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The bridge between Boris, BDS and business in Israel

10 November 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem, Palestinians

Boris Johnson, mayor of London, conservative MP and possible future Prime Ministerial material, is leading a delegation of commercial leaders this week to Israel and the Palestinian territories.

His Monday morning in Tel Aviv was a great success for the locals. And that should come as no surprise. Bilateral trade between the two countries has grown consistently for over a decade. And Israeli companies have raised over $3.0bn in London financial markets in the past two years alone.

As Johnson himself said at a function: “Why would you – of all the countries in the region – why would you boycott the one which is actually a functioning democracy and a pluralist, open society…. the most vibrant?” And when interviewed on Britain’s Channel 4 news, Johnson referred to an academic boycott of Israel as ‘foolish’.

Johnson is not alone, both in his perception of how Israel and UK can work together and how BDS is an impediment to peace. Jan Koum, founder of WattsApp, tweeted his objection to BDS this week. Lord Robert Winston, IVF Pioneer. was similarly emphatic in his words, when receiving an honourary doctorate at the Weizman Institute from the British ambassador to Israel.

For all these announcements, this is also the week, when the EU is insisting on invoking its policy that products manufactured in the Palestinian territories are no  longer considered as Israeli, and thus must be labeled accordingly. Israeli officialdom has reacted angrily, noting that there are dozens of political – military conflicts around the globe. Yet in not one other incidence has the EU taken such an aggressive and one-sided approach.

Will this European move help the peace process? According to the respected journalist Danny Rubinstein, there may be about 1,000 manufacturing Israeli enterprises in the Palestinian territories. Many have parts made elsewhere and thus beat the regulations that way. A few, like Sodastream have left the area, thus leaving dozens of Palestinians unemployed. As for the rest, very few export…. and some are improving their packaging, which will actually help sales.

Just for the record, Palestinians employed in Israeli West Bank factories must by law receive all social benefits, such as national insurance as per any other worker in Israel. These are far more generous than those of the Palestinian Authority. In fact, however measured, their wages overall are much higher than their counterparts in Ramallah etc.

Johnson’s visit is all about building links with new partners. Prosperity increases the chances of peace. While the attention is on the London- Tel Aviv – Ramallah axis, this week Israel signed an agreement with Jordan. A new joint industrial zone will be built. “The Jordan Gate” will be supported by the construction of a new bridge to link the two sides. Is that the most interesting lesson for all in this time of heightened tensions?

A Jerusalem Jew, Muslim, police officer – all loved by Oslo

25 October 2015
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Categories: Afternoon Tea in Jerusalem, Israel, Jerusalem, Palestinians

After the festive meal to celebrate the Jewish New Year, Alexander Levlovitch gave a lift to his daughters and was driving back home through the dark south-easterly streets of Jerusalem. His car was deliberately attacked. He lost control, but still had enough sense to veer away from others in order to minimize the loss of limbs.

He died clutching the steering wheel. Lawyers can argue whether it was the one kilo rock that struck his car or the incitement that the killers had endured which are responsible for the death of Levlovitch. The eulogies and articles merely describe a person, who sought peace between his fellow human beings.

Jerusalem and the region have been burning ever since. For example, thirty days later – and 30 days is significant because this is when mourners in Judaism remember the deceased –  “a Palestinian woman was shot after stabbing a Border Police officer near the capital’s police headquarters”. This was October 12th, a day of multiple acts of terror.

What was so special about this one specific stabbing? It is not that the terrorist was treated on the spot by an Israeli police woman. It is not that the terrorist was then taken to a hospital in Jerusalem, where care was delivered on the same basis as to everyone else.

What sets this story apart is that the police woman is Captain Maya Stolero, who’s late father was…….dear Alexander Levlovitch. She did her job. She is trained to help civilians. And that is what she did, regardless of race and religion.

It would be convenient to let the story end there. However, the incident raises a very troubling question. Agreed, not everything is ‘rosy’ in Israeli society. Yet, if this is how the Israeli police and local hospitals behave towards those who hate them, what are the Palestinians actually complaining about?

There are those who advocate on behalf of the Palestinians by claiming that they are poor, carved aside from regular society. They have no hope. And I bet there are stats to show that the Arab sector in Israel deserves a larger share of the national pie.

But to say ‘no hope’? I have just shown two simple examples of where such hope lies, daily. And what about the Oslo Accords of the early 1990s. As my wife reminded me, that framework was installed precisely to offer the kind of hope that the Palestinians are looking for today. Unfortunately, the violence of Arafat’s Intifada destroyed such dreams for many, of all persuasions.

And the rock that was hurled at Alexander Levlovitch’s car? It was as much about the desire for peace and mutual recognition and was that same Intifada. In other words, the terrorists are burying the very “hope” they aspire to, and you have to ask why?

Is the violence in Jerusalem triggered by poverty?

19 October 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem, Palestinians

The violence in the Holy Land reached a new level of horror last night. Until now, much of the Palestinian terror has been focused in the capital, Jerusalem. On this occasion, a young man ran amuck in Beersheba, killing at least one person and severely injuring many others.

A murderous act, directed against Jews. But what prompted it? Is it economic distress and poverty, as many international commentators and academics like to advocate?

Three facts stand out in this discussion.

  1. For all the problems with accuracy that the World Bank has in measuring Palestinian GDP, Gross Domestic Product, – the accepted international measurement of the size of an economy – the amount for the West Bank and Gaza is low. In current US$, the figure is US$12.8 billion. This reflects high unemployment, negligible collection of taxes, low wages, all of which combine in turn to have knock on effects re corruption etc.
  2. According to the IMF, there are dozens of countries, whose GDP is on a par or less than that of the Palestinians. To name but a few – Bahamas, Malta, Malawi, several pacific islands, etc. Yet despite the relative low income levels, most of these countries do not have swathes of citizens looking to pick up knives and guns and then use them against specific ethnic groupings.
  3. In a rare but fascinating social analysis of the families of some of those who have perpetrated these heinous crimes, it emerges that most of the attackers have come from ‘middle-class’ backgrounds. “They all lived in houses owned by their families, and had unlimited access to the internet. They all carried smartphones that allowed them to share their views on Facebook and Twitter and, among other things, to engage in wanton incitement against Israel and Jews.”

In parallel, it is also gradually emerging that the Palestinian Authority (PA) , which for decades has been crying about its empty coffers, has a veritable surplus of riches. For example, last week, I cited a Palestinian source that mentioned how the PA carries around US$1.3 billion in overseas investments.

And yesterday, I read some original research by Doron Peskin in the Hebrew newspaper, “The Calcalist”, which menas “The Economist”. The Palestinian National Fund was established way back in 1964. Today, it is directly controlled by President Abbas himself. Aside from donations from the Saddam Husseins of this world, every public employee in the PA ‘donates’ 5% of his salary to the Fund.

The total current value of the fund is unknown, although assumed to be in the billions. Peskin’s coverage of the financial worth of Palestinian leaders has proved to be accurate over the years.

So, if ain’t the money, what prompts a young Palestinian adult to pick up a knife and look for a Jew to murder? If you look at the backgrounds of Muhannad Halabi, Shuruq Dweyat, Fadi Alloun and others – male or female – for all their lives they have been exposed to incitement. It is available of Palestinian television. It is available in school textbooks, funded by UNESCO, which in turn is funded by Western taxpayers. And it is available on social media.

This is hatred. It is time for the rest of the world to shout “No, Enough. Unacceptable”. Otherwise, as has already happened on the streets in London and Berlin, these crimes will become another successful export from the Middle East.

