Yesterday evening, my regular keep-fit routine was disturbed. I could not get out of my head that 5 people had been slaughtered in their sleep, just a 2 hours drive away. That includes a 3 month old baby. Even now, it keeps buzzing in my mind – how can anybody be driven by such manic hate to do that?

 According to initial reports, a couple of people had climbed over a fence, which had set off an alarm. The security team treated it as a false alert. 2.5 hours later, 5 bodies, and time for the perpetrators to celebrate.

Most readers of this blog will not have heard of the incident. Drowned in the information avalanche from Japan’s awful tragedy and hidden by the news of the no-fly zone re Libya, there was no space left for coverage on Sky TV. (There was just room for Charlie Sheen on its website.)

And of course, these were 5 humans who lived in Itamar, known as a right-wing hot house in Israel’s West Bank. So, in the politically correct spin of 2011, the media can afford to ignore the story.

Obama was disgusted. Hague, France and others were similarly shocked. The Quartet condemned the incident “in the strongest possible terms”.

I am not an expert on the peace process and rarely comment about it directly, but it seems to me that it will take a mix of 4 elements to get it to work.

Israeli compromise: Israel has already ceded land to Egypt and to Jordan in return for peace. It had offers on the table to both the Palestinians and to Syria a decade ago,which were ignored.  And I dare say that while Netanyahu is most reluctant to give up anything else, he has declared repeatedly his willingness for a two-state solution.

Palestinian compromise: The Palestinians have pulled out of peace talks twice in the past decade, as they were approaching decision time. Chairman Arafat ran away from Clinton and Barak at Camp David in August 2000, seeking the path of Intifada. And two years ago, President Abbas could not bring himself to announce an agreement with Olmert. In fact, since the details were leaked, the Palestinian team has denied the whole story.

Support from Arab states: Former President Mubarak is no saint. As ruler of the strongest military regime in the Arab League, he kept the peace process alive with Israel. He enabled King Hussain of Jordan to join in, etc. He is now gone. Israel’s gas supply from Egypt has been “temporarily” shut off on a continuous basis. Iranian ships have sailed through the Suez Canal for the first time in years.

Western encouragement and neutrality: The commitment of Europe to find a just peace cannot be argued. Only last week, the EU’s most senior foreign affairs diplomat, Catherine Ashton issued another statement, demanding increased Israeli flexibility. Hague, Clinton et al did the same. However, as at Munich, it was difficult to find a similar demand from the other side.

Tragically, this flexibility has now been reflected in some poor patrolling and the death of five civilians. No generous comments of sympathy from Arab states and no return to the peace table by the Palestinians.

Meanwhile, I continue share something in common with Western diplomats. We have both put on a few kilos this week for lack of effort. I gave up on my exercises, and they have been sitting around again with the wrong peace formulas for the Holy Land.

Sky News TV is leading a brilliant expose of Colonel Ghaddafi’s reign of torture. The UN has rushed to declare wide-ranging sanctions. Obama is appalled.

But where have these hordes of self-righteous protesters been until now? It is only a few months ago that CNN and Human Rights Watch were praising the regime in Tripoli.  In January 2003, Libya was elected to head the UN body on human rights and nobody muttered a word. The world was too busy condemning Israel, defending itself from Palestinian homicide bombers.

Back at Sky, they have issued an easy-to-understand map of the Middle East, explaining why so many people are revolting. No mention of the Palestinian territories. The economy in Gaza is clearly on the up, which ironically is damaging Hamas’s financial stranglehold. With amazing irony, the tourism industry in the West Bank has benefitted by the Egyptian turmoil.

So where is the West going to focus its attention next week? Well, actually if you look beyond the headlines, they are desperately trying to get back to the Palestinian Issue. Apparently, this is the main cause of instability in the Middle East, a unique spin designed to help decision makers ignore torture and riots in Algeria, Tunisia, Libya, Egypt, Jordan, Oman, Iran, and Yemen………to name but a few. 

