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16 juli Dramatisk endring av Palestinas økonomi
Palestine in the Middle East:
Opposing Neoliberalism and US Power
Part 1
Adam Hanieh
Over the last six months, the Palestinian economy has been radically
transformed under a new plan drawn up by the Palestinian Authority (PA)
called the Palestinian Reform and Development Plan (PRDP). Developed in
close collaboration with institutions such as the World Bank and the British
Department for International Development (DFID), the PRDP is currently being
implemented in the West Bank where the Abu Mazen-led PA has effective
control. It embraces the fundamental precepts of neoliberalism: a private
sector-driven economic strategy in which the aim is to attract foreign
investment and reduce public spending to a minimum.
Understanding the logic of this economic framework is critical to assessing
the current juncture of the Palestinian struggle. The neoliberal vision
underpinning these policies is a central corollary to the political
direction promoted by the Israeli government, the Palestinian Authority (PA)
and their US and European Union (EU) supporters. The aim, as the first part
of this article explains, is to formalize a truncated network of
Palestinian-controlled cantons and associated industrial zones, dependent
upon the Israeli occupation, and through which a pool of cheap Palestinian
labour is exploited by Israeli, Palestinian and other regional capitalist
groups. The evolving institutional framework for the Palestinian economy not
only incorporates the Israeli occupation into the way 'development' is
conceived, but also acts to foster the culpability of Palestinian political
and economic elites for how these structures operate.
Such an analysis, however, is only part of the story. The second part of
this article argues that these changes in the West Bank and Gaza Strip
cannot be fully understood without an appreciation of the regional framework
of the Middle East. Over the last two decades, and particularly accelerating
under the Bush administration, the US has pursued a policy of integrating
its bases of support in the region within a single, neoliberal economic zone
tied to the US through a series of bilateral trade agreements. This vision
is aimed at promoting the free flow of capital and goods (but not
necessarily labour) throughout the Middle East region. The region's markets
will be dominated by US imports, while cheap labour, concentrated in
economic 'free' zones owned by regional and international capital, will
manufacture low-cost exports destined for markets in the US, EU, Israel and
the Gulf.
A central component of this vision is the normalization and integration of
Israel into the Middle East. The US envisions a Middle East resting upon
Israeli capital in the West and Gulf capital in the East, underpinning a low
wage, neoliberal zone that spans the region. What this means is that
Israel's historic destruction of Palestinian national rights must be
accepted and blessed by all states in the region. In the place of real
Palestinian self-determination (first and foremost the right of return of
refugees), a nominal artificial state will be established in the dependent
islands of territory across the West Bank and Gaza Strip. This goal is an
essential pre-requisite of US strategy in the region. Our political
activities must be informed by this understanding if we are to successfully
build effective solidarity movements to confront and turn back this project.
Neoliberalism in Palestine:
The Reform and Development Plan
On 17 December 2007, at a one-day conference in Paris, over 90 international
representatives from various countries and donor organizations gathered to
pledge their support to the Palestinian Authority government headed by
President Mahmoud Abbas (Abu Mazen) and Prime Minister Salam Fayyad. The
conference was the largest of its kind since 1996, and was chaired by the
French and Norwegian governments, Tony Blair (as representative of the
Middle East Quartet), and the European Commission. Following speeches by
various EU member states, the Palestinian Authority, the International
Monetary Fund, and the Israeli government, attendees at the conference
pledged over US$7.7 billion to the PA.
The main impetus for this conference was an attempt to garner financial
support for a new PA economic strategy called the Palestinian Reform and
Development Plan for 2008-2010 (PRDP). Based upon a detailed series of
proposals written by the World Bank and other international financial
institutions, the broad outlines of the PRDP were first presented in
November 2007. Since that time it has become the guiding framework for
economic policy, particularly in the West Bank areas where the Abu Mazen-led
PA has effective control.
The first thing to note about the PRDP is that the heavy hand of the World
Bank, the International Monetary Fund and other neoliberal institutions such
as the British Department for International Development (DFID) can be
clearly seen in its policy recommendations and outlook. The argument behind
the PRDP is explicitly neoliberal, calling on the PA to undertake a series
of fiscal reforms in order to foster an "enabling environment for the
private sector" as the "engine of sustainable economic growth". Palestinian
grassroots organizations have gone so far as to describe neoliberal
financial institutions as "a de facto 'shadow government' in the West Bank,
dictating the development programme of the Salam Fayyad government."