What the Palestinians are fighting for – a new society

12 October 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem, Palestinians

Hidden amongst the current round of violence between Israelis and Palestinians and ignored by biased reporting of the international media, there is a question that demands to be answered. Just what are the Palestinians rejecting? Beyond the standard hatred and vitriol of both sides, what do they object to?

The issue is critical. And three stories yesterday encouraged me to demand a deeper understanding of what is happening.

Remember, Sunday 11th October was a day when:

And now add in the following facts: –

  1. That same female was taken immediately to a hospital in Jerusalem. As per the seriousness of her injuries, she was prioritised treatment, which was offered by whichever team happened to be on duty at the time. All patients and staff are seen as equals, whatever their religious or political background.
  2. One of the first on the scene at Gan Shmuel was the senior police commander of the region, deputy commissioner Jamal Hachrush, an Arab from Kfar Kana. That town was also in the news yesterday, as teenagers rioted and blocked roads. Jamal is highly respected amongst his colleagues.
  3. And while the BBC refers to alleged stabbings in Jerusalem by alleged terrorists, almost inevitably the first people on the scene at such terror incidents are the paramedics from Magen David Adom, Israel’s equivalent of the ambulance brigade. There is a fascinating feature in today’s newspaper, featuring one such team; a Muslim, an ultraorthodox Jew, and a Jew who until recently lived in what is often termed an illegal settlement. That is correct. They operate together, as a team.

I have to ask myself another question. Where else in the Arab world, across North Africa and the Middle East, would you find such open pluralism? Why are the Palestinians so intent on rejecting Israel?

As the commentator, Robert Festenstein, surmised this week, if you were to ask most of these protestors what they thought about the racists of the Ku Klux Klan or the English Defence League, they would assuredly be horrified. The same can be argued of the supporters of the BDS movement, who nevertheless: –

embrace or excuse organisations such as Hamas which openly seek the death of the Jews. This is the same organization, which oppresses women, kills gays and incidentally any journalist who dares to publish the truth about their loathsome conduct and tactics. They would …..happily line up alongside Hamas and other Jew hating organisations because they are just that, Jew haters, ……..but they just don’t see it.

And thus, Israel for whatever it stands for and whatever good it does…………Israel, the one democratic society in the Middle East…….has to go.

I do not believe that all Arabs hate Israel. Peace can be achieved. However, is it not strange that many of the issues that Israel has had to face in the past few years, such as homicide bombers and the need for fenced borders, how these same issues are now on the agendas of politicians in Europe?

No, Israelis are not giving up. And I would encourage outsiders and analysts to wake up as to why they need Israel.

The surprise of the hidden Palestinian economy

9 October 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinian Society, Palestinians

As Palestinians and Israelis sink into another tragic round of reciprocal violence, the micro economies of each sector are also taking a direct hit. Small traders in the centre of Jerusalem or Nablus, providers of tourist services, businesses looking for investment, etc, – with some irony, there are similar effects on both sides of the divide

The Palestinians often claim that Israel can absorb the financial downside, as it has a larger economy. Maybe, but I am not sure why this is a justification for violence. And surely traders should want to protect their precious sources of revenue rather than support violence that destroys such wealth.

Palestinians and their advocates will also point to the weak base of the Palestinian economy, which has become a spark for much of the new troubles this month. There is a wealth of documents, detailing how the economy in Gaza and the West Bank continues to worsen.

But again, some of the murderers of Israelis have come from reasonable social backgrounds. To be blunt, there are many poorer regions in the world, and their inhabitants are not throwing rocks at innocent children and women in protest.

So, I must assume that the Palestinians are rejecting a perceived lack of hope. It is that damn occupation that is causing the desperation. Maybe, until along comes two little known facts, hidden away from the view of CNN, New York Times, the Guardian et al.

First, the Israelis often complain that the Palestinian leadership has been tainted – no, ridden – with corruption. For example, just look at how the widow of Chairman Arafat, Suha, lives in luxurious exile. More recently, there have been a series of leaked documents re Palestinian corruption, reportedly outlining rape and severe financial wrong doings at high levels of the Ramallah government.

And into this arena has jumped the respected magazine, “The Economist’, not usually noted as a friend of Israel. The editorial wondered how long it will be before locals reject the continuing “extravagance and graft in Ramallah“.

The Palestinian Authority (PA), the limited self-governing body in the occupied territories, has been plagued by waste, graft and accusations of both since its inception in 1994 following the Oslo accords. When auditors looked at the books three years later, they concluded that nearly 40% of the budget had been frittered away.

Second, and here is a genuine surprise for Palestinian economy, “a joint study by the Palestinian Central Bureau of Statistics (PCBS) and the Palestine Monetary Authority (PMA) ….. has revealed that the Palestinian economy’s investment outside Palestine outweighs investment in Palestine from abroad by the end of Second quarter of 2015.”

To clarify for the non-economists: The Palestinian economy of its various sectors had invested outside Palestinian territory by more than the investment amount in the Palestinian territory from abroad to the tune of US$1,254 million. And if I can remind my readers – that is just what is recorded…officially!

So you have to wonder. If much of this money was left in ‘Palestine’, theoretically available for use on behalf of that nebulous average man on the street, how much of this current violence would still be taking place……….and which continues to destabilise the economies of all?

The Palestinian economy – one big gas?

3 September 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem, Palestinians

 

This week, a UN report suggested that “the social, health and security-related ramifications of the high population density and overcrowding are among the factors that may render Gaza unliveable by 2020, if present trends continue.”

The situation is so bad that the Palestinian economy is now officially in recession for the first time since 2006. Unemployment in Gaza itself has passed the 44% mark. By any standards, this is a recipe for social violence. It will probably not take too much for extremists to use this frustration to launch further attacks against Israel. After all, what is there to lose?

Rather predictably, Israeli propagandists have come out with a different set of stats.

  • Hamas in Gaza has been diverting building materials away form housing and towards their latest underground maze of tunnels.
  • In the West Bank, the new city of Rawabi has just been opened, close to Ramallah, seemingly for the nouveau riche
  • According to one external analysis, the third largest section of the Palestinian budget is the money given to convicted terrorists. Disappointing, especially since this is a budget sustained by the contributions from EU taxpayers and others.
  • Similarly, it is often the leaders and families of such freedom fighters / terrorists – call them what you want – that tend to receive the most wonderful medical aid. It is paid for by the Palestinian ‘state budget’, even if the service is provided by Israeli authorities.
  • And of course, there is the continuing saga of too many senior Palestinian officials being caught with their ‘hands in the till’. The latest set of leaked docs from Ramallah points to millions going astray.

There is obviously some importance to these stats. After all, the Palestinian Ministry of Finance is rumoured to have authorised the building of a new Presidential palace, which sounds pretty cool. In the words of William Booth from the Washington Post:

Media images beamed from the Gaza Strip rightly focus on the territory’s abundant miseries. But rising from the rubble of last summer’s devastating war with Israel are a handful of new luxury-car dealerships, boutiques selling designer jeans and, coming soon to a hip downtown restaurant, “Sushi Nights.”

Yet beyond the rhetoric, there is a game-changer that both sides tend to ignore. Bringing this subject to the fore would throw billions of dollars at the Palestinian Exchequer. All those never ending payments payouts to UNRWA and other political NGOS would become meaningless on the spot.

You see readers, Gaza has access to some very nice off-shore gas fields. According to Danny Rubenstein in the Calcalist newspaper, while much smaller in size than the Israeli reserves, they are far more accessible. British Gas received the exploration rights back in 2005. The annual financial flip in revenues could be worth as much as 3 billion dollars!

