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The economics of the Gaza-Israel fighting – Part 2

14 July 2014
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

Two days ago, I questioned  what would have happened if Hamas had invested its capital from the tunnel economy in human resources and social infrastructure rather than in military might. Where would the Gaza economy stand today and would Hamas still thus feel the need to support the frightening cycle of violence?

By way of a follow up, I spied two headlines almost side-by-side in yesterday’s newspaper. The first questioned how Israel will find the money to pay for the additional costs of war. This is expected to top 3 billion shekels or close to a billion dollars. By way of comparison, the annual budget of the Ministry of Defense, the heaviest in the country, already stands at 51 billion shekels.

Now we know that Israel is no longer a third world country. Outside the EU and America, it is one of the UK’s leading trading partners. Many of the world’s high-tech leaders, such as HP and Microsoft, have set up r&d centres in the Holy Land. The Prime Minister, Netanyahu, owns properties in Jerusalem and in Caesarea.

Compare that to the second article, which considered the growing riches of the Hamas leadership. Proportionally, it appears that the Palestinian Prime Minister in Gaza, Ismail Haniyeh, can match the largess of his Israeli counterpart. Back in 2010, Haniyeh purchased a 2,500 sq meter property for around 4 million dollars.

It is not that I am trying to preach a stringent form of Communism. However, we are talking here about Haniyeh, who claims that Gaza is a financial backwater that demands Western taxpayers to support his flagging economy. Haniyeh practices his Islamic religion on his sleeve, branding himself as a man of modest means. And Haniyeh is one of the key leaders of Hamas, which ousted the corrupt fatcats of Fatah from Gaza.

I detect a whiff of deceitful disconnect. You may call it the triumphal return of the pigs from Animal Farm.

For several years, there has been a growing amount of evidence that the Gaza economy can only be explained in a bipolar manner; the poor who have remained desperately poor and the nouveau riche, many of whom have ties with Hamas. There are now hundreds of millionaires in the Gaza Strip. Palestinian commentators have long looked at “the new class of rich“. New cars have been readily available, at least while Egypt kept the tunnels open.

It appears that Haniyeh is not alone in benefitting from the poverty of his electorate. Khaled Mashal is thought to have stashed away over US2.5 billion, according to Egyptian analyst, Dr Ahmed Karima. Chairman Arafat was no friend of Hamas, but the fundamentalists have clearly studied his financial techniques. Arafat took his fortune with him to the grave, and I suspect that the Hamas leaders are also not interested in sharing their gains with their constituency.

The Gabble from Gaza focuses on the numbers of rockets launched or how many people are displaced. Both, from whatever side of the border you come from, are a tragedy. The truth is that not far behind the bloody headlines are pecuniary considerations and personal interests that Hamas is bound to protect, even at the cost of the suffering of its own people.

Human suffering in Gaza, and elsewhere?

11 July 2014
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Categories: Afternoon Tea in Jerusalem, Israel, Jerusalem, Palestinians

The current bout of fighting between Israel and Gaza raises old issues of the economic poverty amongst the Palestinians.

And now this week’s bombing, which has resulted in tens of lost lives, makes it easy for outside news agencies to highlight these woes. Sky TV has reported the suffering from a local hospital. The BBC has shown ample footage of the wounded being carried around and other collateral damage. The NGOs are have issued a string of complaints regarding Israel’s actions.

Also this week, at least 50 bodies were found in Iraq. The UN reported that civilian casualties in Afghanistan are up 17%. And the Ebola epidemic in Africa is slaying hundreds. So, if these issues barely rank a mention amongst the educated world media, I begun to wonder if the ‘gabble from Gaza’ had also succeeded in hiding a secondary level of suffering far closer to home.

However good reporters are, we know that they cannot portray a complete story in a two and a half minute clip. Sky omitted to mention that Gaza children continue to be accepted and treated in Israeli hospitals. The BBC has been forced to admit that in its rush to put out stories, facts have become distorted in places. And not for the first time, the NGOs have accepted the sanctimonious rhetoric of the ‘underdog’ in their rush to condemn Israel without due concern for the facts. Again, is there another story?

Lets us accept for now the stats of the Palestinian Ministry of Health that tens have been killed, including women and children. It is not clear to me, how they died.  Do these same figures include Hamas soldiers killed in their own tunnels or taken out by Israeli gunfire? As for the bombings, by whom? It is known fact that up to a third of all Kassam rockets do not make it out of Gaza, falling back on the same population that launched them.  Is that not a crime against humanity?

Next, if the population of Gaza is around 3 million, there are just over 8 million in Israel, of which about 75% is Jewish. Now, the improved Kassam missiles can reach about 80% of the population in the Holy Land. Actually, one landed last night in Beitunia, close to the house of President Abbas!

This means that by attacking Israel, Hamas is waging war against nearly three times the numbers of people in its own territory, highly disproportionate. (And these people have between 15 to 90 seconds to take cover before the rocket lands.) Further, as Hamas leaders boast, the Kassams are directed at civilians, where as Israel is aiming at military targets. Another crime that the International Court of Justice prefers to ignore?

As I wrote last week, Gaza is suffering. While Hamas invested in a large underground (literally) military infrastructure, the leadership has lacked the money to pay its own followers. Resources have been channeled into weapons that kill rather than towards the creation and protection of life. If a different path had been chosen, then

Palestinian firms could be natural partners for Israeli companies – and others – looking to export to the larger Arab markets, notably Saudi Arabia, Egypt and Iraq. The nascent Palestinian technology sector would find an experienced and willing partner in next-door Israel, with its highly developed technology industry. Israeli venture capital firms could provide much-needed financing, support, and know-how to export-oriented Palestinian entrepreneurs.

Hamas has chosen a separate path, wrecking havoc on everyone, starting with its own. This is not a story about fighting in Gaza. This is a war inflicted on civilians of all religions by an Islamic leadership whose human values are deformed, putrid and vile.

The fact that the greater media refuses or is unable to recognise this wider picture concerns me. Ben Cohen has written how the Palestinians have hijacked the language of Auschwitz “to maintain their position in the Western conscience as the world’s most downtrodden nation“. Howard Jacobson observes that Israel’s critics have adopted the language of anti-semites without even realizing it. He defines this as the “gradual habituation to the language of loathing. Passed from the culpable to the unwary and back again. And soon, before you know it…….”

Gaza is suffering? Yes, and because of Hamas. And that misery is passed on in disproportional numbers to its neighbours. If only the Palestinians had a leadership that genuinely cared about human morals. And the world press has a duty to all to find a way to convey that message.

The house of the hill – in Brussels and in Ramallah

16 April 2014
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinian Society, Palestinians

Why has Europe begun to question its role in the Palestinian financial system?

A recent diplomatic conference highlighted the problems of the Palestinian economy; strikes, corruption, high unemployment, and more. The event was hosted in Prague and since  1991, the European Union – through its taxpayers – has been arguably the principal monetary supporter of the Palestinian territories, directly and through organization such as UNRWA.

The flow of these billions is set to continue, at least to the end of the decade. Yet throughout this period, there have always been three key ‘misfits’, enveloping these subsidies.

