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The Ramallah bubble: Prosperity under occupation?

By Lia Tarachansky and Max Blumenthal

From street level in downtown Ramallah the economy seems to be thriving. Gleaming storefronts display an array of brand-name products, American fast food restaurants are sprouting up and the city is host to a bustling nightlife that could rival Tel Aviv. For years Israeli officials have pointed to economic growth in the West Bank, arguing the occupation is not as detrimental as many argue. Israeli Public Diplomacy and Diaspora Affairs Minister Yuli Edelstein and Eitan Dogat, head of the branch of the Israeli government in charge of the occupation (COGAT), have quoted figures showing annual growth as high as 9.6 percent in the West Bank.

These figures, promoted also by Palestinian Authority officials, come from World Bank reports, but as Palestinian economist Ibrahim Shikaki points out, behind this veneer of prosperity is an uncomfortable reality.

In September, the West Bank was rocked by anti-austerity protests, directed against Prime Minister Salam Fayyad, the chief architect of the Palestinian economy since the Oslo Accords. By signing the Paris Protocols, part of Oslo, the Palestinian Authority agreed to a forced dependency on the Israeli economy. Israeli Prime Minister Benjamin Netanyahu termed the situation “Peace through Prosperity.” The Real News’ Lia Tarachansky and independent journalist Max Blumenthal look at what lies behind this policy.

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    1. Richard Witty

      The future is improvement in Palestinian condition, NOT boycott.

      That only stops things, with no proposal for improvement.

      Anger, rather than thought. Anger, rather than determination.

      Reply to Comment
    2. XYZ

      Hong Kong achieved great prosperity under 150 years of British occupation. If a people are industrious and willing to work hard and avoid corruption, they can prosper. The West Bank in the 1970’s had one of the fastest economic growth rates in the word, under “Israeli occupation”.

      I know one of the favorite bete noires of the ‘progressive’ Left is the “domination” theme. NO ONE IN THE WORLD IS TRULY INDEPENDENT. An independent Palestinian state, should it arise, will end up being dependent on Israel and Jordan, among others. Israel is dependent on the US, EU and eastern trading partners. The US is dependent on China and the petrodollar states of the Middle East for loans to keep them afloat. The question is not “domination” but rather what the local population is doing and what they are aspiring to, as I stated above.

      Reply to Comment
      • Y-Man

        ok, since occupation doesn’t matter, we should totally let the Palestinians occupy Israel, right? set up some barbed wire fences, some checkpoints, whatever

        Reply to Comment
        • Kolumn9

          If the Palestinians occupied Israel there would be no Jews left in Israel.

          The point is that economic growth is very much possible under ‘occupation’. The economic development in the West Bank from 1967 until the first intifada pretty much disproves all claims to the contrary.

          Reply to Comment
          • andrew r

            Just like there were no Arabs left in most of Palestine occupied by the Zionists during 48-49. In any case, I am a little curious as to how the Palestinians would expel all the Jews from Israel, unless you’re suggesting they’ll readily setup Final Solution-type extermination centers. Making this another deranged remark casting Palestinians as the target of vicarious revenge.

            The real factor behind economic growth in the territories was the use of the Palestinians as an unskilled labor pool, and the wages they earned in other Arab states like Kuwait counted towards this touted growth. Israel imposed a massive trade deficit on the West Bank and Gaza, restricted the growth of certain crops so they wouldn’t compete with the Israeli variety and forced the shekel to be the only legal currency. Then came the intifadas and Operation Cast Lead…

            Reply to Comment
        • The Trespasser

          There is not one even semi-successful Arab state, which means that barbed wire and checkpoints have nothing to do with it.

          Also, you are forgetting that Palestinians have no one but themselves to blame for harsh conditions – until they’ve took habit of exploding themselves among Israeli civilians during the 2nd Intifada there was no checkpoints, no walls and no unemployment.