Very cool, indeed. So why is this wealth still stuck in the ground? Blame who you want

  1. Israel will not allow oversees’ players to encourage the economic recovery of the Palestinians.
  2. The Palestinian Authority (PA) is pressuring the Israelis to ensure that nothing happens, so long as Hamas keeps the PA out of Gaza.
  3. The Israelis do not trust such a development.
  4. The reserves are too small to invest in such extreme capital outlay.
  5. Etc, etc, etc……

And in the meantime? First, the gas remains locked up under the sea. Second, the Palestinians break their own boycott rules by buying gas from its enemy, Israel.

To give you an idea of the significance of the US$3 billion number, UNRWA raises around US$1 billion just to keep its statutory budget ticking over. In effect, to get to this new source of greenbacks, all the Palestinians have to do is to stop attacking Israel. It is almost that simple.

The point is that the UN can write whatever report it wants. Yes, many Palestinians are gut-wrenchingly poor. However, that does not impact on 100% of the population in the West Bank and in Gaza. In fact, a more enterprising, genuine and positive approach to peace is near-guaranteed to secure Palestinians a wind full of new wealth via its offshore gas reserves.

The Palestinian crisis people do not want to see

22 July 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinian Society

This time last year, Israel was fighting a bloody conflict in Gaza with the people’s’ army of Hamas. Around 2,200 lost their lives, primarily on the Palestinian side. While Israel’s economy took a blow, those on the West Bank were left relatively untouched.

We have been reminded of these sad events in the past few days. As memorial services have been held in Israel, international journalists like Jon Snow from the UK flocked back to Gaza to report what has – or has not – been repaired. And a small flotilla tried to beat Israel’s naval surveillance of Gaza, although it was stopped before reaching its destination. (It was later reported that the only provisions for Gaza was a small box of medical supplies that would have been cheaper and simpler to send by express mail!).

So how can the Palestinians be helped? Compared to a decade ago, the number of roadblocks in the West Bank are minimal. While Israel has left Gaza, those who thought that life would be better, the “disengagement has backfired badly.”

And last week, we witnessed the most absurd report. Palestinian workers are going to the courts of the Palestinian Authority in order to secure the same fair treatment that they would have received under Israeli labour law.

Help from elsewhere? With some ironic timing, I was handed a pamphlet, prepared by UNSCO on behalf of UNCT in June 2013. Entitled “The United Nations in Palestine”, it details 25 – I repeat twenty five – UN based organisations that are involved in supporting Palestinians in an on-going manner. ILO/ OCHA / UNDSS / UNFPA / UNROD etc, etc. And remember, most of this is paid for by the generosity of Western tax payers.

Their combined budget for the Palestinian issue alone? I have no idea. However, as I have often cited, UNRWA’s annual finances alone stretch to over one billion dollars. As politicians and diplomats close their eyes, there are no independent audits to verify transparency and accountability of this monolith.

From the Israeli side, there is no humanitarian crisis in Gaza. Speak to soldiers in COGAT and you will be informed that even if the economy is fragile, the residents of Gaza are not starving. In fact, Israel has ensured that the volume of goods entering Gaza has doubled in 2015. Who receives them and on what basis? Well, that is a different question. I suppose much can be said about the resources dripping down the various UN groupings.

On a highly pertinent side note, what also emerged this week is that there are around 18,000 civilians, mainly Palestinians from Syria, who are trapped in a pathetic refugee camp near Yarmouk. About 3,500 are children. International rescue efforts are simply not on the horizon. Yet the UN did release its report on the 2014 war, which heavily criticized Israel’s use of force in defending itself. There seems to be a disproportion here.

What is truly sad for me is that the main Palestinian crisis is one that has been cutting through the Middle East for decades and remains unresolved. There has never been a leadership that has placed nation-building above its hatred of Israel……and its parallel desire for the good life. And that is the key lesson we can take away, a year after that wasteful and tragic war in Gaza.

UK’s wasted aid to the Palestinians. Better in a cardboard box?

3 July 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

According to official recordings of proceedings from Parliament in London on July 1st 2015:

DFID (overseas aid – MH) is providing £349 million in support of Palestinian development from 2011-15 and £72m for 2015/16. The UK was one of the biggest donors to the crisis last summer, providing more than £17 million in immediate humanitarian assistance for those caught up in the conflict. In October, the UK pledged a further £20 million in early recovery assistance at the Gaza Reconstruction Conference in Cairo.

To those sums, you can add the US$95 million that the UK donated in 2014 alone to UNRWA and the financial help given to a plethora of NGOs active in the region. Also, there are the hundreds of millions of Euros that are handed by Brussels, either directly to the Palestinian Authority or to UNRWA. And the World Bank, partially funded by the UK, has contributed a further near-billion dollars since 1993. etc, etc.

In itself, nothing here is wrong. Israel can complain that this is too much or unbalanced. This is a political decision to allocate taxpayers’ money. Tough luck. All that is required is some transparency and accountability to clarify where the money ends up.

Apparently, the UK “continues to take extensive precautions to ensure that Hamas does not derive any financial benefit from our projects, including by providing £0.5m to support the Materials Monitoring Unit (MMU) which oversees and monitors the import, storage, supply and use of construction materials into Gaza …” (Hansard, 25th June.)

Four days later, a statement confirmed that the:

Palestinian Authority (PA) payments to Palestinian prisoners in Israeli jails are made at the request of the Israeli Authorities to meet basic living conditions. No UK or EU money is used for payments to Palestinian prisoners in Israeli jails, or their families. UK funding to the PA is used to pay civil servant salaries only. The UK funds are channelled through a trust fund administered by the World Bank and only named civil servants from a pre-approved list are eligible. The entire process is independently audited, which ensures we know exactly where and how our money is being spent.

So, the UK government can claim that it lives up to the test of accountability and transparency. Taxpayers have been assured………….or have they?

What is key is that there are no available figures for how much of the Palestinian Authority’s (PA) spending comes from taxes collected. However, as both the IMF and the World Bank have consistently found this revenue source to be negligible, then it can be assumed that most of the PA’s spending power derives from overseas contributions. That includes large sums from British taxpayers, some of which, by admission of a British minister, ends up in the hands of terrorists resident in Israeli prisons.

What about those large UNRWA contributions? Well, as I have pointed out before, UNRWA is arguably the largest international charity in the world. However, UNRWA is not controlled by the UN. Staggeringly, yet never publicised, it has no external accountable nor transparent reporting procedures. When you consider that its educational facilities became army camps for Hamas operatives during last year’s war with Israel, you have to question what truly happens to the hundreds of millions of donated by UK, European and American taxpayers.

While the mind is left to shudder at where these public monies end up and what they may be financing, I wanted to briefly examine some of the actual projects. Using the same sources as above, it has emerged this week that her majesty’s Ministry of Defence has seconded personnel to the EU for “security sector assistance to the Palestinian Authority”, whatever that may mean.

In parallel, the EU police mission for the Palestinian Territories has been extended until 30 June 2016 at a cost of  €9.175 million. “Through its contribution to security and justice sectors reform, the mission supports efforts to increase the security of the Palestinian population and to reinforce the rule of law.”

The EU and member countries have yet to produce a report showing the improvement in the justice system rising out of this investment. In contrast, there is emerging evidence that the domestic security services in both the West Bank and in Gaza are prone to murderous and in humane tendencies.

While the British Parliament was awash with announcements of financial support for the Palestinians, a flotilla of ships sailed through the Mediterranean. It purported to carry aid for Gaza and was trying to block the Israeli blockade on the enclave. It was stopped by the Israeli navy, which discovered that the whole bundle of resources amounted to ‘two cardboard boxes“. As the Sussex Friends of Israel illustrated, the Palestinians could have received 70 times more help.