<http://www.socialistproject.ca/bullet/bullet125.html#1> [1]
What does the PRDP actually mean for Palestinians on the ground? As the name
suggests, there are two main policy components to the PRDP: 'reform' and
'development'. The reform component commits the PA to a program of fiscal
tightening that exceeds measures imposed by the IMF and World Bank on any
other state in the region. There are three key elements to this program.
First, in probably the harshest attack on any public sector in the Middle
East in recent history, the PA has committed to cut 21% of jobs in the
public sector workforce by 2010. Nearly 40,000 people will lose their jobs
through this mass layoff.
<http://www.socialistproject.ca/bullet/bullet125.html#2> [2]
Second, the PA has pledged not to increase any public sector salaries over
the next three years. In an environment of very high levels of inflation
(11% in the year to March 2008) and rapidly rising food and energy prices,
this wage freeze is a recipe for disaster for the average person in the West
Bank and Gaza Strip.
Finally, a further key component of the PRDP is the requirement that
citizens present a 'certificate of payment' of utility bills in order to
receive any municipal or government services. This measure will have a
dramatic impact on the poor, as the subsidization of electricity and water
bills (i.e. allowing these services to continue despite the non-payment of
bills) was a central means of survival for millions of people in an
environment of rapidly spiraling poverty levels. This new measure means that
individuals applying for various services - including requests for ID cards,
car licenses, building permits etc - will be denied if these debts are
outstanding. Public sector employees will have utility debts docked from
their salaries.
International financial institutions place such a high priority on the PRDP
that virtually all donor support to the Palestinian Authority - including
the $7.7 billion earmarked at the Paris Conference - is contingent on its
implementation. To ensure this compliance, a new bank account called the
PRDP Trust Fund has been established through which international support to
the PA will flow. This account is headquartered in Washington D.C. and
managed by the World Bank. The Bank has explicitly stated that disbursements
through this account are based upon "assessment of the progress of
implementation of the PRDP."
<http://www.socialistproject.ca/bullet/bullet125.html#3> [3]
A 'Culture of Entitlement'?
To fully comprehend the impact of the PRDP measures they need to be placed
in the context of the existing economic situation in the West Bank and Gaza
Strip (WB/GS). During the period 1999-2007, Palestinian GDP per capita
declined by approximately two-thirds and personal savings were wiped out as
a result of Israeli attacks on Palestinian areas. These are the worst levels
of poverty ever witnessed: around three-quarters of households in Gaza and
well over half in the West Bank now live in poverty.
<http://www.socialistproject.ca/bullet/bullet125.html#4> [4]
In addition, over the last 15 years there has been a significant shift in
the structure of the Palestinian labour force that further compounds the
effect of these policies. Israel has reduced its reliance on Palestinian
labour in areas such as construction and agriculture, replacing these
workers with migrant labour from regions such as Asia and Eastern Europe. As
a result, employment by the PA has become a key means of survival for
Palestinians in the WB/GS. Around 1/5 of Palestinian workers in the West
Bank and Gaza Strip are employed by the PA in sectors such as education,
health, security, and municipal affairs. In an environment of increasingly
high dependency ratios (an average of 5.3 people were dependent on each
employed person in 2007), nearly 1 million people rely upon wages garnered
from public sector employment.
<http://www.socialistproject.ca/bullet/bullet125.html#5> [5]
On 5 February 2008, soon after the announcement of the PRDP fiscal measures,
public sector workers launched a strike. In addition to protesting the wage
cuts and the 'certificate of payment', workers called for an increase in the
'travel expenses' component of their salaries because of rising costs of
travel (a result of Israeli military checkpoints and fuel price increases).