Tony Blair has arrived in Jerusalem to help prepare for the next round of Quartet meetings and pressure Israel. Obama needs to balance helping Israel recently at the UN. According to a report in the Israeli newspaper, Yediot, the British Foreign Minister is considering recognising the state of Palestine, even if this is in direct contradiction to the commitment of both parties not to take unilateral one-sided measures.

But here’s that all misses the point.

Mohammad Bouazizi didn’t set himself on fire in December, thereby triggering Tunisia’s Jasmine Revolution, to express solidarity with Palestinians. Instead, his suicide was a direct response to the economic and social strictures in his own country…..The conventional wisdom that the Palestinian-Israeli conflict is the mother of all problems in the region has now been exposed as nothing but a myth.

What gets me is that all the efforts of the West are based on the support of moderate regimes like Egypt and Oman and Jordan, which are supposed to help convince Israel that they will ensure that no Arab country will attack it again, once Palestinian land has been given up. But these governments no longer exist or have had to back track.

Be it Hague or Blair or Ashton or Obama or Clinton, can we believe that the word “oops” – with a large O – is in their vocabulary? Or does the Libya fiasco merely provide another distraction to learn how the Middle East really works?

The Economist magazine has made great efforts to predict which Arab country might be the next to fall after Egypt. Syria? An emirate?

More intriguing is the “Shoe Thrower’s index, which aims to predict where the scent of jasmine may spread next.” Simply using factors such as youth ratios, unemployment and corruption, the Economist has attempted to which autocracy could go next, assuming that the bug spreads.

It is interesting how Egypt, Libya and Yemen figured at the top. There again, Tunisia is placed in the middle, close to Jordan, another potential time bomb, and Bahrain below that. So, the index makes for a cute exercise, but it is not complete.

Marxists and co are having a field day. Do the violent street protests signify a return of proletarian revolutions, with the proverbial spark spreading virally via facebook? A man burns himself in a backwater town in Tunisia and within a month, billions of petrodollars become meaningless, as leaders in Iran, Bahrain and Algeria hurry to learn the art of damage limitation. 

So where are the protests from the Palestinians? Without claiming that Israel is the perfect country – who is? – it is all very quiet inside the Ramallah/Gaza axis. True, Abu Mazen’s cabinet reshuffle is seen as a defensive response rather than a move from strength. And the Palestinian Independent Commission for Human Rights issued a statement on 6th February:

concerned by the restrictions on freedom of expression and peaceful assembly by Palestinian security agencies, which have banned peaceful protests by Palestinian citizens in solidarity with the people of Tunisia and Egypt.  On 2/2/2011, the Palestinian police banned a peaceful protest which was organized in the city of Ramallah and arrested a number of journalists and participants for a short period of time.

In Gaza, it is possible that the situation is still too raw for change. “The new wealthy class — many associated with Hamas — as well as established capital owners are concerned about keeping their money inside Gaza, preferring to move it abroad….even to Israel”

As for the Jewish State, the Netanyahu government has backed down on some price rises. There may be a general strike in two weeks. But there are no mass demos, coloured by riot police. Why?

Dr Robert Brookes is leading blogger in the field of psychology. With amazing irony, his latest monthly posting is titled “we all want out voices to be heard“. He concludes that: –

Self-determination and autonomy are basic needs that exist throughout our lives, …… Intrinsic motivation and democratic ideals flourish when environments encourage and support one’s voice being heard. In all of our institutions, whether in schools or in various organizations or businesses, those in leadership positions must ask if all members truly believe their opinion is respected and that they are afforded a certain level of choice and autonomy. This kind of respect does not imply a loss of authority on the part of leadership, but rather the cultivation of a climate in which leadership will be honored for validating the input and voices of others.

For all its faults, and despite of a very real existential threat for all of its modern history, Israel has a free press, freedom of worship and a secret vote for all. The country is at the heart of the industrial revolution in telecommunications, with over 50 companies at this week’s World Mobile Congress in Barcelona. Open source tech and apps are everywhere, near impossible to block. 