          Reply to Comment
          • History

            “There is not one even semi-successful Arab state”
            Simply put, this is a ridiculous generalization that speaks more of the discrimination and racism of the speaker than of anything else.
            What about Qatar, Quwait, UAE, even Egypt?
            Of course, your thoughtless comment is so vague that the very term “successful” is open to interpretation.
            To preserve your dignity, lets move on to the second point.
            The Palestinians have no one but themselves to blame? Strictly speaking, that too is wrong. For one thing, Israel is the occupying state, the hegemonic dominant majority, that controls trade, borders… etc.
            Just one example is that a good portion of Palestinian tax money that should go to the PA goes through Israel. When Palestine won recognition of statehood at the UN last year, Israel’s retaliation was to withhold that money. Wait, what? Withhold that money, as though this was a contribution that the Israeli government makes to support the Palestinian economy? “Withhold that money” ? In other words, blatant stealing and active undermining of the Palestinian economy.
            I think the PA is in part responsible, but it definitely has someone else to blame, and justifiably.

            Reply to Comment
          • The Trespasser

            >What about Qatar, Quwait, UAE, even Egypt?

            Qatar, Quwait and Emirates are 100% dependent on oil exports. Stop buying oil and they’ll eat sand.

            Egypt? What and by what standard is successful in Egypt?
            Tourism? Education? Government? Industry? Military? Science maybe? Social services?

            >For one thing, Israel is the occupying state, the hegemonic dominant majority, that controls trade, borders… etc.

            Israel was occupying state until 2nd Intifada as well, when there was no economical problems whatsoever.

            >“Withhold that money” ? In other words, blatant stealing and active undermining of the Palestinian economy.

            Yeah. Withhold money and cover a part of PA debt for electricity for example.

            >I think the PA is in part responsible, but it definitely has someone else to blame, and justifiably.

            Someone else to blame for what exactly? Tightened security? Severed economic ties?

            Reply to Comment
          • Felix Reichert

            In fact the West Bank has one of the lowest incomes per capita of the region.

            Were it not pccupied by Israel people would most likely have a lot more, and be more prosperous.

            Here’s the data according to World Bank/IMF/CIA/UPenn:

            Lebanon: 14700/15500/15700/14200
            Egypt: 6300/6500/6600/5400
            Jordan: 6000/5900/6000/5800
            Syria: 5300/5000/5100/4500
            Palestine: 2500/xxxx/2900/xxxx (Westbank & Gaza)

            Reply to Comment
          • Felix Reichert

            By the way:
            This is the median income per capita (after price point parity/PPP)

            Reply to Comment
          • Felix Reichert

            Oh, and the claim that there were no economic hardships under direct Israeli rule (or before the 2nd Intifada) is a blatant and transparent lie.

            One of the main causes of the first Intifada was the economic mismanagement of the territories by the Israeli occupiers.

            Of course you already know that, Trespasser, but nonetheless continue spreading your vicious lies.

            Reply to Comment
          • The Trespasser

            “One of the main causes of the first Intifada was the economic mismanagement of the territories by the Israeli occupiers.”

            Palestinians never had an economy which could be (mis)managed. One really can’t mismanage a flock of sheep or and olive tree, you know …

            Reply to Comment
          • Felix Reichert

            Am i supposed to answer that blatantly racist (and wrong) statement?

            One of the main reasons a “real” (industrial) Palestinian economy couldn’t develop were the policies of the occupying force (Israel) that were specifically aimed at dismantling the industrial sector in Palestine.
            The industrial sector in Palestine actually SHRUNK heavily after 1967.

            Maybe you should inform yourself before posting idiotic statements?


            Reply to Comment
          • Leen

            Qatar and UAE have one of the highest economic development indexes in the world. (Key word here is development, not growth).
            And yes although their economy is still over 50% dependent on oil, both UAE an Qatar are investing in projects that will make them less reliant on oil exports (this is the case for UAE as Dubai does not have any oil reserves and depends mostly on commercial, financial, and real estate sectors of their economy).

            There is a reason why Qatar and UAE are not Saudi Arabia despite the fact that Saudi Arabia have more oil. It’s because they are making a wise investment in other sectors of the economy.