  1. Why has the Palestinian cause earned such large fiscal attention, when others in Africa and elsewhere have missed out? It is a decade ago since Nigel Roberts, former ranking World Bank representative in the region surmised global financial support for Palestinians as “the highest per capita aid transfer in the history of foreign aid anywhere”.
  2. Why has the Arab League, for all its wealth, never matched the contributions of the Europeans?
  3. Why is Palestinian poverty highlighted and blamed solely on the Israelis, when a World Bank report noted that the Palestinian economy grew under Israeli control by 5.5% annually up to 1999? That is a phenomenal performance, absolutely and relatively.

Something does not add up.

Back in 2003, the European Union investigated claims of fraudulent use of its resources by the Palestinians. The report under Christopher Patten was never released. (Interestingly, Patten went on to run the BBC and was famed for burying reports there). In parallel, The Funding for Peace Coalition was active for many years on these same issues. As the website poses: Where has all this money disappeared to?

These are contribution paid for by farmers in Greece, small businesses in Germany or even the owner of a pub in Putney, London What has been achieved through their generosity? Specifically, as Alarabiya News questioned regarding Suha Arafat, how did the wife of the former Palestinian Chairman amass such wealth? Should people be concerned? I believe so and for three separate reasons:

First, it is an issue of good governance. A taxpayer expects his representative to take responsibility. He has a fundamental right to know where his money ends up and that it is for a reasonable purpose. It is difficult to find any other subject, where such sums – billions – were and still are transferred with relatively little transparency and accountability.

Second, as reported above, there are a lot of poor Palestinians. No argument. They deserve better. It is staggering to consider that the financial transfers from the European Union have not made a more lasting and significant positive contribution on the Palestinian economy. It is even more amazing when you compare this failure to the World Bank analysis, noted above, about how the economy had previously leapt forward when Israel had full control of the territories.

Third, there is considerable evidence, which suggests that not only have funds been diverted for the benefit of an autocracy, both in Hamas and in the Palestinian Authority. Monies have ended up in the hands of terrorists. As admitted in the House of Commons in London, by a minister at the Foreign Office, Mr Hugh Robertson, “UK officials raised the issue of payments to Palestinian prisoners in Israeli jails with the Palestinian Authority (PA) most recently in March 2014. The International Development Committee also received information on this issue from the Minister of Finance during their visit in March.” In the same vein and possibly even more bewildering was the question raised in the European Parliament by Michal Kaminski.

It is a well-known fact that the Palestinian Authority proudly owns up to illegally spending over 6% of its budget — donated by, among others, the EU, where funding terrorism is against the law — on salaries for terrorists in Israeli prisons and pensions for the families of suicide bombers. The Palestinian Prisoner Affairs Minister, Issa Qarake, has admitted on television that the salaries are directly proportional to the terrorists’ sentences and the number of Jews they have killed……What is the Commission’s strategy to stop EU funds being used to pay salaries to terrorists in Israeli prisons?

And the response:

The EU is aware that the Palestinian Authority has a system of allowances in place for Palestinian prisoners, their families and ex-detainees. This scheme is not and has never been financed by the EU.

Maybe………..BUT how did the PA have enough money in the first place to distribute such payments?

For the record, there is also growing disapproval of some of the actions of UNRWA, to which Europe pays hundreds of millions of Euros annually. Not only does this billion dollar organisation have no external auditing procedures. It prints and distributes textbooks in its schools that appear to promote violent incitement against Israelis.

So where to now? The current round of peace talks is precariously balanced. The Palestinians are fuming about the non-release of terrorists by Israelis. In turn, Jerusalem feels that President Abbas has deliberately instigated the crisis, just like at the beginning of the Intifada in 2000. In response, Prime Minister Netanyahu is forcing the Ramallah government to pay up on extensive debts, which sounds ironic in light of the above discussion.

There is some hope. On the ground, individual Palestinian entrepreneurs are trying to work with Israelis. And Israel is actively seeking to open up commerce for its Arab population. It is also very welcome to see the read of the approach of Michael Theurer, chairman of the European Parliament’s Committee on Budgetary Control. Writing in the Wall Street Journal, he observed how in December 2013,”the European Court of Auditors revealed major dysfunctions in the management of EU financial support to the Palestinian Authority, and called for a serious overhaul of the funding mechanism.” He continued:

The report from the European Court of Auditors is a wake-up call on the need for stricter supervision of how EU funding to the Palestinian Authority is spent……A useful next step would be the imposition of clear benchmarks and conditions that the Palestinian Authority would have to meet in order to receive additional EU funds. These should include improving the state of human rights in the West Bank, cracking down on corruption and cutting off subsidies to convicted Palestinian terrorists.

Until then? The sad fact is that as long as Palestinian and European decision makers remain safely ensconced on their hilltops in Ramallah and in Brussels, Palestinian and Israeli civilians alike will continue to suffer, as will the bank accounts of European taxpayers.

Why Europe is encouraging financial investment partnerships from Israel

16 March 2014
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

For over two decades, Israel has been parading itself as the start up centre of the Middle East, encouraging overseas players to invest in technology, stocks and infrastructure in the Holy Land. For example, “foreign  investments in companies traded on the Tel Aviv Stock Exchange more than  tripled from 2012 to 2013″ to US$1.5 billion.

Yet it was the visit to Israel last week of the UK Prime Minister, David Cameron, which alerted observers to a more balanced flow of financial trade, especially with Europe.

Yes, Cameron won over many friends with his clever speech to Israel’s Parliament, the Kenesset. He also pledged a series of aid measures for the Palestinians. This included yet more UK taxpayers’ money to be channeled through UNRWA, a billion dollar a year project with no external audit.

What was new was the 70 million of investment into the UK pledged by Israeli private enterprise. The investment, which will create hundreds of UK jobs, including:

A £50 million commitment by Israel’s Noy Infrastructure and Energy Investment Fund to the UK’s renewable energy sector.

A £12 million investment by Israeli pharma company Teva in clinical development in the UK.

A £10 million investment by Israel-based AposTherapy in the UK in the next three years, creating hundreds of UK jobs.

As the two countries noted: “These announcements are testament to how the UK and Israel work successfully together. UK exports have grown steadily and we are now the third largest exporter to Israel and there are now over 250 Israeli companies operating in the UK.”

These are not isolated moves by Israeli companies. It was reported last month that “Israel’s institutional investors have sharply increased their holdings in overseas markets, which now represent 22% of assets under management at the end of last year, up from just 15% three years ago….. Among other foreign investments favored by Israeli institutionals were ETNs tracking European stocks and shares in emerging markets.”

So where has this paradigm shift come from? The fact is that while Israel’s economy has its problems, it is considered strong and solid. Through a stable banking system, it rode the global credit meltdown more successfully than most. It is developing an offshore energy industry. Add to that the financial benefits of Israel’s propensity to come up with great start ups, and you end up with a lot of new capital looking for a base overseas.

And that is why Europe is increasingly looking to tap into Israel’s emerging abilities in the money markets. Hundreds of millions stand to benefit from this new source of wealth in the Middle East.

Israeli entrepreneurs that you do not hear about outside Israel, because…..

4 February 2014
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

There is much talk these days of the potential of a widening boycott against Israeli businesses, because……well, it sounds politically correct.