<http://www.socialistproject.ca/bullet/bullet125.html#6> [6]
The strike was largely unsuccessful, however, in turning back implementation
of the PRDP. One of the main reasons for this is the fact that public sector
workers in the West Bank (and their trade union representatives) are
traditionally tied to Fatah, the ruling party that dominates the Palestinian
Authority and is responsible for the PRDP. Because of this relationship,
strikes and other labour actions tend to be curtailed in the name of
political expediency.
<http://www.socialistproject.ca/bullet/bullet125.html#7> [7]
Nevertheless, the strike did indicate the widening chasm between the
Palestinian Authority's neoliberal trajectory and its ever-weakening claim
to national liberation. One of the starkest indications of this was the
language employed by the PA leadership in reference to the PRDP's proposed
'certificate of payment'. Repeatedly throughout the strike, prominent PA
representatives took to condemning public sector workers and the poor for
their supposed "culture of non-payment" and "sense of entitlement."
It needs to be clearly understood that the Palestinian population in the
WB/GS has no control over basic services such as water, electricity and
telephone access. As a result of the system of control established by Israel
in these areas, all of these utilities are supplied by Israeli companies
through Palestinian interlocutors. The bill a customer receives for
electricity may be written in Arabic, but the service is ultimately sourced
from an Israeli company (with the exception of a small amount of electricity
generated in the Gaza Strip).
Because of this relationship, the PRDP 'certificate of payment' essentially
means that the PA has taken on the role of debt collector for Israeli
companies, choosing to target the poorest layers of the community in order
to sustain the structures of occupation. Even worse, the neoliberal language
adopted by the PA blames millions of people living under never-before seen
conditions of poverty for attempting to find ways to survive.
South African activist, Salim Vally, has recently noted that neoliberal
municipal governments in South Africa use the same language of a "culture of
entitlement" to describe the failure of poor township residents to pay new
user-fees. Indeed, in a striking confirmation of the similar trends at play
in both countries, Vally reveals that a few years ago, officials from the
South African Cape Town municipal government awarded a visiting Palestinian
delegation (including chief PA negotiator Saeb Erekat), a supply of pre-paid
water meters as part of the drive to encourage the imposition of user fees.
The PA has pledged to install these types of meters as part of the PRDP.
<http://www.socialistproject.ca/bullet/bullet125.html#8> [8]
By gutting 1/5 of the labour force, imposing a wage freeze as prices
skyrocket, and compelling the poor to immediately pay millions of dollars in
debt, the PRDP will have a savage and unparalleled impact on the population.
These neoliberal measures will undoubtedly open significant fissures within
the different political forces and social movements over the coming period.
But key to any effective response is an understanding that the PRDP is not
solely a deliberate attempt to impoverish the population. Rather, it aims at
complementing the second component of the PRDP: its particular model of
'development.'
'Development' and the Industrial Zone Model
Alongside the fiscal measures discussed above, the PRDP promotes a series of
development projects that have been heavily backed by the US, EU and the
Israeli government. An essential pre-condition of this development model is
a large pool of desperate, poverty-struck Palestinian workers, who are
willing to accept the jobs envisaged under this type of development. This is
the intersection between the 'reform' and 'development' components of the
PRDP.
The PRDP development model aims at utilizing cheap Palestinian labour in
industrial zones and parks, located at the edges of the patchwork of
Palestinian territories in the West Bank. Under this vision, Israeli,
Palestinian and regional capital will cooperate (under the banner of
'peace') within these industrial zones to take advantage of very low
Palestinian relative wage costs. While some of this production will involve
traditional low value-added sectors such as textiles, some zones will focus
on complementing high tech sectors of the Israeli economy where a
well-educated Palestinian labour force can offer low-wage alternatives. The
goods produced will be exported to the US, the EU and the Gulf states. The
Palestinian Authority will play the role of policing the several
million-strong reserve army of labour locked behind the walls and
checkpoints of the Palestinian territories. In return, the PA leadership
will wield the trappings of a state, obtain for itself the privileges to
travel and move freely, and earn a stake in the profits that flow from the
zones.