Sussex Friends Of Israel's photo.

And it is this flotilla that shows just why so much of the money will rarely end up in the pocket of the average person in Nablus or Rafah. The blogger, Elder of Ziyon, noted that the boats passed en route  close to Egypt, Lebanon and Syria, where Palestinians are suffering and have been the target of killings. The plight of these people was ignored. Instead, the international press was treated to another sexy orgy of Israeli hate-feast.

And that is the lesson for the UK government. It must prove beyond reasonable doubt, in a transparent and accountable manner, that the hundreds of millions in contributions for the Palestinians do drip down to their intended target and are not diverted to the planting of the seeds of the next conflict.

Palestinian and Israeli high-tech: Spot the difference

21 June 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

Side by side in last week’s Hebrew financial press were separate yet related two articles. One reported how four new Israeli VC funds had just closed out with US$340 million in hand. The other questioned why Palestinian high-tech just cannot seem to get going.

Now the proponents of each side will blurt out fairly obvious explanations for such differences. The Palestinians are just interested in investing in the destruction of Israel. Alternatively, Israel has no interest in helping a thriving Palestinian society succeed. And so the rhetoric continues.

However, in attempting to move beyond the mutual slanging of both teams, maybe there is a far more pertinent issue, one that relates to the subject of innovation. Let me examine this further.

Back in 1986, Israel’s economy effectively closed down, as it failed to cope with incessant hyper-inflation. In parallel, the war in Lebanon was grinding to a murderous stalemate and the first Intifada was about to commence. Since then, the country has earned the reputation of ‘Start Up Nation“. Only today, we have read how the Australian fund, Square Peg, intends to invest US$150m in the Holy Land. Over a hundred multinationals have r&d centres in Israel, and the list appears to grow monthly. All positive stuff.

In parallel, the reports on the Palestinian high-tech sector seem to clutch at straws. A few women striving to make a breakthrough? The new city of Rawabi described as a high-tech hometown, when it is not. Vague reports of crowd funding launching high-tech schemes in Gaza. For all the hype, it does not seem to add to much.

USAID, Cisco, Intel and others are known for trying to support the Palestinian economy with practical schemes. Coca Cola has building a new US$20m plant in Gaza, which will employ around 300 people. And the World Bank’s latest US55m grant will push its total to US$970 million since 1993!

The Palestinian economy is not in a good position, bankrupt. Blame politicians, who have preferred corruption and the fight against Israel as opposed to investing in society. Or blame Israel for not helping, but only sending in troops unnecessarily. But there again, as I mentioned before, back in the 1980s, Israel also endured a period of poor economic performance intertwined with bloodshed.

However, Israelis then took a different viewpoint. As a nation, they did not stand around and complain, but were prepared to make changes. The politicians simply froze the economy – prices, wages, money supply – in order to give it a chance to recover. The attitude of ‘we deserve help / the government will bail us out’ was gradually replaced.

Instead, Israeli entrepreneurs were encouraged with an exciting and evolving programme of grants and aid. People were allowed to think beyond the accepted and to operate outside the scope that the violence of the Middle East tends to demand. Emphasis was placed on innovation and industrial revolution rather than military service.

And I have to ask: Why does the Palestinian leaderships in Gaza and in the West Bank not adopt a similar approach? What have they got to lose?

The declining Palestinian economy? 5 ‘success’ stories

15 June 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

For all its failings, the latest report from the World Bank on the Palestinian economy makes for grim reading; Low growth, high unemployment and little hope for significant immediate change.

So I was encouraged when several items came my way, which showed just how an entrepreneurial spirit can thrive within different parts of Palestinian society.

The Tunnel Economy in Gaza

The New York Times wrote an excellent summary of the “tunnel millionaires” – those people in Gaza who made a fortune from building the tunnels or being part of the teams that sold luxury merchandise smuggled in afterwards. It is often unreported that tens of children died in building the tunnels. And this new trade was forcibly ended when Egypt clamped down on Hamas, ending a commerce worth hundreds of millions of dollars.

However, from and academic perspective, this enterprise, which lasted around a decade and then mutated into an offensive plan against Israel, showed just how creative Palestinians society can be.

The Banking System

Hiding monies from suspicious governments in Gaza and in Ramallah has often been a problem for those Palestinians who can afford to save money. What I find absurd is that submerged amongst all the huge sums of avoidance in the HSBC, there are details of 55 Palestinians, scuppering away around US$150 million. Given the squalor detailed by the World Bank, that achievement is impressive.

I would love to know who this people are and how they managed to secure such holdings. It would make for a fascinating case study.

Mohammed Dahlan

Mohammed Dahlan has led an interesting life. He rose to fame via the street gangs of Gaza, originally opposing the established leadership. Later on he made his peace with Chairman Arafat, and was to make a fortune through various ‘business deals’ in Gaza. He was violently ejected by Hamas in 2007, yet Dahlan now plays the role of “Hilary Clinton” in Abu Dhabi. According to Newsweek and Bloomberg, he is amassing tens of millions of dollars in order to launch a presidential-style comeback.

What I do find a little uneasy here is how such vast sums of money end up in the control of Dahlan, yet the leaders of Hamas and Fatah argue that the average man in the street lives in poverty. It would seem that there is a certain lack of proportion to their arguments, a hypocrisy which comes to the fore when they demand more aid from the UN et al.

Gaza – the double hit

It is now a decade since Israel withdrew from Gaza. And while Israel and Hamas continue to lob weaponry at each other and while the international media is replete with stories about the endemic poverty in this fertile strip of land, it does seem that some progress has been made.

First, one has to be amazed at how Hamas has found plentiful resources to convert some of the former Israeli towns into training grounds for their militias. There is also at least one known rocket manufacturing facility. You could argue that this is a wonderful piece of economic energy, as it creates jobs for those who otherwise would have found themselves on the streets.

In parallel, other Israeli townlets, that had been noted for producing  fruits and vegetables, are now the sites of funfairs, university hospital, schools, etc. 

And it is these very last subjects that make the rest of the facts presented here so sad. Economics is the allocation of resources. If only more of these vast sums had been devoted to helping Palestinians rather than fighting Israel (or each other) or smuggled away for private greed, than the millions of Palestinians could be living lives of comfort and joy.

The cost of boycotting Israel

12 June 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

The BDS movement – Boycotting, Divestment, Sanctions – was founded by Omar Barghouti in 2005. An Israeli Arab, who received his degree from Tel Aviv University, he launched an international campaign to ensure that all Israeli products and services, commercial or cultural, are simply not available.

Theoretically, if Israel were to achieve peace through giving up the West Bank and Gaza, then BDS would lose its raison d’etre and close down. As BDS leaders oppose Israel’s very existence, that is unlikely.

It is estimated that a full economic boycott would cost Israel around 1% of its annual GNP, forcing a rise in interest rates and a potential destabilisation of the shekel. However, if peace were to be achieved, it is further estimated that this would boost the economy of the Holy Land by over US$100 billion in a decade. In parallel, the Palestinian economy would receive a 50% fillip.

Last week, the CEO of Orange, Stephane Richard, had to clarify recent remarks, which suggested that his telecom company had bowed to pressure from Qatar and was to leave Israel. Two days earlier, the National Union of Students in the UK had voted to enforce BDS regulations. In February, hundreds of artists committed themselves to refraining from any association with Israel.

I will leave aside the hypocrisy of the issue. After all, none of these boycotters have uttered criticisms of Saudi Arabia and assumedly continue to use plastic products made in Chinese sweatshops. Nor will they complain of the mistreatment of Palestinians by Palestinians or by other Arab regimes. And of course, the similarity of the BDS campaign to the 1936 Nuremberg laws is completely ignored.