Israeli advocates point to the hypocrisy of the situation. The boycott campaign proponents (BDS) do not advocate an equivalent boycott of China or elsewhere. Two Israelis, resident in New York, have just concluded a US$100 million property contract on behalf of the government of Qatar, no problems there apparently. A Palestinian survey reveals that 70% of respondents declared a preference for Israeli products. And for all the controversy of Scarlett Johansson’s advert for SodaStream during the Superbowl and the subsequent venom of Oxfam, Palestinians clearly enjoy working for Israeli employers in the West Bank.

OK, but what about encouraging the Arab sector in Israel?

Well, in the past two years, the Prime Minister’s Office has initiated a couple of seminars promoting the issue. Further, a technology incubator has been created in Nazareth, a city combining Jews, Moslems and Christians. Similarly, so few people know about the Al Bawader investment fund, set up in 2010 through an initiative of the Israeli government and the Israeli venture capital group, Pitango. It has a fund of over US$50 million to invest specifically in Arab ventures within Israel.

Al Bawader has a current crop of seven start-ups on its books. A typical example is Ms. Mass Watad, born in 1980 and who studied at the Hebrew University in Jerusalem. She currently owns a chain of diet clinics and in addition has developed a massage therapy. She  intends to set up a series of franchises in the Arab world.

Datumate Ltd, very clearly in the high-tech sector, was founded by Dr. Jad Jarroush. Employing ten people and benefitting from the marketing reach of Pitango, it offers software applications for customers in the area of land surveying, civil engineering and architectural planning.

As I write this, there is a very active television campaign in Israel, rejecting racism in all its forms. So few of Israel’s detractors will tell you about this prime-time effort. So few will report on the successes of Al Bawader. There again, so few of them reside in countries with similar adverts.

Israel’s economy: What if…….?

9 December 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

It is becoming increasingly apparent that for all the complaints of the Palestinians, the Israeli government has made some genuine concessions in the secretive peace talks between the two sides. There have even been unconfirmed discussions with the Saudis.

For decades, one of the basic gripes of the Palestinian Authority has consistently been the argument that Israeli security measures have restricted the development of their economy. The rhetoric has been backed by a plethora of reports from the IMF et al.

In some ways, this is no brainer. If you block the free flow of peoples and materials, whether or not you may be stopping a suicide bomber or two, you are going to impinge on commercial growth. It is worth reflecting that the World Bank reported that the Palestinian economy under so-called Israeli occupation was one of the fastest growing in the world for decades become Chairman Arafat launched the Intifada in 2000. It would be interesting to calculate how much Palestinian people have lost financially for the cause of violence.

Actually, there has often been a second level of economic concern for the Palestinian leadership. While on the one hand, it quietly promotes the boycott campaign of Israeli products, tech, academia and art, it also demands that Israel does more to support its fledgling economy. A classic example is the need to replace Gaza’s dependence on Egyptian electricity.

The seemingly political-correctness of the boycott campaign masks the hypocrisy of the fact that it too acts as a barrier to encouraging trade between parties. Clearly, this is a case of the pot calling the kettle black. And there is a more deeper, and conveniently hidden, question. How much has Palestinian hatred towards Israel cost the Israeli economy?

Two starting points: First, since 2001, Israel has had to invest heavy resources to combat an Intifada, defend itself against incursions from Gaza, fight a war in Lebanon, protect itself against a nuclear Iran, and fight off a global recession. For all that, average annual GDP growth has been around 4%, impressive by any standard. Second, before the Intifada, it is estimated that around 125,000 Palestinians secured regular daily work in Israel. Today, that figure has ‘climbed back’ to around 40,000.

The New Yorker Magazine recently estimated how much Israel has surrendered in lost economic potential because of the existential threat it faces. The journal quotes an economic model from Yusaku Horiuchi and Asher Mayerson, who asked what would have happened if Chairman Arafat had accepted Barak’s proposals in 2000 at Camp David. (It would appear that much of this offer is still on the table today via John Kerry!)

Cumulatively, from 2001 to 2010, Israel’s per capita G.D.P. was $25,513 less than that of synthetic Israel’s. ….For an Israeli family of four, even after income taxes, it might have meant a down payment on an apartment, a college education for a child, or a couple of new cars…..Because tax rates in Israel are generally around forty per cent, there are implications for the government, too: based on conservative estimates (assuming, for instance, that only a third of the revenue goes to taxes), the lost G.D.P. could amount to nearly sixty billion dollars going to the government—a big proportion of the country’s annual budget.

This week, Israel announced that it would help to fund a project to build a water pipeline from the Red Sea to the Dead Sea, which will jointly benefit Jordan and the Palestinians territories. Just think how many other infrastructure projects – schools, hospitals, roads – could have been funded if violence had not forced a different turn of events?

The relative methodology to understanding BDS

25 October 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

The Methodist Church in the UK has created an on-line survey to ask for opinions on BDS – Boycott, Divestment and Sanctions – a global economic, academic and cultural campaign to apply political pressure on Israel.

In a nutshell, supporters of BDS argue that Israel’s occupation of the West Bank since 1967 is brutal and contradicts international law. It must be stopped.

Israel’s advocates believe that this is a politically-correct truth, wrapped up in a lie. It is George Orwell’s newspeak at its most triumphant. After all: –

I am not an expert of Methodism, which arose in the 18th Century as a response to perceived hypocrisy in the established Church of England. I do believe that any true religion does not look to generate separation, distrust and hatred. Rather it should be seeking to invest in co-existence at grass roots level. In the past few years, Israel has made the following advances towards working with Palestinians: –

  • Contrary to BDS circulars, Israel helps to provide extra water and sewage solutions to the Arabs, inside and outside the Palestinian territories.
  • President Peres recently invited the Barcelona football team to Israel, and great efforts were made to ensure that the players visited Ramallah.
  • A new scheme has been launched to ensure that 500 Arab teachers are employed in Israeli schools
  • Increasing numbers of Arabs – Christian, Muslim, female – can be found serving in the Israeli army
  • The ‘Save A Child’s Heart’ campaign in Tel Aviv has saved the lives of hundreds of Palestinian children with cardiac conditions over the past two decades. (Actually, the team is currently involved in a unique project in Tanzania. Should that too be boycotted?)

All that is left for me to understand is what precisely the proponents of the boycott intend to achieve? Yes, they can put pressure on celebs like Stephen Hawkings not to visit Jerusalem, even though the very tools keeping the professor alive are powered by Israeli tech. Please note that Microsoft, Siemens, HP, General Motors, Facebook, R&D centres operating in Israel and turning out services for the whole world. Just check out on the internet re the levels of foreign investment in Israel. (However, I suggest caution before using Google, as it is co-owned by an Israeli.)

PWC estimates that Israeli exists in 2012 were valued at US$5.5 billion (mainly from overseas) and this figure will be topped in 2013. This year has already seen:

  • IBM purchase Trusteer, which protects millions of bank accounts in the UK and America from computer theft.
  • Communications giant, Cisco, add intucell to ten other Israeli acquisitions. These applications are found next to the television set and in the phones of billions globally.
  • Facebook buy onavo to enhance its mobile app capability.