I know that many, possibly even most, of these demonstrators in the Arab World do not like Israel. But for all their hatred, are they telling their leaders that they are actually envious of the way the Holy Land is ruled? Israel is a democracy.

And maybe there is another message here for world leaders. They have often thrown shoes at Israel, claiming that Jerusalem’s intransigence on the Palestinian issue is the core of instability in the Middle East. The Economist’s index is telling you that it is time for a review of your mindset.

The European Commission decided today (22.12.10) to provide an initial financial package worth €100 million for the Occupied Palestinian Territory under the 2011 budget.

Now that is a pretty cool donation, especially from an international organisation also financing at least 4 economies suffering meltdown. And this public money is going to end up in an economy that does not officially exist, at least as a member of the UN.

This is not the only set of Western taxpayers funds ending up in the Treasury of the Palestinian Authority. The UK recently confirmed that it had contributed approx US$45 in 2010 to the World Bank Trust Fund, which “pays the salaries of public sector workers in both Gaza and the West Bank”. Japan gave US$12m in early December. Mrs H Clinton came up with US$150m. And so the list seems to go on.

Conglomerates from the private sector have also joined the game:

  • Cisco will invest $5 million in a venture capital fund for Palestinian startups.
  • Google is investing $2 million which will include contributions to the same VC fund and to the local operations of NGO Mercy Corps.
  • A long term commitment by HP to expanding business operations in Palestine and local collaborations with USAID.
  • Intel will expand cooperation with Palestinian IT/software firm Asal Technologies.

Is this a wise bet on the future or just politically correct? SKY TV recently reported on the new strengths of the Palestinian economy. Google Bethlehem at Christmas and you will find plenty of info on how Manger Square has been full of tourists this year.

According to David Makovsky of the Washington institute for Near East Policy, Prime Minister Salam Fayyad claims that 120 schools have been built in the last decade. Those and 3 new hospitals, 50 health clinics, hundreds of new or resurfaced roads, etc, etc. And tax collection was up 50% in 2010, although starting from a meager base.

Bottom line for Fayyad is that poverty is down a third as are expected contributions from foreign assistance.

 It’s all looking very positive….that is until you start to ask a few questions.

1) The European press release above recognises that “the EU now fulfils by far the pledges made at the Paris Donors’ Conference in December 2007.” Good. Encouraging. So where are the equivalent donations from Arab countries. What do they know that is stopping them from fulfilling their pledges and thus investing?

2) If the World Bank Trust Fund is asking the UK and others to contribute to salaries of public workers in Gaza, they are effectively paying the wages of Hamas officials. Hamas is listed as a terrorist organisation. As I write, news came through that Hamas has illegally arrested over 3000 political opponents in 2010 alone.

3) If the Palestinian economy is improving so much, why is so much aid needed in the first place.  The World Bank talks about 8% annual growth. New luxury hotels are to be seen in Gaza and in the West Bank. Israel is no longer withholding tax revenues as all debts by the Palestinian Authority are accounted for. Even the number of manned Israeli roadblocks in the West Bank is only 14 in number, thus allowing for easier commerce.

So here’s my issue: When an investor or venture capital group seeks to become involved with a new project, they look at the skills available, the team, transparency, history, and future accountability. They consider who else will share the risk. Above all, is it possible to assess the true need.

Would you invest 100m Euro in one go under such conditions? There again, in this case, it was signed off by those who are not necessarily accountable.

How do you know it is Christmas time?

The Europeans always complain that the amount of snow is wrong, whatever the quantity. The shopkeepers are never happy with either the pre or post festivity purchasing stats. And the “spinners” in the Israel-Palestinian conflict begin to bombard the gullible with slanted stats about life in Bethlehem.

Here’s what I mean:

In “New Christmas Story: Bethlehem under Occupation“, the reader is asked to believe that Israel has effectively banned Christianity from Manger Square. Published almost on the same day, Human Rights Watch (HRW) in New York called for a boycott of Israeli products manufactured in the West Bank, as the Jerusalem government must be seen as a brutal occupying force.