However, what I find amazing is how BDS proponents appear to be oblivious to how their actions actually impact negatively on the Palestinian economy and society. Bassam Eid, a Palestinian social activist observed:

I’m opposed to the boycott because it only ends up harming the Palestinians themselves. Take, for example, the SodaStream plant in Mishor Adumim that is now moving some of its operations to Be’er Sheva. I’ve met with Palestinians who worked at the factory and were fired because of the move. They told me they were earning an average of NIS 5,000 a month there, and that today they are being offered salaries of just NIS 1,400 in the PA.

To give some perspective of the numbers of Palestinians involved, companies located in the Barkan industrial park in the heart of the West Bank have long been a target of the European Union. Yet of the approximately 20,000 employees, around 50% are Palestinians. Sanction these firms and you will hit those people you ware trying to help. And that is only one of many sectors.

Also forgotten in the inferno of politically-correct rhetoric is the impact BDS may have on fragile economies overseas. Consider the UK, which is still trying to emerge from the 2008 credit crunch. Sajid Javid, the Secretary of State for Business, is wholly aware that bilateral trade amounts for around US$7.0 billion, and growing. Tamper into that and that means lost jobs. Ouch!

Actually, it means more than that. Referring back to the NUS, if the lunatics at the student HQ were to implement their own resolution, they would have to throw out all computers with Intel technology. In fact, a similar threat would hang over their smart phones with GPS applications. And as if this was not making them thirsty, they would also have to stop using all water, as many authorities in the UK are now using Israeli tech to protect supplies or purify sources. And the list goes on.

This summer, Israel is hosting a roller-coaster of performing artists – One Republic, Bon Jovi, Dionne Warwick, etc. In England, the Curzon Cinema chain has refused to heed calls for a boycott of Israeli films. A conference in Jerusalem this coming September of Cognitive Behaviour will feature a spectrum of overseas speakers and will include an address how Palestinian children are effected by violence. The list of BDS rejection is thankfully still long and strong.

To close, I am bound to refer to the head of Google, Eric Shmidt, who ironically found himself visiting Israel earlier this week.

The impact Israelis are having on science and technology is immense, so that’s why I’m here and why I’m investing here. (In the modern world, for an economy to grow, there is a need for innovation and the establishment of new companies.) For this to happen, a country must invest in several areas – education, high-speed Internet connections, an open immigration policy that allows leading minds to move between countries, and also an environment that encourages entrepreneurship.

So what is the true cruel and despicable reason that BDS supporters want to hide and then to destroy this human triumph, otherwise known as Israeli society? And why do I suddenly hear echoing in my mind the song from Cabaret, when he whispers that “J” word?

Listen to the World Bank tell the truth about Palestinian economy

5 June 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

The latest report from the World Bank on the Palestinian economy makes for depressing reading. With specific reference to Gaza since last summer’s war, there is barely one statistic of encouragement amongst its 40 pages. 43% unemployment, 39% poverty rate, growth non-existent, 80% receive some aid, and so on.

Gaza’s economy is a disaster. The authors do not hold back. Israel’s blockade since 2007 created this humanitarian disaster. The way Israel attacked in 2014 merely enhances the problem. By implication, it is clear who must take responsibility.

So, it was strange that buried deep on page 17 was the observation: “Economic decline in Gaza started much earlier and has been linked with armed conflict …… Gaza’s economic performance over the past two decades has been at the global bottom, with only three economies experiencing lower rates of growth. Thus, Gaza’s total GNP is only a couple of percentage higher now than it was in 1994.”

Note! In 1967, lsrael captured the territory from Egyptian rule. 1994 was when Israel handed over control of the economy to the Palestinian Authority. A decade later, Israel withdrew from Gaza, leaving intact the highly lucrative greenhouse industry. By 2007, Hamas had violently overthrown the corrupt apparatchiks of Fatah.

And of the economy prior to 1994? Again according to prior work from the World Bank, “the annual growth rate (for the period 1968 to 1999) establishes itself at 5.5%.” As the author Sebastian Dessus observed, this was one of the highest rates in global terms, even allowing for population growth. It was also achieved during Israeli rule.

In other words, there is a disconnect. Under direct Israeli rule, there was a boom. The moment control was released to the Palestinians, this golden period drew to close and was followed by increased violence and economic doom. If you were a university lecturer, marking the May 2015 report, you would be forced to question if the facts justify the conclusion.

Permit me to become a little turgid and pick out some other salient points of the new report.

Page 12: “The wage bill (in the public sector) is over half of current spending. ….. The number of PA employees increased by 1,296…and mostly in the military sector, which raise sustainability and efficiency concerns given that the sector is already large by international standards…”

In other words, there has been an investment in military infrastructure rather than improving social services or industry. And much of this budget comes from the largesse of Western taxpayers.

Page 20: “The crackdown of the illegal tunnel trade between Gaza and Egypt led to a significant loss of employment opportunities”. Fair enough, but it was Egypt who closed the border and the tunnels, not Israel. So, to be precise, it is Egypt that enforces a blockade from its side, while Israel encourages a controlled flow of goods and personal from its side.

Page 26: The authors question what would have been the upside if there had been no hostilities or “access restrictions”. They estimate that the Gaza economy would have more than doubled in size, climbing by nearly US$4 billion. The implication is that Israel is directly responsible for this loss.

However, as the virtual university academic, I am mystified why the owners of the report failed to ask an alternative question. Why have the various rulers of Gaza since 1994 invested in a military economy directed at  Israel at the expense of their own brothers and sisters? Why have the greenhouses been converted into Hamas training camps? This policy has lead to war and destruction, as well as a period of deep poverty as summarised in the World Bank’s own stats.

Page 30: The argument that Israel is to blame was one of the key premises that saw the coming together of the Cairo Conference after the conflict of summer 2014. US$5 billion of aid was promised, of which 30% was specifically designated to Gaza. Of that sum-total, US$583 million – about one-third – has still to be delivered. And much of the other total.

If this is so important a cause, why are donors holding back? And, do the oil-rich kingdoms of the Middle East comprehend something that the West cannot recognize, because they only contributed 40% of that US$ 5 billion total? (By the way, it is evident that much of these billions was actually taken out of existing budgets and just renamed.)

Recalling an old joke about Stalin receiving a message from Trotsky, it is not what you say, but how you say it.

I am sure that the World Bank’s figures are accurate. Yet, they have been used selectively, assumedly to slot into a  pre-drafted politically correct narrative. In its current form, the report does not provide a guide for economic reforms in the Palestinian territories. It only serves one purpose – to supports the rhetoric of Hamas, whose raison d’etre is the destruction of Israel.

Israel’s rogue economy – Part 2

25 May 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

Israel has a free and relatively strong economy, which includes a robust and open health system. Israel operates as a rogue state, and it is this anomaly that helps it serve its own and other peoples indiscriminately around the globe.

Thus I described how Israel’s economic ability goes beyond the obvious parameters, taking aid to Syrian refugees as well as victims of natural disasters such as in Nepal.

I was prompted to have a second look at the call last week from the World Health Organisation to examine how Israel proffers medical services to Palestinians throughout the region. The terms of reference are carefully loaded to make sure that the final report is hardly likely to be balanced.

So, I was struck by the words of two commentators, which portray a very different picture to what the officials of the WHO are trying to conjure up.

Stuart Palmer’s blog “The Haifa Diary” makes a purpose in showing the side of Israel rarely reported in the foreign press. I was stunned by the size and scope of the stats he quoted in his latest posting.