Should these deals be reversed, and why? Warren Buffet, French retailer Kiabi, health giant Prolor Biotech and so many more have upped their positions in Israel during 2013, effectively benefitting millions internationally.

So what is BDS really trying to say? If I refer back to the position of the Israeli advocates, they point out that one of the founders of BDS, Omar Barghouti, advocates for the total destruction of the Jewish state of Israel, even though he studied at the University of Tel Aviv.

I suppose this same Barghouti would boycott all the theories and the science of Albert Einstein, because the estate of this Nobel Laureate has been dedicated in its entirety to the Hebrew University of Jerusalem. This leaves many to believe that BDS is another name for the theory of relative hatred.

Israel’s economy – friend or foe?

11 October 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem, Palestinians

Consider these facts on Israel’s economy, released by international financial organisations in the past few days.

  • The World Bank believes that Israel’s control of the West Bank hinders the Palestinian economy to the tune of US$3-4 billion per annum.
  • The IMF has assessed that Israel’s economy will grow by around 3.3% in both 2013 and in 2014, at least double the rate of the USA and the European Union. Interestingly, the Palestinian economy is expected to contract for the first time in a decade.

Many of the newspapers that followed the first story have been asking why Israel does not withdraw from the Palestinian territories, and then economic wealth should flood in. No?

There again, reports from Reuters and elsewhere indicate that corruption is so historically endemic in the Palestinian territories that any new money would merely flow towards those already accustomed to receiving it.

I wish to propose another question.

If the Palestinians and others would cease their attacks on Israel, would this not release vast additional resources for social and commercial projects? After all, Israel has already approved 300 economic and humanitarian projects for Palestinians in the past 24 months and more are in the pipeline. If so, then maybe the economy of the Holy Land could help to lead others towards greater prosperity. Yes?

7 new economic and social quirks of ‘the Middle East issue’

26 September 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinian Society

Some readers often ask me why I do not write specifically about the Israeli-Palestinian conflict. In response I explain how there are so many bloggers already out there, each with their own agenda. Another one will not make a difference.

That said, just recently, I have come across a series of financial and social issues that are out of the ordinary – certainly, unexpected – and deserve wider review.

1) Investing in Palestine: As the UN Assembly meets and President Abbas implores the world to support his cause against Israel, I recently questioned who is actually investing in the emerging Palestinian economy. The bottom line is that the Arab block, who Abbas says wants to recognise Israel, transfers relatively few funds towards its favourite political project. Most of Ramallah’s joint ventures are with ……Israel.

2) Israel’s economy and the global recession: At a time when America is struggling to maintain its economic momentum and the UK may finally be seeing an initial emergence from a deep recession, Israel’s finances appear to be under control. The stock market  is beginning to perform and public expenditure is finally in check. Growth predictions for 2014 have been raised to 3.4%.

3) The level of aid for the Palestinian economy: It is well established that the Palestinian economy is bolstered by aid received from large international agencies. One recent report calculates that “the Palestinian people, have received per capita, adjusted for inflation, 25 times more aid than did Europeans to rebuild war-torn Western Europe under the Marshall plan after the Second World War.” Much comes via UNRWA’s near US$1,000 million annual budget, a self-perpetuating black hole of Western taxpayer largesse.

4) The main beneficiaries of Israeli Arabic health care: About six months ago, Israel’s largest health fund released a series of training videos in Arabic for the local market. Over 90% of the million plus views have been registered to countries with no official relations with the Holy Land. So much a for a boycott of the Jewish state.

5) The main beneficiaries of Palestinian justice system: Amnesty International (AI) has just released a report condemning the Palestinian Authority (PA) for not allowing free political demonstrations. It is only a month since AI condemned Hamas in Gaza for its frequent use of executions, a horror confirmed by the BBC. When one considers that the Palestinian Women’s Center for Legal Aid and Counseling has documented 25 honour killings so far in 2013, it has to be asked: Why does the Palestinian system demand political and social justice from Israel but does not apply the same principles for its own people?

6) What Egypt and Syria are teaching others:   The Arab Spring, the revolting pictures emerging from Syria, the Islamic-Marxist rule in Iran and more have challenged a vital core part of Western thinking for decades. Until now, it was accepted that the Israeli-Palestinian conflict was the main core of distress in the region. Clearly, it is becoming evident that pressuring Israel into a peace deal will not bring overall peace to the Middle East. Well done Assad and co for highlighting the unspeakable.

7) Not worth visiting? So with all these trouble points and instability, who would visit Israel today? Well for the first eight months of 2013, 2.13 million tourists were recorded. That figure continues the upward record trend over the past three years.

Do Palestinians really conduct business with Israelis?

13 September 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem, Palestinians

There is an international movement called BDS. Founded by Omar Barghouti, who curiously enough studied at Tel Aviv University, the group seeks to impose an international boycott on Israel, cultural and economic, whether the subject matter relates to Israel pre or post 1967 borders.

So if 171 non-governmental Palestinian organisations started off the protest, you would surely expect to see Palestinians running from any opportunity to support business with Israel?

And then along comes Hani Alami, 43 years old and star of the Palestinian telecom scene. Alami has just purchased 30% of Alvarion, former leader of the Israeli internet industry. According to a Hebrew article, the bidding closed around 48 million shekels, about US$14 million.

And this poses the question, who else is trading with Israel?

Well, there is an official trade agreement between the two sides, signed by the Prime Ministers. There is a chamber of commerce. There is around 3 billion dollars of recorded annual trade. And this is in addition to a plethora of on-the-ground projects that are rarely featured in the international media – sharing water resources, open networking by CEOs, and even occasionally at retail level.

BDS is an evil non-sequiter. Peace can only come through promoting cooperation and further mutual understanding, but BDS prohibits the two sides coming together. And if BDS was so interested in human rights, why does it not object to Palestinians trading with China or Russia, or why does it not complain about Hamas executions of criminals?

David Olesker wrote:

The most extreme detractors of the Jewish state assert that the key to understanding the region (and perhaps the whole world) is to understand that “Israel is the problem.” Like the classical antisemite, the ideological enemy of Israel sees Jews and Israel behind everything that is wrong in the world. Most reasonable people who are generally supportive of Israel’s rights can’t easily be seduced by the conceptual frame that defines a world where “Israel is the problem.” However, they can fall prey to its less extreme form of the frame, which can be summed up as “Israel is the issue.”……If Israel is the issue, then all problems can ultimately be resolved only by actions on Israel’s part .

And thus the circle would be closed, except that there are still enough Palestinians out there who understand that hatred serves…….. hatred. It never creates prosperity nor harmony. Witness Alami, who would happily show you how much Israeli tech has been installed into the Palestinian mobile and telecom sector in recent years.

Does Israeli society promote peace in the Middle East?

14 August 2013
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Categories: Afternoon Tea in Jerusalem, Israel, Jerusalem, Palestinian Society, Palestinians

I was in Tiberias this Saturday night, walking along the edge of the Sea of Galilee. As I strolled down to the sea front, past the Scottish Hotel, owned by the Church of Scotland, the crowds were deafening. Jews mixed with Druze, who mixed with Moslems, along with the foreign tourists. All were customers and waiters at the multitude of restaurants on the thriving promenade.