Israelis will reply that economic growth in the West Bank is bouncing along at about 8-9%, now that the Palestinian Authority is directing more resources towards proper government and away from violence. And the HRW report can only be described as a pathetic or dangerous whitewash, as “the manufactured allegations erase the context of a protracted and intense conflict, and ignore the legitimate security needs of Israel.”

So what is happening in Bethlehem, Christmas 2010?

The Catholic News Service has just reported that:

With five new hotels in the works, a handful of new souvenir shops opening recently and nearly 40 restaurants able to serve crowds from 100 to 1,000, the Bethlehem economy is showing signs of recovery following the desperate intifada years. For the first time in years, shop owners and tourist industry workers in the birthplace of Christ are optimistic and have confidence in the economy. For most, 2010 was the best year for business in a decade.

And it is an established fact that Israeli and Palestinian tour guides are cooperating, bring trade to each other under a new scheme. In fact, as Israel is completing a boom year in tourism and as around 2/3 of the visitors are Christians, it can be assumed that many have ended up visiting Bethlehem.

Start crawling the net and the evidence from non-partisan sources is that life ain’t too bad in Bethlehem these days. By the way, it should be emphasised that every since the municipal boundaries were reorganised by Chairman Arafat in 1996, the city has been predominantly Muslim.

Led on by the Palestinian PM, the Christmas preparations near their climax. Meanwhile, 15 miles away in Israel, two Christian tourists were attacked , probably by terrorists. One died of her wounds.

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

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

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

Encouraging, but the documented concluded that: –

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Can Israelis and Palestinians work together?

My own work experience includes a 7 year stint with a multinational in Jerusalem. Employees included Israeli Arabs and Palestinians. I recall how we all shared a joke about our Christian colleagues. They had the best deal, as they did not work on Jewish and Muslim holidays, as well as Christmas.

A one-off freak affair? No way. One of Israel’s most successful independent businessmen is Stef Wertheimer. He has just launched a new Arab-Israel industrial park in Nazareth. It was less than a decade ago, when the Christian and Muslim communities in the city were at physical loggerheads over a visit by the Pope.

And Israel’s largest newspaper, Yediot, ran a feature this week on economic cooperation in the West Bank. For example, the newest branch of the supermarket chain, Rami Levy, is located near Bethlehem. Jews and Muslims work and shop together. About 15 miles to the north, the town or settlement of Psagot has set up a winery, where the staff is also “mixed”. etc etc.

In previous writings, I have mentioned the brilliant work of Save a Child’s Heart in south Tel Aviv, the Peres Center for Peace and the Abraham Fund – all these making a quiet but significant difference in health, commerce, education and social services.

Is there a catch? It is disappointing not to find a similar level of initiatives coming from ‘the other side of the fence’.

And it is with disappointment and irony how several international groups have been boycotting Israel in some form at what they see as Israel’s punishment of the Palestinian population. The latest examples include a cultural protest by 140 Irish artists and a Norwegian oil fund has dropped 2 Israeli companies from its portfolio.

These people are effectively erecting barriers to progress, the very act they accuse Israel of. Maybe hypocrisy is a more accurate description than irony. Their policy creates mistrust, if not hatred, simply watering the seeds of wars to come.

There is a message here. Numerous NGOs, politicians, artists and others wage a war of words against Israel. If they were to judge the country by her actions that do not make the main news programmes – the actions that make a difference – boycotts could be replaced by increased greater economic benefit for all.

Is that too simple a dream to hope for?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It is politically correct to accept that Gaza’s economic woes are cause by Israeli policies. However, if you use IMF and World Bank stats, 3 points are immediately evident of Gaza’s history:

  • Under Egyptian rule up to 1967, the area was an economic no-go area with life expectancy under 60
  • With Israel in charge, growth leapt to over 5% per annum until 1999.
  • Bring on the Intifada and then Hamas rule, and its back to disaster time.