            Reply to Comment
          • The Trespasser

            >And yes although their economy is still over 50% dependent on oil

            Over 75% dependent on oil.

            >both UAE an Qatar are investing in projects that will make them less reliant on oil exports

            Creating industrial zones for imported workers would save some oil, but is not a solution.

            >this is the case for UAE as Dubai does not have any oil reserves and depends mostly on commercial, financial, and real estate sectors of their economy

            Nonsense. Dubai economy was built on oil dollars. Also, Dubai is not qualified as a state.

            “Although the United Arab Emirates is becoming less dependent on natural resources as a source of revenue, petroleum and natural gas exports still play an important role in the economy, especially in Abu Dhabi”

            Obviously, if a state could invest a LOT of absolutely free money to create (with help of foreign advisors and managers) an industrial and offshore zone it could earn some money with it.

            However trading, services (banks and such) and low-tech manufacturing does not guarantee economic stability to a state simply because it makes state fully dependent on its economic partners and supply of dirt-cheap slaves from other countries.

            Reply to Comment
          • Leen

            Man you are a pedantic person aren’t you? The reason why I said over 50% is because different sources have different statistics.

            And the reason why I mentioned Dubai specifically is because it has no oil reserves which is why there is rivalry and heavy competition between Dubai and ABu Dhabi. Which is also why it has relied more on a different sectors of the economy.

            Either way, it doesn’t really change the fact that both country have high economic and human development indexes.

            Reply to Comment
          • Joyce Mooney

            Not one successful Arab state? Racist.

            And Israel successful? Because of my tax dollars, yes!

            Aren’t they our 51st state?

            Reply to Comment
        • rsgengland

          Before the Britissh Mandate of Palestine came to an end, the Jews (called Palestinians then) did not sit and complain and beg for handouts.
          They instead create the framework for a functioning state. All the departments and organs of government existed before the Second World War.
          If the Palestinians, instead of continuously trying to rubbish Israel, invested their time productively in trying to build a working state, the reality of that state may a bit closer to realisation.
          Try and look for a little positive in situations.

          Reply to Comment
          • andrew r

            “Before the Britissh Mandate of Palestine came to an end, the Jews (called Palestinians then) did not sit and complain and beg for handouts.”

            Maybe not, but they got plenty all the same like exemptions from import duties, military training, assistance in crushing any resistance to colonization, and of course the Balfour Declaration.

            Of course the Palestinians then and now do not sit around complaining, either. They try to run their own economy and Israel does things like destroy chicken farms and seal off exports.


            Reply to Comment
      • Philos

        Right but in Hong Kong the people there had civil rights, and were not locked in a national struggle for independence against their “occupiers.” In fact, most were outraged that Margret Thatcher agreed that once the territory would be handed back to China the denizens of Hong Kong would be denied any possibility to apply for British citizenship, which activists there saw as the only way to guarantee that China would not walk back on their pledges to respect “one state – two systems.” The guarantee being that the people of Hong Kong could just up and leave if Beijing became heavy handed. What we have in Palestine is more akin to the French in Algeria; pure colonial exploitation enforced with the barrel of a gun. There is nothing comparable in the world today except in Tibet or Xinjiang

        Reply to Comment
      • Gearoid

        This is the stupidest comment I’ve ever seen.

        Hong Kong was POLITICALLY CONTROLLED by the British. Palestine is MILITARILY OCCUPIED, as well as COLONIZED by Israel.

        There are almost no valid comparisons between the two. Even suggesting it shows such monumental stupidity I’m nearly at a lack for words. It’s not apples and oranges, its apples and orangutans. Completely different.

        Reply to Comment
        • Leen

          Not to mention, it’s not like the British started ethnically cleansing Hong Kong and propped up illegal settlements all over HK, subjecating the inhabitant population to domination, second-class citizery, and controlled their water resources, land, borders, security, exports, imports, economy, etc.