And while thousands of Israelis were partying, American Secretary of State, John Kerry, was on the warpath. He is pulling out all the stops to reignite peace talks – at least, talks about talks – between Israelis and Palestinians.

Depending on whose spin you believe: Either the Israelis are not serious, because they keep building or enlarging so-called settlements. Or the Palestinians have shown less than a minimalistic level of commitment by bombing tourists in Eilat. UN experts have shown revealed their position by criticising Israel for its supposed harassment of a Palestinian human rights’ activist.

All this comes on a day, when Israel released 26 Palestinian prisoners, as a gesture of good will. Judging from the record of the former inmates, Israel was forced into this move by Kerry. Tom Gross, an experienced journalist covering the region, has noted that:

  • Abu-Musa Salam Ali Atia of Fatah  hacked to death  Holocaust survivor, using an axe in broad daylight.
  • Ra’ai Ibrahim Salam Ali of Fatah killed a pensioner by axe blows to the head while he sat on a public bench reading a book.
  • Two of the prisoners, Abu Satta Ahmad Sa’id Aladdin and Abu Sita Talab Mahmad Ayman, were imprisoned in 1994 for the murder of David Dadi and Haim Weizman. They killed Dadi and Weizman as they slept in Weizman’s apartment, and then cut off their ears as trophies.

And so the list goes on. You have to ask. Why would Palestinian President Abbas want such people released into his society? Why give them a heroes welcome? And why has there been no reciprocal move to show to Israelis and the peace brokers how serious the Palestinians are about peace?

What the process is showing is that while Israel, and specifically her Prime Minister Netanyahu, are not liked by parts of the international diplomatic community, their complaints do not stand up to realities on the ground. It is not just that citizens of different religions mix freely on the streets in the Holy Land, Israel goes out of its way to help others. For example, dozens of Syrians have now been treated in Israeli hospitals as a result of fighting on their own soil.

In contrast, as Palestinian journalist Abu Toameh records, “while Palestinians are being slaughtered and forced out of their homes in Syria, the Lebanese government is preventing them from entering Lebanon.” And in Gaza, the planned executions of named traitors has even attracted the disgust of the British government, as well as the UN and Amnesty International.

There are no simple paths along the journey towards peace. This was best illustrated by a recent and amazingly frank appraisal by an outgoing member of the Spokesperson’s Unit of the Israeli army.

However, I would like to take one step further what the Wall Street Journal wrote. “What does it say about a prospective state of Palestine that among its heroes is Salah Ibrahim Ahmad Mugdad?“, who beat a 72 year old security guard to death with a steel rod. When Abbas and co are prepared to find a new type of hero, one that Israeli society can relate to, than Kerry’s efforts will have a far deeper meaning.

Peace talks in the Middle East? What Palestinians says about their own economy

30 July 2013
1 Comment
Categories: Afternoon Tea in Jerusalem, Israel, Palestinian Society, Palestinians

So the Palestinians and the Israelis are due to meet today in Washington to begin talks about talks.

One of the issues that always annoys me is the way the Palestinian economy is reported and analysed. The standard retort is that the economy is in a mess – eg unemployment at over 25% – because of Israeli restrictions on the freedom of movement.

Well that specific stat is agreed upon by most sources. And it cannot be denied that Israeli security measures by definition must inhibit economic development. However, there is a flip side. For example, before the violence of the Intifada and up to 1999, the World Bank has stated that Palestinian economy grew by 5.5% annually for over two decades. And what about the implications of the violence on the Israeli side, which demands that resources are directed towards defence rather than structural growth?

So,let’s try to move away from the spin and the meaningless of politically correct statements. I often like to hear what Palestinians are saying about their own economy.

Last week, the Palestinian Monetary Authority released the latest figures on the state of the business environment. “In general, the overall index indicates that recovery in economic activity that took place during the past months of 2013 was back on the track in July, as a result of improvement in some industrial sectors such as food industries (index increased from 0.37 to 1.97) and furniture (from 0.24 to 1.75).”

The figures were especially encouraging for the West Bank region. It can be no coincidence that the Swedish furniture multinational, IKEA, has confirmed that it is holding discussions to open a new outlet in Ramallah in the coming year.

Despite the hypocritical howls of the BDS movement, cooperation with Israeli authorities continues. One notable example is the annual seminar held for farmers from Gaza. This year, around 50 people attended. Last month, a new industrial complex was inaugurated in Jericho with the open support of Israel, Jordan and Japan. And there is increasing speculation that discoveries of energy resources in the Eastern Mediterranean and its forthcoming development will also bring the two sides together.

The down side at the moment for the Palestinian economy can be traced to events in Egypt. Seasoned Middle East observer Tom Gross cites a report from AP from 24th July. “Egypt’s new government has imposed the toughest border restrictions on the Hamas-run Gaza Strip in years, sealing smuggling tunnels, blocking most passenger traffic and causing millions of dollars in economic losses.”

This was not a one-off comment. Egypt controls around 70% of the power supply into Gaza. And Al-Monitor headlined that Gaza fishermen can no longer ship out into Egyptian waters, which will have a clear negative impact on a major local industry. Gross observes these are blatant restrictions of economic movement, but there is no international outcry. Why?

So what does this all this mean for Mr Kerry has he brings the two sides together over a very wide negotiating table?

As these pictures illustrate (even if I do no agree with the flavour of the website), there are many aspects of affluence in the Palestinian territories. However, the population as a whole deserves better. And here’s the catch.

Instead of blaming Israel for their poverty, Palestinians can do more to resolve their own issues. A simple but obvious start would be to divert their limited resources from activities which generate hatred against Israel. They can be moved towards fostering internal structural growth for the civilian population.

The question remains if this potential of increased economic wealth for the Palestinians is a priority for their own leadership during the peace process?

Bringing the gap of hatred through commerce – Middle East case study

29 May 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

Many a government will claim that it utilises commerce and overseas aid to close the gap with less than friendly nationalities. A classic example is USAID, whose annual budget extends in to the billions and reaches dozens of less-wealthy countries.

There have been numerous commercial efforts to mobilise trade in order to bring the Israelis and Palestinians together. President Peres has been particularly active over the years in trying to set up joint industrial and agricultural facilities near the border with Gaza, although persistent Hamas rocket fire has ensured that the results have been minimalistic.

So, it was encouraging to read in the Palestinian media that earlier this week representatives of Israeli and Palestinian high tech came together in Tel Aviv. Significantly, this drew the support of the tech multinationals like Microsoft as well as Cisco, whose boss is known to be close to Peres.

It is not just that Palestinians are considered an educated community and relatively cheap compared to their Israeli counterparts.

During the last few years more than 500 Palestinian engineers and analysts have been employed in Palestinian companies working with Israeli IT companies. There are 4,000 working in the Palestinian private IT sector and another 3,000 in telecoms. Beyond that, 1,500 to 2,200 more graduate into the field every year from the 13 universities in the Palestinian territories.

With some irony and sadness, the downside to all this came from the office of the Palestinian chairman, which described the meeting as “unacceptable“. This is the direct opposite of the comments from one of my business colleagues, who recently attended a forum in New York where both Jews and Muslims were prominent. To paraphrase: they had never before learnt so much about each other and thus come away with a greater feeling of mutual understanding, even if some of the Arab delegates were forced to speak in a different tone form the public podium.