According to the report, Israel’s Coordinator of Government Activities in the Territories Unit (COGAT) has issued roughly 27,000 permits for Gaza residents—including both patients and their families—to receive medical treatment in Israel and elsewhere. According to the World Health Organization, in 2013, the most recent year for which there are statistics, 3,840 Gazans were treated in Israel.

Stuart goes on to relate of specific incidents. And his observations are backed up by an independent source, which ironically is known as a frequent critic of Israel. The New York Times, also citing COGAT sources, observed that “the fact that Israel grants any permits is somewhat surprising given the years of hostilities with Hamas, an Islamic group sworn to Israel’s destruction.”

An analysis of the World Bank reports on the Palestinian economy will note that, whatever meager resources are available, they are often invested in the public sector – a euphemism for creating tunnels and fighting units to attack Israel. In contrast, Israel registers humanitarian efforts that cross borders and continents. And the reason such aid is available is because the economy has grown by around 3-4% on average each year since 2002 – despite the Intifada, the rockets from Gaza, and the incursions from the North.

The question for the WHO is will it be able to focus on economics – the science of the allocation of resources – or will it yet again waste international taxpayers’ money as it succumbs to standard, inaccurate yet politically correct dogma?

Israel’s economy is 67 years old – a lesson for others to follow

23 April 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

As Israel celebrates 67 years of independence, this is an opportunity to see just what its economic success can teach others in the region.

Remember: From 1948 until the mid 1980s, Israel’s leaders deemed it best to govern a closed economy, protected by high tariffs and government regulations. Since then, the country has witnessed spectacular growth, often characterised by the term ‘start-up nation’. According to the Ministry of Economics, “since the Establishment of the state, the number of employees in Israeli industry has grown from 65,000 to 400,000. Israeli exports have soared from $5 million to $47 billion.” Phenomenal!

And that growth shows no sign off stopping. For example: –

  • The Israeli economy grew 7 percent in the last quarter of 2014, its highest rate of growth in recent years.
  • Even Jerusalem is no longer seen as just a tourist centre for the religious, but a thriving port of call for high-tech and biotech investment opportunities.
  • In the past month alone, multinationals like Apple or Dentsu from Japan have upped their involvement in the economy of the Holy Land.
  • It is estimated for 2014 that 300 start-ups raised approximately US$3.4 billion in capital. A further 100 companies sold out for US$7 billion. 2015 is showing a similar pattern after just four months of activity.

The list of positives is very long. Although there is still much to improve, one commentator wrote: “Israel boasts one of the world’s most innovative economies with the highest ratio of startups per capita, the second-largest venture-capital industry and more than half of our exports deriving from the high-tech sector.” Unfortunately, despite the boom, ‘there is chaos all around’.

Let us compare this success story to the Palestinian economy of today. Proponents of Ramallah and Gaza argue ad nauseam that there will be no riches for its people until Israel takes down the military road blocks in the West Bank and rescinds the blockade of Gaza. Yet, there are now very few such army positions. And it is Egypt that has shut down its border with Gaza, while Israel allows in daily lorry loads of humanitarian supplies.

Inevitably, there are many reasons why the Palestinian economy is thread bare. To name a few: minimal efforts to collect taxes, corruption, a poor historical base, and yes Israel can take some of the blame. However, there is something more fundamental, something that Israel began to appreciate back in the 1980s.

A strong country cannot just rely on a strong military. The economy needs to thrive as well. That requires diverting resources into domestic infrastructure. In contrast, Hamas appears content to ignore the housing problem in Gaza, concentrating on building more tunnels to attack Israel’s towns. Fatah makes little attempt to install basic social principles of government. Where are simple programmes to encourage small businesses? As I wrote over a year ago, the Palestinian economy remains a story of “what if?”.

And if you are really looking to the answer to that question as to what could have been achieved: Well, success is not just measured in statistics. The beauty of Israel has been summarized in an amazing and stunning collage of 67 photos. They reveal just what a fantastic place Israel has grown to be and how it has come to prosper, for peoples of all faiths and dreams. Happy Birthday, Israel!

Why the Palestinian treasury is bare – 4 questions

7 April 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

The Palestinian Economy Minister has resigned. The economy itself is reaching yet another crisis point, ostensibly because Israel has withheld nearly US$ 0.5 billion in excise taxes that it has collected on behalf of Ramallah.

Read whatever report you want on the Palestinian economy, and the picture is desperate; high unemployment (especially amongst the young), zero or negative growth, minimal water reserves in Gaza, and more. The international community believes that Israel can and must do more to help.

So I had to ask myself who is paying for all the heavy duty equipment being smuggled into Gaza? This must be worth millions.

This is no isolated headline story referring to large sums covered up. Let us recall those tunnels that Israel destroyed in the war last year. Well, apparently many new ones are being dug, on both the Israeli and Egyptian side, and funded by Iranian petro dollars. Interestingly, construction methods have altered to allow for both cement and wood.

Thus, it is imperative to consider. Can you imagine the benefits to the local population if the Hamas government ever preferred to invest in its own people rather than killing Israelis?

Actually, a similar statement can be made of the BDS movement, an international campaign designed to boycott Israel, just as the Nazis banned associations with Jews. To date, the credit profile of Israel has remained unharmed. However, according to Kristin Lindow, senior vice president at Moody’s Investors Service and Moody’s lead analyst “the sanctions do run the risk of hurting the Palestinian economy, which is much smaller and poorer than that of Israel…”

It is very clear why the Palestinians need these sums immediately from Israel. Whether in the West Bank or in Gaza, they have refused to set up a formal system to collect taxes. And historically, for all the grand promises, Arab governments do not deliver on their promises to send aid…except for Qatar and Iran.

So that leaves the excise taxes, which Palestinians claim make up 70% of revenues – shall we say, declared revenues – of the Palestinian Exchequer. And that assumedly is why many Palestinian civil servants, the largest employer in the economy – are not being paid properly.

Only here comes another misfit. A full month before Israel began to withhold the funds, Gaza’s public sector went on strike, as the workers were not being paid. In other words, I have to ask if President Abbas is fiddling his books merely in order to make Israel look bad? After all, he has been prepared to reject Israel’s compromise solution, which will transfer about half of the money to Ramallah. (The rest will pay off Palestinian debts to Israeli statutory authorities).

While the Palestinian coffers may be empty, the prime causes of the situation are not so obvious. Yes, the economy is in a dreadful state. As the IMF declared, having stated a war with Israel, Gaza has been pushed into a recession. That said, there does seem to be an awful lot of spare cash floating around, hidden out of view by the higher echelons of Fatah and Hamas in Ramallah and in Gaza.

Did I mention that the Economics Minister, Mohammed Mustafa, resigned, as he was disgusted by the endemic corruption he discovered?

Gaza’s economy, March 2015. Confusing the facts

4 March 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

If you stand on a vantage point, near the Erez Crossing Post in Israel and then gaze over into Gaza, it is still possible to see streets of destruction in the northern part of the region. The war last year between the two sides left countless without homes, a woeful economy weakened further, and relief agencies screaming for extra resources which are drying up in the winter mud.

As far as UNRWA is concerned, only about 5% of all aid pledged is actually donated. And in the meantime, Israel is to blame. The regional superpower, whose guns caused the destruction and with a Prime Minister, Netanyahu, despised by Obama et al, the government in Jerusalem makes for an easy target of the verbal hate for those trying to help the Palestinian cause.

Of course Hamas had provoked Israel into a massive retaliation, having launched hundreds of missiles from Gaza earlier in 2014. Moving on from the war of words, key facts have emerged this week that demand us to consider an alternative understanding to what has caused the economic demise of Gaza.