Fertile Gaza, with an economy that could be really successful, suffers from unemployment, poor sanitation and an authoritarian  government.

For all the repeated criticism of Israel from UNRWA, NGOs, the Turkish Prime Minister and others, there is no starvation in Gaza. Consumer goods exist in quantity. There are even official tariffs to protect some local manufacturers and keep out imports. Hamas has refused to move even one Palestinian family from the refugee camps and into former Israeli towns. 

I found  a recent Newsweek article illuminating:-

While the three-year-old ban on many imports has posed a hardship for most Gazans, smugglers have been able to deliver these items through a network of tunnels connecting Gaza with Egypt. An Israeli television news segment—aired last week and widely discussed here—shows Palestinian shop owners on the phone with their Israeli suppliers, coordinating the delivery of goods by sea to Cyprus and onto Sinai, where they’re carted to Gaza through the tunnels.

So not much of a blockade. So what is likely to change now that Netanyahu has bowed again to international pressure and accepted most of Obama’s demands?

Will there be less firing on Israeli civilians, the main cause of Israeli hostility? Maybe – not out of love, but because Hamas has seen how the propaganda front can be more rewarding than firing thousands of missiles.

Ironically, if imports arrive directly into Gaza, prices may rise and Hamas may lose a source of its income. Hundreds will lose work in the tunnel industry and Hamas will cease to take its graft from the reduced contraband. Maybe, the activities will transferred to the overland ports of entry and “normality” will be restored.

Israel has agreed to up the numbers of trucks allowed to enter Gaza daily from around 100 to 150. Maybe exports can start up, which will produce a real bonus for the economy. The fact that NGOs have failed to call for this until now reveals how their focus was often directed against Israel than on behalf  of Palestinians.

What would truly make a difference is if Hamas were to recognise Israel’s right to exist. In the West Bank, where the economy has grown by around 8% in the past 12 months, there is now cooperation over sewage schemes and alternative wind energy. Rami Levy, one of Israel’s largest supermarket chains, has a new branch near Bethlehem open to all.

Why don’t world politicians force Hamas to do something that is obvious, necessary, simple and humane; to recognise Israel and to live in peace with the state? Think how much we would ALL be better off.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Here we go again?

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

Nothing could be further from the truth.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 Steps Taken by Israel to Support Palestinian Economic Activity

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

The Gaza Strip

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

European politicians have spent the past month arguing that Israel does not do enough for peace.

I have maintained that if you look at efforts on the ground, the above hypothesis remains simply that, a theory; the efforts of real life are very different and truly encouraging.

So here is an example of what I mean. What follows is a statement released today from Israel’s Ministryof Defense.  

Press Release:  Outbreak of Swine Flu in the Gaza Strip

 Israel has already transferred 10,000 doses of vaccine and continues to monitor the situation

 In light of recent cases of swine flu in the Gaza Strip, the Coordinator for Government Activities in the Territories (COGAT) and the Gaza District Coordination and Liaison Office (DCL) are working with the Palestinian Civil Committee in Gaza (associated with the Ramallah-based Palestinian Authority) to prevent further cases.

During the course of day, the passage of a sick person was facilitated and, upon examination, the individual’s illness was found to be swine flu.  Similarly, four other ill persons who also showed signs of swine flu also crossed.

The Gaza DCL is in continuous contact with health officials from the Palestinian Civil Committee in Gaza and as such is able to create up-to-date situation assessments regarding swine flu.  Meetings are held with high frequency and in accordance with reports from Gaza.

 As of now, approximately 10,000 doses of vaccine against swine flu have been transferred to the Gaza Strip via Israel, which remains ready to receive further requests.

 Since the beginning of 2009, approximately 8,000 Gazan patients and their loved ones have entered Israel for medical reasons.