Israel has earned its reputation as the start-up nation of the Middle East. Two days ago, the CEO of Intel in Israel, where they have three plants, noted that his company had already invested over US$10 billion in the Holy Land. The Dutch are now following a London-based example and setting up a technology centre deliberately based on Israeli concepts. In the Israeli high-tech each of the past three financial quarters, companies have raised nearly US$500 million dollars from local and foreign based investors, a staggering amount for a country of barely 8 million people and where 50% is a desert.

It would be a shame for Israel’s neighbours to miss out on such benefits due to misguided and historical hatred amongst its leaders. It really is time to learn how to talk the language of understanding.

Two pointers on the Palestinian economy – May 2013

14 May 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinian Society, Palestinians

Gross Domestic Product (GDP) in Palestine witnessed remarkable growth of 5.9% during 2012, Palestinian Central Bureau of Statistics (PCBS) said in its report.

That is certainly progress for an economy that was set back for a decade by the Intifada. Accordingly, there are encouraging signs in multiple sectors. Government revenues have risen marginally.

In parallel, some international aid is having a positive impact. For example, last month the UK’s International Development Minister Alan Duncan announced to an audience of the Hebron Chamber of Commerce the details of a new £15 million Palestinian Market Development Programme. The previous grant had “helped hundreds of businesses turn over £80 million in sales and exports, enter 87 new export markets, develop 129 new products, create 3,400 jobs and increase their exports by 52%.”

That said, all is not rosy. Just look at the unemployment rate that seems pegged around 25%. With a young population, that raises ominous social questions for the immediate future and stability of any governing party in Gaza and in the West Bank. So here are two suggestions that should help to make a positive change and relatively quickly.

First, to paraphrase a detailed report from the International Monetary Fund, ‘better governance’ would make fundamental difference. In fact, the report makes for more depressing than the official Palestinian stats I have cited above.  The key recommendations are hidden on pages 17 and 18. While it no longer blames Israel for all the economic woes in the Palestinian territories, there is a demand for halting pay rises to a bloated public sector, implementing better tax revenue collection systems, and reducing capital outlays on dubious public sector projects.

However, second, in order for this to happen, the Palestinian people will need a leadership that is…….well, capable. Unfortunately, after weeks of internal haggling, the Palestinian Prime Minister, Salam Fayyad, resigned on April 24th. Texas-educated, IMF-trained and one of the few that was determined to introoduce transparency in the system, Fayyad had had enough.

According to some observers, Fayyad could see that the Palestinian economy under President Abbas may be heading for a dive. Not only has substantial donor aid from Arab countries effectively dried up. Just as pertinent is the fact that corruption and graft amongst the leaders in Ramallah and in Gaza have rarely seen better times.

An analysis prepared by a Gaza journalist, details how money is leaking out of the official Palestinian financial system, which lacks accountability . It is near unbelievable to read how “the report criticised the murkiness surrounding the PA’s security budget, which  accounts for nearly one third of the Palestinian public budget, because it was  comprised of only one figure, without details….”

The truly worrying aspect is when one links that statement with the policies of Western governments. Less than two weeks ago, on May 6th, the European Union released a further €20 million to help fund the payment of the April salaries and pensions of nearly 76,000 Palestinian civil servants and pensioners in the West Bank and the Gaza Strip. Totally funding in this field has reached around €1.5 billion since 2008. If the corruption is so widespread, you have to ask what has European taxpayers money actually been spent on?

There are countless micro examples, which illustrate the lack of open government, at least from the point of view of Western standards. Even when the UN is supposed to hand resources and aid out to Palestinian refugees, the money slips away unguardedly from the hands of those who need it.

The Palestinians deserve a better economy. For that to happen, they require a true leadership, neither laden by the demands of corruption nor beholden to violent ideologies.

Controlling your finances – a Palestinian perspective

14 February 2013
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Categories: Blog, Business, Israel, Palestinian Society, Palestinians

All finance directors need to control their budgets and cash flows. Otherwise, your shop, your corporation or your country enters the world of bankruptcy.

Palestinian Treasury officials have never been able to plan future positions from a position of stability. Blame Israel, internal politics, donors not fulfilling pledges, etc, but their excel spreadsheets have often lacked substance.

The draft budget for 2013 was presented this week in Ramallah. As noted by Finance Minister, Qassis, Israel has not transferred funds for January. Further, Arab countries have yet again defaulted on promises of support. Palestinian Monetary Authority (PMA) chairman, Jihad Al Wazir, says that from 2008 to 2012, handouts have dropped by two-thirds to a paltry US$600 million.

I am sure that the irony was not lost on the cabinet when a seminar, hosted by Transparency International the previous week, had noted how there was a need to take “measures to improve oversight of PA financial controls at the borders and increase coordination between the border and finance authorities.”  To put it diplomatically, money is simply going astray.

There are clear positives, which give room for cautious optimism. A feature posted on CNBC noted that while the public sector debt was moving dangerously upwards to over 12% of gdp, the PMA has ensured that the banks have been protected from financial harm.

The banking system’s Tier 1 capital, its main benchmark of health, stood at a remarkably robust 24 percent of assets last year, according to the IMF. Struggling European banks’ Tier 1 ratios generally hover between 7 and 10 percent, and at around 8 percent for Israeli banks. Non-performing loans at Palestinian banks stand at less than 3 percent of total loans, and debt-to-deposit ratios remain far healthier than in neighbouring Jordan and Israel.

In parallel to this island of stability has been the slow but detectable rise of a new middle class. Rawabi is a fascinating new town, located near the city of Ramallah. Its development has been encouraged by Israel. Intriguingly, much of the properties are slated for young couples with ‘new money’. And that trend is matched by the growth of Palestinian women in employment, and more specifically as entrepreneurs. Their numbers may now be as high as 30% of the labour force.

Personally, I have found it interesting to read a Palestinian blog describing the “flood of Israeli goods” entering Gaza. While the author clearly believes that this is not a healthy situation, they also failed to note that Egypt has began to waste smuggling tunnels on its border with Gaza. This vital lifeline “brings in an estimated 30 percent of all goods that reach the enclave.”

And of course, if the Palestinians cannot rely on their Arab neighbours for donations, the good news is that the contributions from the relatively affluent EU taxpayer have not seized up. It is difficult to assess accurately the level of payments that the EU devolves to each citizen in Gaza and in the West Bank, as Brussels conceals the statistics. However, the direct directives added up to almost €200 million in 2012. This not only went to financing salaries of civil servants. As confirmed by leading local politicians, the money financed the living standards of convicted terrorists.

For all these positives and their starts, significant change will not come for sometime. The geopolitical dynamics will see to that. In addition, tunnel destruction, rising debt and continuing corruption do not facilitate a mass Palestinian socio-economic revival. As one Palestinian commentator indicated, when the wife of a senior PLO official spends $20,000 for dental treatment in Tel Aviv at a time when there is no shortage of renowned Palestinian dentists in Ramallah, Bethlehem and Nablus, the average citizen is forced to deals with inconvenient truths.