          Reply to Comment
    3. Yaron

      As a former resident of the Netherlands, I often heard the complaint that the Netherlands was too much dependent on Germany when it comes to economy. But what can you do with such a big neighbor? Today, everything is the EU’s fault. Is it the sole fault of the dominant that he dominates? If they want, the Palestinians could sell their stuff elsewhere in the world and they could decide to buy no Israeli stuff, but what is the point? If politics crosses into the field of economy, the first one loses, because everyone wants the lowest/highest price, the best product, etc. If they think clever, they should rely on Israel until they are big enough to stand stronger on their own feet. With less frustration and a bit of patience they will. Whining about lack of power changes nothing. You have to prove that you are worth it. So just work hard, educate well and beat corruption.

      Reply to Comment
      • Haifawi

        Except that Germany isn’t pointing a gun to the Netherlands head, collecting Dutch taxes, forbidding the Dutch from building electric power stations, and stealing the Dutch water. Think more Dutch in Indonesia than EU.

        Reply to Comment
        • Kolumn9

          Yes, and the Dutch aren’t shooting rockets at Germany, blowing up buses in German cities or demanding that Germany be abolished to allow a second Dutch state to arise in its place.

          The Palestinians could have a flourishing economy but they are not going to get there by being hostile to the one country in the region which could make it possible.

          Reply to Comment
      • directrob

        Yaron, I see no truth in your post. Ignoring the last soccer dissaster years go by without people complaining about the Netherlands being dependent on Germany (25% of the export goes to Germany, 17% of the import comes from Germany). The main difference between Israel and Germany is that Germany pays for its imports. If you want to compare Palestine economics with the Netherlands you have to go back to 1940-1945.

        Reply to Comment
    4. Yaron

      I am not impressed.
      Of course every comparison goes wrong. I just wanted to point out that a perspective of threat is useless and does not relate to reality. Just look at it like that: once you start thinking from the perspective of what you can do instead of what others are doing to prevent you from doing.
      Everything is negotiable and I am pretty sure that in a situation of no occupation, the interests would not be divided so much differently. In any case, Israel would have the upper hand, because it is stronger both military and economically. But that does not mean that you necessarily will ‘lose’ in the economic game.
      It is up to the Pals to start thinking differently and make use of the economy of Israel for their own cause and well being instead of losing themselves in senseless dogma’s. This will bring both peace and prosperity. It is up to Israel to come to the understanding that this well being also concerns them and that they should take this opportunity and create the possibilities for growth and limit hindering the Pals in their basic behavior as much as possible.

      Reply to Comment
      • directrob

        Yaron, I am not impressed. As far as I can see the “”pals”” lets call them Palestinians do their best to get on with their lives. At the mean time Israeli are busy stealing everything of value and making Palestinian life misirable.

        “it is up to the pals” … nice try but nonsense!

        Reply to Comment
    5. Colonalists always point out how their presence improves the area. Sometimes it is true. But, even when so, there comes a point of diminishing returns where the occupied want autonomy, as in India. One only has to look at water allocation in the settlements to see inequitable distribution which constitutes rape for the indigenous. One cannot simultaneous condemn Palestinians for lack of business while 1) holding disproportionate control over essential resources; 2) flooding one’s own products into the area; 3) denying general economic and personal transport throughout most of the area; 4) proping up an elite with NGO grants, aid control, and tax transfers; and 5) continuing a policy of land appropriation which reduces the available land base of the occupied. The settlements are a loud indicator of a two faced colonial policy.

      You have a bantu economy with largesse for those playing the game. Yes, some lives are better thereby. But opportunity is denied in a massive way, with the occupier an essential gate keeper for advancement. This will ultimately blow up.

      Note that several right nationalists commenting now seem to think a One State will be fine for all. And, indeed, a Two State model is not stable under this structural asymmetry. Israel’s economic success in the Bank will ultimately transform Israel itself. And the road will be full of debris.

      Reply to Comment
    6. Leen

      Economic growth does not translate into economic development.

      Plus 80% of the Palestinian economy is affected by the occupation. Just imagine how prosperous the entire west bank would be if there was no occupation.

      Reply to Comment
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