1) The blockade of Gaza. While Egypt has maintained a complete blockade of Gaza for about 12 months, Israel continues to let in humanitarian aid. In fairness, nobody claims that this is enough, especially rebuild those homes in a reasonable space of time.

However, I was struck by a recent BBC report, which clearly showed how Hamas is reconstructing its offensive tunnels against Israel.

In other words, Hamas is yet again taking materials that arrived via Israel, which are designated for civilian use but are in short supply, and then they are using them for military purposes. What the BBC film in effect demonstrated was why the autocrats in Hamas are thrilled that Israel embraces the economic theory of free trade!

2) Power supplies. On an average day in Gaza, few people will receive more than 12 hours of electricity. According to Israeli military authorities:

Israel supplies 125 MW of electricity via 10 power lines. Egypt provides 32 MW, and the power plant in Gaza provides 60 MW. Currently, the power plant has the capacity to produce 80 MW, but is not operating at full capacity due to the PA’s lack of financial resources to buy fuel. In 2014, 62,520,470 liters of diesel fuel were transferred from Israel to Gaza via Kerem Shalom for use in the power plant. So far in 2015, 13,866,880 liters of fuel for the plant have been transferred. Plans to upgrade the abilities of the power plant, such as operating on natural gas instead of diesel fuel, and currently being investigated.

Now, we know that a Hamas rocket attack on Israel during the 2014 war cut the power line between Gaza and Ashkelon. And it is accepted that a Qatari grant to support the power plant in Gaza has been used up. What is not clear is why, despite such hardships, Egypt does not provide more support nor why the Hamas military remain able to manufacture new Kassam missiles.  The facts are at odds with established norms.

3) Water reserves. One of the true tragedies for Gaza has been the correlation between the Hamas investment in an offensive military infrastructure and the parallel destruction of the water levels in the region. Nothing, but nothing, has been done to preserve the precious few supplies left and which are in danger of becoming salinised permanently. Under the 1994 Oslo Accords, such tasks are the responsibility of the local government.

Today ironically, the Ma’an News Agency in Ramallah reported that Israel is to double the amount of water it releases to the Gaza Strip. This is possible, because Israel is considered a world leader in building desalination plants, such as in Ashkelon.

So if the facts do not correspond to the ‘let’s accuse Israel game’, here is another misfit. Gazans are openly purchasing products made in Israel.

Various kinds of Israeli-made snacks, juices, soft drinks and biscuits were accumulated on the shelves and in large refrigerators at Metro mall and other supermarkets all over the Gaza Strip, while in the West Bank, the Palestinians had decided to boycott these products.

And one final idiosyncrasy: Contrast all the despair and poverty in Gaza to Rawabi, a brand new Palestinian city. Located west of Ramallah, the contractors have not shied away from using Israeli building products. The city is about to be connected to Israel’s key water reservoirs. Many of the first 450 families are under 50 years old. Bottom line – Rawabi shows what Gaza should have been and what it still could become…through cooperation and a willingness to accept Israel.

In the meantime? The Gaza economy is a ruin, fostering little hope for its people.

The reasons for this disaster just do not reside with Jerusalem, nor Mr. Netanyahu, nor the Israeli army. As long as Hamas continues to divert core resources for its military needs, residents in Gaza are unlikely to confront the phenomenon of sustained economic growth.

The Palestinian economy – basic rights still missing

29 January 2015
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

It has become comfortable professional practice amongst international journalists to blame Israel for all the economic woes of the Palestinians. Even during International Holocaust Day, respected Sky News anchorman, Adam Boulton sought to compare the systematic slaughter of 6 million Jews to the current hardships of those in Gaza and the West Bank.

In terms of sound bites, one has to wonder why such communicators did not mention how over 2,400 Palestinians have been killed or disappeared amidst the violence in Syria. Similarly, there is silence re the dozens executed by Fatah and Hamas regimes. Surely, this environment of violence and hatred must act as a bigger downer on the Palestinian economy than Israel’s actions.

As for the facts on the ground, we known that the Palestinian economy is dependent on donations. One of the largest component of this is UNRWA, the United Nations Relief and Works Agency. Its current annual budget, ignoring special projects, runs to over a billion dollars, putting it as one of the largest international charity in the world. Major donors include Britain and the European Union. UNRWA runs a dedicated assistance programme to help Palestinians rebuild homes. Of the US$ US$585 million dollars promised, barely 25% has been handed over.

Interestingly, despite the name and its initial history, UNRWA is not controlled by the UN. It has no external accountable nor transparent reporting procedures. Thus distributions disappear. When you consider that its educational facilities became army camps for Hamas operatives during last year’s war with Israel, you have to wonder who truly benefits from the hundreds of millions of UK, European and American taxes.

The weak tax base of Palestinians has long been a cause of concern for the IMF and the World Bank. Poor government practices do not enhance the collection process. In parallel, Palestinians are understandably angry at Israel’s decision to withhold excise collected on behalf of the Ramallah Finance Ministry. This is worth over US$100 million a month.

Whatever Israel’s reasoning, Palestinian civil servants, the largest group of wage earners in the economy, are yet again not receiving full salaries. On the other hand, the Saudis have just delivered US$60 million. Similarly, Iraq and Qatar have promised a further US$50 million together. Why does the man in the street not feel these contributions?

And how are Hamas and others able to fund the rebuilding of their military prowess?

The average Palestinian deserves better from his and her leaders. There may not be a lot of joy around, but money is out there, as videos of shops for the elite prove time after time. Palestinians are being deprived of the basic right to receive their fair share of public monies, yet Israel takes the rap.

If you are looking for a suggestion: I note that Iran does not help out with the UNRWA budget. And yet according to an article in the Hebrew newspaper “Calcalist” (Economist), for all the sanctions imposed on Tehran, the Ayatollahs make sure that Hizbollah receives a cool US$100 million annually. Now if those weapons were converted into ploughshares…..but that would require a desire to seek peace.

Jerusalem’s resilient economy

20 December 2014
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem, Palestinians

I do not often do this, but today I want to echo the thoughts in full of Danny Rubinstein. A quality journalist, Rubinstein has decades of experience reporting on Israel’s relationship with the Palestinians, especially from an economic standpoint.

Now, it is no secret that tensions in the Holy City have risen. Extremists on both sides have tried to provoke the authorities. And yet for all that and what the world does not see is that life goes on. My son continues to work with two Muslims in his department. The Jerusalem Municipality, as per every year, will distribute free Christmas trees to Christian Arabs. “Palestinian entrepreneur, Hani Alami, is setting up an accelerator on the city’s seam line to draw budding entrepreneurs from both sides of the city.”

Rubinstein makes a key point. Despite the language of political leaders and the rhetoric of those seeking to provoke, the vast majority of Jerusalem’s citizens, whatever their religion recognize the interdependence. And thus the local economy continues to move forward.

Entitled, “Jerusalem, where economics triumphs over violence”, can be read in full below.

Despite incidents of violence in Jerusalem, demonstrations and escalating tension, the economy is bringing a semblance of normalcy to the lives of Jews and Arabs in Jerusalem.

Dozens of Arab bus drivers have stopped working due to harassment and Arab taxi drivers are afraid to pick up passengers in the western city, and yet the overall picture is not one of disruption, but rather of a citywide transport network that is held together by thousands of Arab workers.

Aside from the hundreds of public transport drivers, the capital’s various truck companies hire the greatest number of Arab drivers, and they are joined by thousands of workers in garages, gas stations and vehicle testing spots. Some are Israeli citizens, like the residents of Abu Ghosh and Beit Safafa, but most, those from the East Jerusalem neighborhoods, are not Israeli nationals but permanent residents with a blue identity card.

