Kerry's West Bank Disconnect

Kerry's West Bank Disconnect

The secretary is exaggerating the Palestinian economy's potential.

Anxious to persuade Palestinians to resume negotiations with Israel, Secretary of State John Kerry went overboard this week in describing the potential economic windfall for the occupied West Bank if there is a revival in peacemaking efforts.

A rise in Palestinian GDP of fifty percent in three years could be in the offing, Kerry maintains.

Upon reflection, it seems that Kerry is stretching things for a reason: economics may be all he has left to offer the Palestinians, having acquiesced in Israel's position on the crucial issues in dispute in a manner that undermines any remaining chances of Washington credibly claiming to be an honest peace broker.

But if the Obama administration proves as unwilling to pressure Israel to reassess economic strictures on Palestinians as it has been reluctant to do anything meaningful to stem illegal Israeli settlement activity, for example, than Kerry will no doubt prove unable to deliver tangible improvement on the economic front as well.

Kerry, speaking to the World Economic Forum in Jordan on Sunday, significantly made no mention of the need for Israel to halt settlement construction or even accept the 1967 borders with land swaps as the basis of negotiations. He appears to have given up on these prerequisites for a viable Palestinian state emerging if indeed he and President Obama ever had any serious intention of changing Israel's policy.

Still, Palestinians should negotiate anyway, Kerry implied Sunday, because if they do they can attain a booming economy and benefit from the largesse of the biggest investment push since the ill-fated 1993 Oslo agreement on self-rule.

Holding out the promise that $4 billion will be pumped into the cash-strapped tiny territory in tourism, construction, light manufacturing, energy, agriculture and communications technology, Kerry said the economic plan, being devised by a team of experts coordinated by former British prime minister Tony Blair, would be ''enormously powerful in the shaping of the possibility of the future so that it is more transformative than incremental and different than anything we have seen before.'' He highlighted preliminary assessments that Palestinian GDP could be raised by fifty percent in just three years.

However, leading Palestinian economists, while welcoming Kerry's bid to help the West Bank, dismiss those figures as fanciful. Samir Abdallah, director of the Palestinian Economic Policy Research Institute in Ramallah and a former minister of planning for the Palestinian Authority, said: ''To invest these four billion dollars in four years and bring GDP up by fifty percent in three years means that this investment turns into jobs, production and export in a fast circle that can never happen unless Kerry wants to spend it in a casino or on the stockmarket.'' Hisham Awartani, professor of economics at an-Najah University in Nablus, termed Kerry's GDP statement ''wishful thinking.''

Abdallah added that a forecast by Kerry that unemployment could rapidly be slashed by two thirds from its current rate of 21 percent was also off the mark. ''Are we talking about permanent jobs or public works that ends with the end of the project?'' he asked.

But beyond the question of why Kerry exaggerated the economic realities lies a more important unknown: Is he aware that a real leap forward for the Palestinian economy will be impossible unless Israel halts its relentless stunting of Palestinian economic life? Kerry did not have the gumption to directly mention Israel's role in subverting Palestinian economic activity in his speech, saying only that ''everyone here also knows how much more can be done if we lift some of the barriers to doing business, build confidence, and bring people together.''

The West Bank's economy, like its population, is under occupation. The stunting encompasses a range of sectors, including preventing Palestinian telecom companies from offering smartphone services (by refusing to relinquish the required electromagnetic frequency spectrum) and imposing draconian restrictions on building in area C, the part of the territory with the most economic potential that remains under full Israeli military control. Building housing in area C would markedly reduce housing prices for Palestinians but at present 70 percent of area C is off limits for construction and 29 percent is heavily restricted, according to UN estimates. In the main Palestinian housing development, Rawabi, near Ramallah, Israel has for years refused to approve an access road traversing area C that is vital for the viability of the first planned Palestinian city.

To gain a sense just how Draconian the Israeli strictures can be, one need only travel a few minutes from Jerusalem to Nabi Samwil village, where Israeli authorities have demanded the removal of a temporary toilet installed for the local elementary school on the grounds it violates building strictures. There is also a policy in area C of treating livestock pens as illegal structures and demolishing them. One wonders how this squares with Kerry's prediction that Palestinian agriculture can be tripled as part of the ostensible peace push.

In some instances, Israel says security is the reason for its economic curbs. But in the case of telecom, security has nothing to do with it. Rather, by keeping all the frequencies for itself, Israel keeps Palestinian telecom companies frozen in a backward state so that its own companies can make large profits as exclusive providers of 3G technology for hundreds of thousands of Palestinians in the West Bank. When you think about it, this is not just unfair, it's a scam and makes a mockery of the cherished American value of a level playing field.

Fayez Husseini, CEO of Wataniya, a struggling telecom company in Ramallah, says that $15-20 million is lost each month in revenues, including taxes to the Palestinian Authority and royalty fees due because of the imposed Israeli monopoly on 3G.

It is precisely because of these kinds of abuses that the United States needs to take up an active role of mediator and facilitator—not just cheerleader for others—if economic peacemaking as Kerry outlined is to get anywhere at all. Because of the trust and leverage it enjoys with Israel, the United States is uniquely positioned to be the arbiter, the honest broker, of the extent to which Israeli security or other arguments suppressing the Palestinian economic future are valid or not. Doing this—starting with getting the Palestinians the telecom frequencies they need and deserve—would be far more meaningful than making wildly optimistic statements about economic growth.

As Awartani, the an-Najah University economist aptly puts it: ''Unless the Americans decide to mean business nothing will change.''

Ben Lynfield is a Jerusalem-based journalist who writes for the Scotsman and other publications.

Image: Flickr/Laika slips the lead