Categories: Business, Israel, Palestinian Society, Palestinians

Is the Palestinian economy finally showing real signs of improvement? There is cause to believe that it is moving away from conflict-driven scenarios, while looking to create sustained growth.

The World Bank has documented that between 1968 and 1999, Palestinians averaged around 5.5% real growth per year, a brilliant achievement by any standards.

With the onset of Intifada, those figures went in to reverse. Blame Palestinian terrorism or Israeli aggression, the average Palestinian’s income dropped off the scale. Tax collection was almost a non-entity. The Funding For Peace Coalition estimated that 25% of the Palestinian budget came through external donations. And who knows which elements grafted off the top?

So what’s changed? First, the European Union finally began to realise that the billions of aid distributed annually had to be more transparent. In parallel, there is a growing awareness that a dependency on handouts will not create an independent economy.

One example is this new approach occurred this week. The Palestinian Administration has demanded that Hamas pay for electricity used in the Gaza Strip. This is in response to the European demand for greater accountability.

Tom Gross, an established commentator on the Middle East, reported on how Palestinian security forces in the West Bank may finally be turning to formal policing and not actions against Israel. One effect of this change has been the opening of a new cinema in Jenin, until recently known as a centre of the Intifada violence.

At a macro level, a high level Dutch delegation met with the Palestinian minster of the economy and 50 companies in order to discuss investment possibilities. Abraaj Capital has co-sponsored a US$50 million investment fund, primarily aimed at small and medium sized Palestinian enterprises.

All very encouraging. But what next? It is very much up to the leadership of the various factions. The Palestinian Authority, controlled by President Abbas, is still perceived by many as corrupt. And Hamas in Gaza is little better.

Greater transparency and more local projects out of the grasp of politicians. And a continuous uplift to the economy is probably the best method to turn people away from the supporters of violence.

How refugees cope in Israel

2 January 2010
2 Comments
Categories: Israel, Palestinians

Mention the words “Israel & refugees” in the same sentence, and most people tend to think about the Palestinian issue.

Well here’s a little known fact about Israel. In the past decade, the country has absorbed 17,500 refugees from Sudan, Darfur and Eritrea. According to UN stats and quoted in the hebrew newspaper “Yediot”:-

  • 1,500 are minors
  • 7,500 are from Eritrea and 6,500 from Sudan
  • Around 16,000 are Muslims

Many quite simply walked to Egypt, entered Sinai, and then reached Israel across the porous desert border with Egypt. And the numbers continue to grow every month.

The article in the newspaper highlights that the communities are plagued by problems associated with poor immigrant communities; alcoholism, violence, drugs, etc. The crime figures do not make for pleasant reading.

So, on the one hand, these people arrive in Israel due to the awful conditions from they have come. And with no small irony, they deliberately seek out the Jewish state, despite the devout hostility of their own governments towards Israel.

In contrast, Israel finds itself with a moral duty to look after people, who have no where else to go. As just one example, the Tel Aviv municipality has set up special welfare departments to cope with the growing crisis.

And here’s the second irony. Repatriation is not an option. I guess that one reason is that Israel’s Ministry of Foreign Affairs could be worried that such an act would be considered racist and result in a motion of condemnation at the UN. I also assume that the vote would have the support of Eritrea and Sudan. (sic!)

Gaza’s economy – one year on

28 December 2009
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Categories: Business, Israel, Palestinians

It is a year since Israel invaded Gaza. Many NGOs report that the local Palestinian economy has been devasted. A closer inspection reveals a more complciated picture.

 Israel’s action was a response to the thousands of rockets that had been fired at southern towns since the withdrawl from Gaza in 2005. On the anniversary of the start of hostilities this week, Hamas organised a  “mass” demonstration of support. Estimates of the turnout vary, but as the Assocated Press commented:

…the Hamas call to rally was met with indifference. Ignoring a siren meant to call for a minute’s silence, cars whizzed by and pedestrians kept walking……”I wish they had commemorated the war by opening a factory. That would have been better than this,” said Gaza resident Rami Mohammed, 30.

And that is the problem for the Hamas leadership. Not all the people are stupid all the time. They will not continuously accept that Israel is to blame for their economic problems.