Over the next few months, UN committees, the World Bank, the EU and others are due to release reports blaming continuing Palestinian government poverty on the punishing measures of the Israeli government. There is no space to discuss here what is “punishing”, but even one roadblock has a limiting effect on the surrounding economy.

However, as an economist, I am forced to ask if these international bodies have considered whether the actions of Palestinian leaders are responsible for their own financial mess. Once all the mud-slinging and spin is eliminated from the Palestinian playing field, the regimes in Gaza and in Ramallah are just that – regimes, dictatorships. Historically, these types of government rarely to deliver economic freedom for their voters………….which is why the economists in Ramallah find themsleves ruling over a bankrupt treasury.

If the Palestinians had their own “Arab Spring”…..

12 October 2012
2 Comments
Categories: Business, Israel, Palestinians

Earlier this month, a most unusual iten appeared in the Arab media. Abdulateef Al-Mulhim, commenting on the “Arab Spring and the Israeli enemy”, observed that:

Many Arabs don’t know that the life expectancy of the Palestinians living in Israel is far longer than many Arab states and they enjoy far better political and social freedom than many of their Arab brothers. Even the Palestinians living under Israeli occupation in the West Bank and Gaza Strip enjoy more political and social rights than some places in the Arab World. Wasn’t one of the judges who sent a former Israeli president to jail is an Israeli-Palestinian? The Arab Spring showed the world that the Palestinians are happier and in better situation than their Arab brothers who fought to liberate them from the Israelis.

The item came after a series of economic demonstrations during August in the West Bank. Whether these acts were a genuine outburst of distress or Hamas trying to wrestle power away from the Palestinian Authority (PA), I will not debate. The key issue is how strong is the Palestinian economy. Does the populace of Ramallah and Gaza need its own protest movement? And if so, who would be on the receiving end of the complaints?

It has long been accepted that the Gaza and the West Bank are two separate economies. Even the ruling powers – Hamas and the PA – appear more united by the hatred of Israel rather than a common political plan.

Gaza’s immediate progress is hampered by Egypt’t battles in the Sinai with various Bedouin tribes. It is not just that Egypt is Gaza’s route to global trade, Cairo supplies around 70% of the power for people in the fertile costal strip. Yet despite such geopolitics and Israeli security restrictions, I have observed previously that evidence suggests that the area now boasts over 600 millionaires.

The BBC news service has confirmed this economic improvement. At a primary level, the tunnel economy has created a new elite, specifically people close to the Hamas regime. In tandem, there has been “a surge in the value of land with prices more than doubling in the past two years.”

There many who argue that if Israel were to withdraw most of its security regulations, then this new wealth would spread to others. Almost by definition, this is a given, although the process could be kickstarted if Hamas were to cease daily rocket attacks in to southern Israel. An additional factor that impedes progress are the social limitations imposed and dictated by Hamas on its own people, measures which have now led to a daming report by Human Rights Watch.

The situation in the West Bank has similarities to Gaza. As the IMF reported, an economic boom is in progress. The 9% increase in growth for early 2012 is a direct continuation from the achievements of 2011.

That said, the PA is till crying poverty. Civil servant salaries for August were only delivered in early October. Although the Ramallah government does not expect to emerge from the economic crisis soon and begs for assistance from overseas, an analysis from the Palestinian Central Bureau of Statistics reveals that there is still a lot of money around.

Stocks of Palestinian assets invested abroad in 2011 were about $5,233 million, while stocks of foreign liabilities on the Palestinian economy were about $4,512 million……primary results of the International Investment Position (IIP) for the Palestinian Territory by the end of 2011 revealed that the net IIP had amounted to about $721.0 million,  which means that the Palestinian economy of its various sectors had invested outside Palestinian Territory by more than the investment amount in the Palestinian Territory from abroad.

So what next? It would seem that both in Gaza and in the West Bank, money is around but not flowing to those positioned at the end of the food chain, about 95% of the population. And that raises the old and recurring issue of corruption and graft. Only recently, a former aide of President Arafat was convicted for embezzlement. If I was a Palestinian, I know that I would be protesting to my leaders about such vast distortions.

Is that a more serious problem than resolving the issues with Israel, I am not to judge. However, it does leave a question for European and American donor countries to the Palestinians – where and how should they continue to transfer money?

Ealier this month, the European Union agreed to a further 11 Million Euro of assistance to UNRWA. What is significant is that for all the murderous troubles facing the Palestinians in Syria, barely 10% of the money will go to lending then support. Most of the money will go……elsewhere.

When will the donors wake up? When will the Palestinians really open their mouths of distress against all of these distortions?

Investing in the Palestinian economy – who gets what?

12 June 2012
1 Comment
Categories: Business, Israel, Palestinian Society, Palestinians

It was recently pointed out to me by a blogger friend that American federal agencies are encouraging those willing to listen that they should place greater investment in the infrastructure of the Palestinian economy. The aim is to move away from the traditional support given to UNRWA or non commercial elements.

A World Bank report in September 2011 describes “the necessity of both sustainable economic growth and effective institutions for a future viable [Palestinian] state. (And)……investment opportunities have arisen in Palestine. For example, in 2011 the Rasmala Investment Bank established the Ras­mala Palestine Equity Fund, which seeks to “achieve long-term capital appreciation by investing in a diversified portfolio of growth and value stocks listed on the Palestine Stock Exchange in securities anticipated to undergo initial public offerings as well as securities at their initial public offering.

One reason for this encouraging change of approach is that the senior Palestinian leadership has yet to shake off the whiff and evil of corruption that pervaded the Arafat dictatorship. To paraphrase a second blogger, Arnold Roth:

Muhammad Rashid, Arafat’s money-carrier (literally), has been arrested. He has been running the Palestine Investment Fund, which in turn controls the Arab Palestinian Investment Company. This organisation is dominated by Tareq and Yasser, the sons of President Abbas.

May not look good to outsiders. The Palestinian Authority (PA) has reserves. Reuters recently observed that:

The Western-backed PA ….says it has poured around $7 billion into the Gaza Strip since its rival Hamas seized control in 2007, but complains that the Islamist group is stymieing its efforts to balance its books……The PA says it spends $120 million a month, or more than 40 percent of its whole budget, on salaries and services in Gaza. 

Remember, those salaries includes dosh for those people launching rockets daily into Israel. And they more than likely funded the “security” provided to a journalist friend as he toured Hamas smuggling tunnels last month. It is also useful to recall that much of this funding comes from the generosity of European taxpayers – over 1 billion dollars since 2008.

Maybe Western leaders are finally aware that this displacement of resources is adversely effecting the average “man on the street” in Ramallah or Jenin. For example, Palestinian sources note that hospitals are facing closure, as they are starved of income. And because the PA has consistently ignored its water obligations under the Oslo Agreement with Israel, villages in the Bethlehem district are now running dry.

Where next? Difficult to say. Palestinian banks are also in a precarious position as they have been struggling to feed the needs of central government. One thing for sure – if you want to invest in the Palestinian economy, make sure that central sources are nowhere near the distribution table.

4 updates on the Palestinian economy

10 March 2012
1 Comment
Categories: Business, Israel, Palestinians

The Palestinian economy may still dwarf in size compared to its Israeli neighbour. It still looks to the international community – particularly the World Bank and the EU – for taxpayers handouts. That said, times are a changing.