Gaza DCL Commander Col. Moshe Levi said: “The Gaza DCL is making great efforts on all levels and through all channels to assist the non-combatant Palestinian population from the Gaza Strip, with an emphasis on the field of health.  This is part of our overall humanitarian effort vis-à-vis the Gaza Strip.”

Until the onset of the second Intifada in 2000, the World Bank considered the Palestinian economy as one of the fastest growing economies on record. Years of suicide bombers, Israel restricting labourers entering the country, incursions into Gaza and more had left the Palestinian territories broke.

In the past year or so, it has been accepted that violence is down. Israel has removed dozens of roadblocks. Palestinians are seen back in the Israeli workforce. Have these changes combined to give an economic boost?

There is plenty of anecdotal evidence to report strong shifts on the ground. For example, independent journalist Tom Gross wrote in the Wall Street Journal that:

As I sat in the plush office of Ahmad Aweidah, the suave British-educated banker who heads the Palestinian Securities Exchange, he told me that the Nablus stock market was the second best-performing in the world so far in 2009, after Shanghai. (Aweidah’s office looks directly across from the palatial residence of Palestinian billionaire Munib al-Masri, the wealthiest man in the West Bank.)

Later I met Bashir al-Shakah, director of Nablus’s gleaming new cinema, where four of the latest Hollywood hits were playing that day. Most movies were sold out, he noted, proudly adding that the venue had already hosted a film festival since it opened in June.

On his own blog, Gross posted pictures, originally shown in the newspaper “Palestine Today”. They show Gaza during the recent Eid festivities. Shops full of goods, a galaxy away from the photos shown by most of the world media.

This information comes as a welcome relief to the stated economic aims of Khaled Mashaal, head of the Hamas political bureau in Damascus. He was quoted on the Filisteen al-’An website as saying: “most of Hamas’ funds and efforts are invested in the resistance and military preparations”

The Wall Street Journal assesses that the Palestinian economy will grow by 5% in 2009, despite the global credit crunch and having to absorb returnees from Dubai. 

Any impact of lower remittances would most likely be softened if those workers find work in the West Bank. With a building boom under way in Ramallah and other Palestinian cities, fueled partly by international aid money totaling $1.7 billion in 2008, many returning from Dubai are finding jobs.

Read the international press, and you could assume that Jerusalem is one divisive city. After all, Jerusalem has been the centre of disputes for thousands of years; 2 destroyed temples, crusades, Turkish rule, 4 different Christian sects fighting today for control of the Church of the Holy Sceptre, different orthodox Jewish groups, and loads more. So, it is easy for editors to play on the theme. 

But if you walk round the city itself, you would have to ask why such drivel is sent to print by respected journalists. Jerusalem actively and continuously supports projects which encourage coexistence.

I recently wrote about Jerusalem hospitals hosting co-projects with Palestinians. I did not mention the sprawling Alyn rehab centre. It has been the saviours of countless lives, particularly young children, from all ethnic backgrounds. 

Alyn’s “Wheels of Love” annual bike ride saw 650 participants from over 12 countries and several religions raise nearly US$3 million. When the bikers returned, many kids and their families, several distinguishable from their different attire, came to meet them.

Sounds too inspiring or Hollywoody, take something more mundane. Israel’s police force has sent a delegation to Northern Ireland to teach their co-professionals about “fair policing models”. 

These are successful techniques, which have evolved over time. Whether it be work in Jerusalem’s crowded streets or patrolling the diverse communities in the north of Israel, the Holy Land has much to teach police counterparts overseas.

Last Thursday night, I enjoyed a wonderful “thanksgiving meal”.  I met up with one of the founders of the Christian Embassy in Jerusalem, which now has reps in dozens of countries around the globe. With other friends, we commented on the new park planned in East Jerusalem, next to several Arab suburbs……..And the list goes on.

Yes. Not all is rosy. In the past 2 months, there have been provoked riots in the Old City. And ultra orthodox Jews have taken to the streets with violence against the police.

But these are not the stories of what is going on daily, the on-going stories of good news. And now you appreciate why good news rarely makes it in to leading media outlets.

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