Take a look at the “tunnel economy”. First, it has created a new elite, where many of the members are linked to the Hamas leadership. And in true Orwellian irony, Hamas had ousted the previous Fatah leadership, which was seen as ridden with corruption.

Second, the underground economy has become an employer of child labour, a total contradiction of humanitarian ground rules, and thus a cause for more discontent.

There is another secret side to the economy. On the one hand, Hamas cries “poverty” to whoever will listen. And yet, when the time comes, it showers money on to the streets. Pictures from the Eid religious festival revealed shops full of produce.

Similarly, Hamas is thought to have invested around US$2 m in celebrating its battles against the Israeli army. But also this week,

…… sources in Gaza have reported of a new corruption affair in Hamas’ transportation ministry. According to one testimony, a senior ministry official named Ziad Harara took tens of thousands of dollars and disappeared……

This affair is related to the driving studies industry in the Strip. According to reports, senior transportation ministry officials take about $658-790 for issuing a driving license, even for people who do fail to meet the driving test’s demands. Hamas government workers receive a $100 bribe for letting people pass a theory driving test without taking it.

Christmas 2009 in the Holy Land

18 December 2009
4 Comments
Categories: Israel, Jerusalem, Palestinians

This coming week, the Jerusalem Municipality will distribute free Christmas trees to the Christian residents of Jerusalem. A lovely gesture and not a solitary one from Israeli officialdom.

Yesterday, the Tourism Minister, Stas Misezhnikov hosted a special reception for Christian leaders of several denominations. This came two days after the Hebrew University in Jerusalem announced that its team had analysed the DNA of a man from the time of Jesus. The skelton was found in a tomb near Jerusalem’s Old City and presented clear evidence that leprosy existed at that period.

As Christmas approaches, the international media almost inevitably sends teams to the Holy Land. They usually ignore such stories. They will bypass the continuing harassment of Christians in the West Bank and in Gaza. 

Instead, Christmas is exploited as a further opportunity to demonize Israel. It is sad and ironic. Israel, the one democracy in the Middle East and the one country in the region where the Christian community is actually growing, suffers from this distortion of truth, and at such a spiritual moment in the calendar.

Palestinian economy: yesterday and today

10 December 2009
1 Comment
Categories: Business, Israel, Palestinians

Until 5th June 1967, East Jerusalem and the West Bank were part of the Hashemite Kingdom, a fact recognised only by Pakistan and by Britain. Gaza was governed by Egypt.

If you look at reports from the World Bank or various UN agencies for the period, these Palestinian territories were amongst the poorest in the world.

“The Israel Test”, a new book by George Gilder, throws some interesting light on what happened to the standard of living after Israel took control. Citing a string of UN reports, Gilder notes that the Palestinian economy took off. In an interview this week, he observed:

When Israel inherited the territories in 1967, it administered them, but much more loosely than it administered it own economy. And so the territories became the fastest growing economy on the face of the earth. Some 250,000 Israeli settlers moved to these previously Judenrein areas, and they attracted some two million Arab settlers. Eight Arabs moved in for every Jew.

This was a golden age for Arab Palestinians. Their numbers tripled, their per capita incomes also tripled, their educational levels soared, and their life expectancy rose from 42 to some 70 years.

……..the delivery by the international community of the territories to the PLO (in 1993), who then brought to a screeching halt all the economic development. The PLO caused a 40 percent drop in GDP per capita incomes, and just generally reversed the huge achievements of the previous 20 years.

The moment Chairman Arafat launched the Intifada in September 2000, the Palestinian economy was bound to go into free fall. Labourers were not allowed into Israel. The industrial area at the Erez checkpoint was decimated. Even money given to the Palestinians to rebuild Gaza after Israeli withdrawal – such as for the greenhouses project – seemed to vanish.

Today, there seems to be 2 Palestinian economies. Clearly, there are parts of the West Bank, which are doing well under the tutelage of President Abu Mazen.  For example, the Ramallah stock exchange is on a high.

Yet down in Gaza, after 2 years of Hamas rule, there appears to be little economic progress. Associated Press reports that the situation is so bad that people are buying fake cancer prognoses in order to leave.

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