The first stage in this scheme focuses on the West Bank where the government
of Abu Mazen and Salam Fayyad wields power and is able to implement this
vision with the support of the Israel. A series of industrial zones are
planned for areas near Jenin, Nablus and Tarqumiya (near Hebron). Although
the exact details of these zones have been kept under wraps, institutions
involved claim that the initial phase is expected to directly employ around
40,000 workers with a similar number of jobs created 'indirectly' outside
the zones.  <http://www.socialistproject.ca/bullet/bullet125.html#9> [9] If
these plans come to fruition they will have a major impact on the structure
of Palestinian labour in the West Bank: just under 20% of jobs in the West
Bank will be tied in some way to these industrial zones.
Inside these zones, Palestinian and Israeli labour laws, wage levels,
environmental regulations, or other workplace conditions will not apply.
Movement in and out of the areas will be controlled by the Israeli military
and Palestinian security forces. Presumably, if Israel's typical pattern of
movement control applies, workers will need to pass stringent security
checks in order to obtain necessary work permissions. In this way, the
ability to work becomes dependent upon complying with Israeli military
orders (over 11,000 Palestinians are currently held as political prisoners
for violating these military orders). The main trade union body in the West
Bank and Gaza Strip, the Palestinian General Federation of Trade Unions
(PGFTU), has not been given the right to represent workers in the industrial
zones.
Plans for the Tarqumiya zone would appear to confirm this prognosis. Turkey
will be the major partner and financer of factories in the zone and will
control internal security. The PA and Israel will control external security
from their respective sides. Turkish sources expect around 200 factories to
be established in the zone, employing around 10,000 Palestinians. Turkish
business representatives explicitly note that in a global environment of
low-cost Chinese goods, zones such as Tarqumiya will assist the relocation
of Turkish industry across the region to take advantage of cheap labour.
They also intend that the goods produced in the zone would be exported to
the US, EU and the Gulf states.
<http://www.socialistproject.ca/bullet/bullet125.html#10> [10]
In addition to the exploitation of cheap labour, these zones serve to
normalize and legitimate the existing structures of the occupation. A clear
example of this is shown by the case of the Jenin Industrial Estate (JIE).
The land for the JIE has twice been confiscated from Palestinian farmers: in
1998 when the PA first mooted the idea for the industrial zone, and then
once again in 2003, when the Israeli military confiscated the land as part
of construction for the Apartheid Wall 'buffer-zone.'
<http://www.socialistproject.ca/bullet/bullet125.html#11> [11] Indeed, in a
striking example of how this model of development is integrated with the
structures of the occupation, the Wall will form the northern border of the
JIE.
The centrality of the industrial zone 'development' model to the US, Israel
and the PA was confirmed at the end of March 2008 during a visit of US
Secretary of State Condoleeza Rice to the region. On 30 March, at a meeting
convened between Rice, Israeli Defence Minister Ehud Barak, and PA Prime
Minister Salam Fayyad in Jerusalem, the establishment of industrial zones
was a major topic of discussion. At the meeting, Israel agreed to facilitate
the establishment of Tarqumiya and presented it as a 'confidence building'
measure. The Tarqumiya project has also been heavily promoted by Quartet
Representative Tony Blair as one of the four so-called 'Quick Impact'
projects tied to the implementation of the PRDP.
The May 'Palestine Investment Conference'
As the March meeting between Rice, Barak and Fayyad indicated, the
construction of zones such as Tarqumiya and the JIE is a high priority of
current political negotiations. Another component of the tripartite meeting
was a discussion of how Israel would help to facilitate a 'Palestine
Investment Conference', convened in Bethlehem from 21-23rd May. This
conference unquestionably confirmed the neoliberal trajectory of the
Palestinian Authority and the integration of the Israeli military occupation
into its development model.
Over 1000 delegates attended the conference, including all of the key
figures in the Palestinian Authority (Abu Mazen, Salam Fayyad and other key
ministers were present).
<http://www.socialistproject.ca/bullet/bullet125.html#12> [12] It brought
together the wealthiest Palestinian capitalists from outside the country
(particularly North America and Europe) as well as regional Arab capital
groups from Jordan, the Gulf and elsewhere. The conference was sponsored by
the main Palestinian business groups active in the West Bank and Gaza
(including the Arab Bank, Bank of Palestine, Paltel, Consolidated
Contractors Company, Arab Palestinian Investment Company); large foreign
capital (CISCO, Intel, Coca Cola, Marriott Hotels, Booz Allen Hamilton); and
US and European governmental organizations (USAID, DFID, and the French
Development Agency).