1. Exports

The security situation has finally eased enough for Israel to enable trade to recommence between Gaza and the West Bank. On 6 March, after negotiations with the World Food Programme (WFP), 13 lorry loads of date bars from Gaza were transferred to the West Bank, the first such transfer since 2007.

2. Business Development Loans

Thousands of young Palestinians will receive access to financial loans to support their new businesses through a United Nations-backed initiative, which seeks to stimulate the creation of new jobs. The “Mubadarati” loan programme will be carried out by the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) in collaboration with Silatech, a social enterprise company that focuses on creating opportunities for youth in the Arab world.

3. Energy

On a slightly negative note, one problem which continues to plague the Palestinian economy is the lack of continuous energy in Gaza, most of which is supplied via Egypt. Ismail Haniyeh, the Hamas Prime Minister in Gaza, has been quoted as blaming his friends in Cairo. Although a temporary solution has been found, it looks as if factories will be operating on a shortened working week for sometime to come.

4. Israeli involvement – Healthcare

While Palestinians and Israelis are not known for being the best of friends, in the medical sphere the story is often different. Palestinian journalist, Abu Khaled Toameh reported this week that the Palestinian Health Minister, Fathi Abu Mughli, organised a tour of Ramallah by an Israeli team of professionals – although the visit was cut short after strong local protests.

This is no new phenomenon. Israel has consistently proved its willingness to cooperate in the medical arena. Official stats show that in December 2011 and again in January 2012, around 1,400 humanitarian permits were issued to allow Palestinian patients and accompanying relatives into Israel. Back in May 2011, the Sheba hospital near Tel Aviv had supported a project to enable 1,000 Palestinians in the Tulkarm area to receive hearing aids.

Just how large are economies in the Middle East? The World Factbook puts the Palestinian GDP per person at US$2,800. Israel’s figure is over US$31,000. The countries of Qatar, UAE and Saudi Arabia leave everyone way behind.

Yet you have to wonder if these kingdoms invest in their Palestinian friends as Israel does.

So what’s changing in Israel?

18 August 2011
No comments
Categories: Business, Israel

I was speaking to a top advertising exec this week in London. To summarise his question:

A democracy based on strict proportional representation, producing continuous minority governments. Nuclear threats from Iran. Hamas and Hizbollah constantly probing. The Palestinians launching a diplomatic initiative at the UN. How do Israelis cope?

That’s point. Somehow, Israel and Israelis do continue jogging along. The economy is sailing along, even if growth has fallen back to 3.3% per annum. Tourism is at a record high. 28 hightech / internet companies will take part at the International Broadcast Convention in Amsterdam.

And yet, and yet…..Something has happened in Israeli society. It has not been just another hot summer.

First, hundreds of thousands have taken to the streets in demonstrations against the social policies of successive governments. Years of growth may be fine on paper. Unemployment may be at a record low. But as this “triumph” has come at a cost of continually squeezing the nebulous middle classes, there has come a point in time when people have said “enough”.

It will be a brave person to say exactly what will be different. And I am not referring to some cosmetic changes in tax codes or cheaper housing for young families. For possibly the first time since 1982, a social movement has exploded out of nowhere and without any control from the established political leadership.

At the very least, politicians of most persuasions are going to have to spend some time listening and understanding to what is going on. They will not be able to carry out one of their basic functions of leading from the front, but they are going to have to be “reactive”. They are being called on to “respond” in full to the call for change.

Where that will take the country is anybody’s guess. A ‘dash’ back to the past of 1977 shows that some social movements may start with a bang but they can fizzle out.

As for the diplomatic front, the aftershocks of the Arab Spring are coming in to play. Following the fall of Mubarak, the Egyptian border is looking tragically porous. With Assad in trouble, intelligence reports indicate that Hizbollah and Iran are trying to support his position. And for all his gesturing over demanding UN recognition, the position of Abbas as leader of the Palestinians is clearly unclear.

The geopolitical map is moving again. And just as interestingly, in parallel, so is the socio-economic foundation of Israel.

It is time for American Presidential hopefuls and European decision makers to recognise that somebody has moved Israel’s cheese.

Israel fails the earthquake test

20 March 2011
1 Comment
Categories: Blog

Earthquakes occur in the Holy land roughly every hundred years. The last major disaster occurred in 1927. So, by the law of stats, something big is round the corner.

This month’s tragedy in Japan has only served again just how unprepared Israel is for the next (inevitable?) earth shattering event in the region. Despite reports from the ombudsman, debates in the Kenesset and appeals from academics, “the state’s fund for dealing with damages from an earthquake, a fund which exists and operates in countries like Japan and is supposed to supply solutions for the immediate economic needs – is empty.”

But as Japan was facing meltdown, the government of Israel had to deal with two more immediate disasters.

Late Friday night of the 11th of March, two terrorists broke into the town of Itamar on the West Bank and murdered 5 people in their sleep. One of the slain included a three month old toddler.

CNN did not consider it a terror incident at first. The BBC downplayed the act. Sky ignored the story entirely.

As for the government in Jerusalem, it failed to realise that it had to compete for media airspace with the horrors in Japan or with images of the civilians trying to combat Colonel Ghaddafi. Graphic pictures of the victims were released far too late. The mini humanitarian debacle, and its implications for the fragile peace process, was missed by the world.

Then, a few days later, Israeli commandos boarded a ship, the Victoria, which had sailed from Turkey and was destined for Egypt. Intelligence reports indicated that it was bearing Iranian weapons for Hamas . Bingo! The top brass in Tel Aviv had got it right, and a big photo op was arranged for the next day.

BUT, somebody had forgotten to explain to the Mossad how to host international journalists and cameramen. After keeping the visitors hanging around in the heat for 2 hours and with few briefings available in English, 200 frustrated media people departed the scene…with no story.

So, the world will never know how hundreds of tons of weapons were prevented from reaching the hands of terrorists in Gaza. And what would Hamas have done with these arms of destruction? As reported by the BBC,

Civilian areas in southern Israel were heavily shelled by Palestinian terrorists in Gaza on Saturday morning (19.3.11), when more than 50 mortars were fired at the regional councils of Sha’ar Hanegev, Eshkol and Sdot Hanegev.

These are stories are real interest. Large numbers are being placed in danger or slaughtered by those who value life of others to the same degree as the Colonel in Libya. The world ignores. In parallel, many of the official Israeli spokespeople are so incompetent that they are frequently unable to make a difference.

It took a Palestinian journalist to pin point the dichotomy. Khaled Abu Toameh, discussing the complexities of Palestinian spin, concluded:

It is disgraceful that while Israel admits Palestinian patients to its hospitals, Arab hospitals are denying them medical treatment for various reasons, including money. But then one is reminded that Arab dictators do not care about their own people, so why should they pay attention to an 11-year-old boy who is dying at the entrance to a hospital because his father didn’t have $1,500 handy? But as the death took place in an Arab country – and as the victim is an Arab – why should anyone care about him? Where is the outcry against Arab apartheid?

Where has the West been until now? Why does Israel not shout out more about this hypocrisy? And who will remember that Israel once again is one of the first countries to send a medical team to help earthquake victims, this time in Japan?

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