And it’s not just in the transport sector. Arab workers are employed in every area in Jerusalem, in particular in manual labor, factories, hospitals, and hotels. This is primarily caused by the separation fence, which cut off East Jerusalem from the West Bank and the employment opportunities there. This separation led to a dramatic shift in the social structure of Jerusalem’s Arab population.

Most of the elite and the professionals left, in particular for Ramallah, where they work as senior Palestinian Authority officials, clerks and managers in the Palestinian banks, company executives, high-tech workers, engineers, lawyers and academics. They are not involved in the Israeli labor market; all are employed in the Arab market.

The more disadvantaged remained in East Jerusalem, where they have the advantage of freedom of movement in the west of the capital and the rest of Israel. There are tens of thousands of construction workers and cleaning staff in hospitals, universities and businesses who prefer to live within the city limits so as not to have to endure the checkpoints on a daily basis. They live in the poor neighborhoods of East Jerusalem, and some even run successful contractor and trucking businesses.

The Arabs of Jerusalem, totaling some 350 thousand people, account for about 40 percent of the city’s population. They have a higher income than the Arabs of the West Bank, but the cost of living is also higher in Jerusalem – especially housing prices, which are sometimes four times higher than in the West Bank.

The Jews and Arabs in Jerusalem are codependent. Where one can separate Israel from Gaza and the West Bank with fences and barriers, in Jerusalem this is impossible, with the Jewish and Arab neighborhoods so intertwined. 

So one may assume that economic rules will prevail over politics in Jerusalem, over incitement and over fear. There is no one to replace the tens of thousands of Arabs who work in the capital; not immigrants, not haredim and not the few middle class left in the Rehavia neighborhood

The waves of violence in the city subside fairly quickly, and the defense establishment is making great efforts, and on the bottom line – the Jerusalem economy is stronger than everything else.

Gaza economy: Money flowing but to whom

1 October 2014
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

By the time that Hamas and Israel had become locked in hostilities this summer, the boom had long gone out of Gaza’s economy. After two strong years, 2013 saw a 1.5% reduction in growth.

The basic facts are depressing:

  • Egypt has sealed its border shut, with not a hint of the tons of humanitarian aid that comes in via Israel every week.
  • Cleaning workers in hospitals are on strike, indicative of labour problems in the dominant public sector.
  • Thousands of people are trying to flee to abroad, a dangerous process which starts with an investment of around US$2,000.

From what is known, civil servants in Gaza have not been paid for three months. Danny Rubinstein, a leading Israeli commentator, claims that the money has arrived in the account of Abu Mazen from his Qatari sponsors. However, the Palestinian president has only paid for those workers in Ramallah, from where he rules.

It does beg the question as to what has happened to the rest of the cash?

A second issue of concern is what will happen at the donors’ conference, which is due to meet in Cairo next week. In order to rehouse hundreds of thousands and to create new commercial projects, billions of dollars are sought. Assumedly, much verbal emphasis will be invested in blaming Israel for border restrictions.  I believe that the average Palestinian deserves an answer to a more important question: Who is going to ensure that these vast quantities of financial largesse will be monitored transparently, so that the bottom line is a better Gaza?

  1. Hamas cannot be trusted. Last week, it even resorted to robbing The Bank of Palestine in order to finance immediate needs.
  2. UNRWA’s neutrality has also been severely compromised. The recent war showed that Hamas has abused UNRWA schooling facilities, where the teaching unions have become politicised and the buildings were used for launching Kassam rockets against Israeli civilians.

It is appropriate to recall here that back in December 2013, the European Court of Auditors admitted that it cannot vouch for where all the billions of Euro dollars in aid have disappeared to over the years.

In a month when the world is waking up to ISIS, Russia is squeezing out Ukrainian liberty and China is poised to crush thousands of students in Hong Kong, who cares? So what if a few billions goes missing in yet another impoverished part of the Middle East. After all, last month 500 Palestinians were drowned and the world’s media barely let forth a polite cough.

Hamas officials have been noticeably quiet about this horrific tragedy. Meanwhile, they must have made a relative fortune from this new-found export in human traffic. And that is the point. Huge sums continue to flow around for a select elite in Gaza, but it is not the truth that is swept up in the wash.

What is the cost-benefit of building a tunnel?

21 July 2014
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinian Society

An outsider looking in on the Middle East must be wondering why Israel and Hamas are fighting a war over a series of tunnels. After all, if Gaza is so poor, as its supporters maintain, how could they afford to build such a network?

It is an open secret that for at least a decade how the tunnel economy has funded Hamas, even before it came to power. Before Egypt shut down the Sinai side of the operations last year and sealed up its side of the border, it is estimated that via taxes and sales the trade was valued in billions for the Hamas exchequer.

So how much does it cost to build a tunnel?

I have already cited Doron Peskin last week. Yesterday, writing in Hebrew, he estimated that one meter costs about US$200, and tunneling work can achieve about 20 meters per day. The cement used to be smuggled through from Egypt. More recently, it has come in ‘regular’ lorry-loads via Israel. Since 2011, Qatar has replaced Iran as the prime paymaster.

Israeli reserve Col.Miri Eisen – former deputy head of IDF’s combat intelligence corps and former assistant to the director of Military intelligence, commented in an interview: –

It is a lucrative economic job in the Hamas. It is their top-tier unit, which is called the tunneling unit. They have put an enormous amount of money when they saw that the tunneling itself was something which Israel has intelligence challenges in finding the tunnels themselves while they’re building them. They put an immense amount of money and effort. They put the best into the tunneling units. They’ve built tunnels from the Gaza Strip into Israel that are a mile, a mile and a half, a mile and 800…I mean incredibly long tunnels and we’re not talking about a little mole tunnel which is dug and a person goes through like in [Shawshank] Redemption… We are talking about tunnels that are done in the tunneling mode, the way you would build nowadays trains, roads, anything that goes underground into a mountain. They are tunneling out, they are using their money, their capabilities, with little Caterpillar tractors that go in and dig out the dirt, covering it with an enormous amount of cement, and you’re all aware of the issue of cement going into the Gaza Strip.

However, in economics, for every cost, there is an alternative cost. In other words, if you can spend on X, that means you did not invest in Y. And therefore, those needed the benefits of Y lose out.

I have no idea how many tunnels exist in Gaza or how long they are. The IDF claims that it has already found 13. So, let’s assume conservatively there are only 20 in total and each one is 2 kilometers long. By my wobbly maths, that is close to a US$100m investment. The alternatives?

Point 1: 13 tunnels may have been found so far. There is no record of a one public bomb shelter being discovered in Gaza. In contrast, history has forced Israel to build one in every one of its homes in order to protect its citizens.

Point 2: BBC journalists and others decry the lack of medical services in Gaza. Now this is compounded by Hamas fighters using ambulances for transport. On the other hand, how is it possible that Israel has managed to establish a field hospital for Gazan citizens during the battles (as it has done for Syrians), while Hamas officialdom is nowhere in sight?

Point 3: Hamas relies on UNRWA to provide a schooling system. And yet the facilities are abused to store weapons. (I understand that UNRWA has since returned the equipment to the government)

The war could have been avoided. As Egypt’s foreign minister said last week: “Had Hamas accepted the Egyptian (ceasefire) proposal, it could have saved the lives of at least 40 Palestinians.”

The pathetic reality is that while Hamas leaders are safely closeted in the tunnels that they have erected for their own means, far more than 40 lives have been lost. The true cost of the Gaza tunnel network, for both sides of the diplomatic divide, has to be measured in terms of emotional loss, a horribly unnecessary evil.

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