The main aim of the conference was to showcase the neoliberal attacks on the
public sector implemented by the PA under the PRDP, holding these up as
'good for business' and an attractive reason to invest in Palestinian areas.
In addition to the industrial zones discussed above, several projects were
promoted throughout the conference that aimed at bringing together Arab and
Israeli capital in joint investments. Israeli businesspeople were encouraged
to attend, although this fact was not widely publicized due to the
opposition of the Palestinian public to these types of joint projects.
One of the projects highlighted during the conference was the 'Corridor for
Peace and Prosperity' (CPP), which aims to create an agro-industrial zone in
the fertile areas of the Jordan Valley. For centuries the Jordan Valley has
been a key agricultural area for Palestinian farmers in the West Bank. But
following the occupation of the area in 1967, the Israeli military proceeded
to evict many of these farmers, confiscate land, and establish Israeli
settlements (first as military-agricultural settlements and then as Israeli
agribusiness and civilian settlements). By controlling water, access routes
and other resources, the land essentially became an Israeli military zone
although scattered Palestinian villages remained in the area.
The CPP aims to establish a free trade agricultural zone in the area that
will turn the small-scale Palestinian farmers into day-labourers and
sub-contractors to large agro-industry controlled by Israeli and regional
capital.  <http://www.socialistproject.ca/bullet/bullet125.html#13> [13] In
other words, not only does the CPP consent to the occupation and
expropriation of land that has taken place over the last 40 years in the
Jordan Valley, it actually aims to integrate this occupation into the
project itself. The agricultural produce grown as part of the CPP will do
nothing to alleviate concerns of food security in the area: the produce is
intended for export to Israel and the Gulf states.
One final indication of the relationship between the structures of
occupation and the neoliberal development model was the support given by the
Israeli military to the conference itself. While everyday residents of
Bethlehem are unable to move without elaborate security procedures, special
colored ID cards and dedicated checkpoints, conference attendees entered the
country and were granted the right to travel without harassment or any
security checks at Israeli borders. Despite the fact that over 200
Palestinians in the Gaza Strip have died in the last year due to the
Israeli-imposed siege and inability to travel for urgent medical treatment,
Israeli authorities permitted Gazan businessman to attend the conference. A
sign erected by the Israeli military at the entrance to Bethlehem welcomed
people to the conference. The sign was written in Arabic, Hebrew and English
and was emblazoned with the logos of the Israeli military occupation.
It should be stressed that the conference did not pass without strong
opposition from grassroots forces within the West Bank and Gaza Strip. A
statement put out by the Boycott, Divestment and Sanctions National
Committee, and endorsed by a wide array of political forces, stated:
"Economic and social development in Palestine is crucial, and it is
imperative that we should take should steps to improve the current economic
and political situation. However, despite the ongoing national and
international conferences designed to bring together the national efforts
and resources; and despite the support of international solidarity, we
believe that the economic conference that will be held in Bethlehem over the
next few days, with the attendance of official and non-official Israeli
representatives, has a serious political implications that cannot be
ignored.... The proposed projects take as their starting point Israeli
participation in decision-making, and Israeli control over their legal
status... [they] are designed to meet the economic demands of the Israeli
administration, not those of the Palestinian people.... These are not the
development projects we want or need. What we require is a national
Palestinian conference with Arab and international support for strengthening
Palestinian steadfastness and as a step toward ending the dependency on the
occupation and its economy."
<http://www.socialistproject.ca/bullet/bullet125.html#14> [14] 
In sum, the PRDP fiscal measures and their allied development projects will
in no way contribute to ending the Israeli occupation of the West Bank and
Gaza Strip. In reality, these measures will only act to strengthen that
occupation by conferring it the supposed legitimacy and blessing of the
Palestinian Authority leadership. The vast majority of the population in
these areas will find their living conditions worsen as a direct result of
these plans. But while the PRDP and events such as the Investment Conference
stand as a damning indictment of the trajectory of the Palestinian
Authority, the forces driving this type of neoliberal vision do not simply
result from corruption, infighting, or mistaken strategic choices. Rather,
they are embedded within the overall US-led economic reconfiguration of the
Middle East. The second part of this article explores this critical regional
process and the place of Palestine within it. *
Adam Hanieh is a doctoral candidate in political science at York University,
Toronto, whose research looks at the political economy of Middle East and
the Gulf Cooperation Council. He can be reached at hanieh08@gmail.com.
Footnotes
<http://www.socialistproject.ca/bullet/bullet125.html#1a> 1. Stop the Wall,
"National BDS Steering Committee: Bethlehem investment conference:
development or normalization," at www.stopthewall.org
<http://stopthewall.org/analysisandfeatures/1657.shtml> .
<http://www.socialistproject.ca/bullet/bullet125.html#1b> 2. The PA
attempts to obfuscate this mass layoff by claiming that those losing their
jobs were not 'legally appointed.' Regardless of the hiring procedures, this
will have an enormous impact on those relying upon this employment for
survival. See Palestinian National Authority, "Building a Palestinian State:
Towards peace and prosperity," p.14,
www.imeu.net/engine/uploads/pna-full-report.pdf
<http://www.imeu.net/engine/uploads/pna-full-report.pdf#page=14> .
<http://www.socialistproject.ca/bullet/bullet125.html#1c> 3. World Bank,
Trust Fund Details - as of June 2008, www.worldbank.org
<http://www.worldbank.org/> .
<http://www.socialistproject.ca/bullet/bullet125.html#1d> 4. Karen Laub,
"IMF: Palestinian Reform Plan Doable", Associated Press, 11 December 2007.
<http://www.socialistproject.ca/bullet/bullet125.html#1e> 5. Statistics on
labour force and dependency ratios available from Palestinian Central Bureau
of Statistics, at www.pcbs.gov.ps <http://www.pcbs.gov.ps/> .
<http://www.socialistproject.ca/bullet/bullet125.html#1f> 6. Amira Hass,
"Democratic Suspicion", Haaretz, 6 February 2008.
<http://www.socialistproject.ca/bullet/bullet125.html#1g> 7. A similar
dynamic was revealed during the last significant strike over 10 years ago,
when Palestinian teachers sought to win higher wage levels. This 1997 strike
was initiated and led by a grassroots committee of teachers who bypassed the
traditional union structures allied to Fatah. It was met with severe
repression that saw dozens of teachers arrested by the Palestinian
Authority. Industrial action by teachers continued off and on until 2000,
when the onset of the Palestinian uprising ended organizing attempts in the
name of "national unity". 
<http://www.socialistproject.ca/bullet/bullet125.html#1h> 8. Salim Vally,
"From South Africa to Palestine: Lessons for the New Anti-Apartheid
Movement," Left Turn Magazine <http://www.leftturn.org/?q=node/1099> .
<http://www.socialistproject.ca/bullet/bullet125.html#1i> 9. See the
Palestinian Industrial Estates and Free Zones Authority, www.piefza.org
<http://www.piefza.org/> .
<http://www.socialistproject.ca/bullet/bullet125.html#1j> 10. Guven Sak,
"The Challenge of Developing the Private Sector in the Middle East," The
Economic Policy Research Foundation of Turkey, May 2, 2008.
<http://www.socialistproject.ca/bullet/bullet125.html#1k> 11. Stop the
Wall, "Development or normalization? A critique of West Bank development
approaches and projects", at www.stopthewall.org
<http://stopthewall.org/latestnews/1654.shtml> .
<http://www.socialistproject.ca/bullet/bullet125.html#1l> 12. See the
conference website at www.pic-palestine.ps for the conference attendees,
press coverage, and presentations.
<http://www.socialistproject.ca/bullet/bullet125.html#1m> 13. See
"Development or normalization?", op cit, for a full critique of this project
<http://www.socialistproject.ca/bullet/bullet125.html#1n> 14. Stop the
Wall, "National BDS Steering Committee: Bethlehem investment conference:
development or normalization", www.stopthewall.org
<http://stopthewall.org/analysisandfeatures/1657.shtml> .
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