HEVER: Conditions for a viable Palestinian statehood 19May11 May 20, 2011

by Shir Hever  -  Alternative Information Centre -  19 May 2011

Once the declarations and ceremonies are over, what will determine whether the new Palestinian state will be able to meet its obligations towards its population will not be statements of recognition by the international community, but the economic, political and military realities on the ground.

Introduction

The intensive international action by the Palestinian Authority (PA), and the continued failure of the peace process, have brought a large number of states around the world to recognize the Palestinian State, and the PA government is preparing to announce its independence in September this year.

The prospect of an independent Palestinian state is quickly becoming a tangible reality, but one must examine the differences between independence on paper only, as opposed to real sovereignty. Once the declarations and ceremonies are over, what will determine whether the new Palestinian state will be able to meet its obligations towards its population will not be statements of recognition by the international community, but the economic, political and military realities on the ground.

After reading the recent documents released by the PA in preparation for statehood, most notably: Ending the Occupation, Establishing the State (from 2009); the National Development Plan 2011-2013 “Establishing the State, Building our Future;” and Building Palestine Achievements and Challenges (the PA report to the Ad Hoc Liaison Committee from April 13^th), I was impressed with the comprehensive nature of the documents, and the high standards presented in them. The documents mention that economic development cannot be sustainable or effective under military occupation, and chooses to lay out a set of planned policies based on the assumption that the occupation will end and that Palestinians will be free of Israeli control.

But one thing is starkly missing from all of these documents. The documents do not articulate by which means the PA leadership plans to achieve the end of Israeli military and economic control. Even the most ambitious reforms in the PA public service are not likely to repel Israeli tanks and warplanes, and the basic power relations between occupied Palestinians and occupying Israel remain the same.

The PA choice to adopt policies based on a hypothetical scenario in which the occupation ends is a  political choice to help envision and imagine how freedom could look and what a viable Palestinian state could achieve. Imagination is indispensible for bringing political change, but by itself is not sufficient.

Israel’s Responsibility after a Palestinian State is Established

Since the 1990s, mainstream Israeli policy towards the Occupied Palestinian Territory (OPT) was the policy of separation, which is manifested in the division of Palestinian territories into areas A, B and C, the Wall of Separation and the siege on the Gaza Strip. Senior Israeli strategists are hoping that a unilateral Palestinian declaration of independence would be an excuse for Israel to annex most of the colonies in the West Bank, renounce responsibility for Palestinian society and leave the so-called Palestinian state encircled, under-developed and out of sight. Any declaration of independence by the Palestinians should not be seen as an end to Israel’s responsibility towards the population in the OPT – Israel must be held accountable for its violations of international law and be forced to provide sufficient compensation for the buildings it demolished, the workers that were exploited, the natural resources that were extracted and the basic responsibilities for public services (health, education, etc.) that were avoided.

We must be careful with our language. Often Palestinians in the West Bank and the Gaza Strip are referred to as “stateless,” but that is not the case. A state does exist which exerts sovereignty over these two areas, and in fact intervenes in the lives of the population more than most states intervene in the lives of their citizens. The Israeli government controls who will be allowed to move where within the OPT and what items may be imported into and exported from the Gaza Strip. Israel’s authority in the OPT renders it responsible for its actions. Even after a Palestinian state will replace Israel as the sovereign power in these areas, Israel’s responsibility must not be forgotten or ignored, and the Palestinians must not be made to bear the full damage of Israeli neglect and attacks on their own.

Democratically Chosen Economic Policies

The word “freedom” is invoked often by the PA when describing the future Palestinian state, but freedom as a political term is a loaded one, which can possess more than one meaning.

Israeli occupation, repression and exploitation have denied Palestinians two kinds of freedoms – the freedom from external control, and the freedom to explore one’s potential.

Democratic states around the world are divided between the Anglo-Saxon model focusing on the first kind of freedom and the north-European model of the welfare state, which stresses the second.

The Anglo-Saxon model gives priority to the private sector, placing minimal restrictions on the business sector at the expense of deeper social inequalities and fewer opportunities for the lower-classes to participate in democratic processes.

The welfare model is based on government intervention and regulation, higher taxes but better services, less inequality and more opportunities for social mobility.

Other models of economic management exist, notably the socialist model, but those are less relevant to our discussion here.

The two economic models have been competing over the past decades all throughout the world, and Palestinian independence would mean an opportunity to choose Palestine’s economic policies.

Yet the state-building phase of the PA is already starting to make decisions in this respect, decisions which could constrain the future democratic choice of Palestinians.. Despite the 2006 electoral victory of the Hamas party, a party which is associated with welfare policies, the PA government selected by the West to replace Hamas had a clear agenda favouring the Anglo-Saxon economic model. Palestine is not yet an independent state, but the PA is already implementing policies to strengthen the private sector at the expense of the public sector, to restrict access to water and electricity for families unable to pay the full price for these necessities, and to encourage foreign investors to enter the Palestinian economy and set up large-scale operations.

When new states are formed, and Israel is often invoked as an example of state-building, they rarely trust the private sector to shape their economies, but instead take the path of large-scale government intervention in order to determine the desired levels of employment, what sectors of the economy should be encouraged and which public services are the highest priority for the population.

As Raja Khalidi and Sobhi Samour wrote in their paper “Neoliberalism as Liberation,” confusing “freedom from occupation” with “freedom from government” can lead to an overall loss of freedom for Palestinians.

This is especially true because of the gross disparities between the economic strength of Israel and the Palestinians. Shortage of controls and regulation mechanisms by the Palestinian state would be an opportunity for Israeli corporations to manipulate and exploit the Palestinian economy.

Requirements for Viability

In order to determine its own policies and reflect the democratic will of its population, a Palestinian state will need four things.

It will need political viability in the eyes of its own population and in the eyes of the international community; security viability: the ability to protect its citizens from harm; economic viability – the ability to provide a sufficient standard of living to the population, and to maintain unemployment and inequality at minimum levels; and it will need sustainability: the ability to remain viable over time, without accumulating excessive debt and without exhausting its natural resources.

Currently, the Palestinian economy is almost completely dependent on the Israeli economy. Israel remains the primary source of imports to the OPT and the main market for exports from the OPT. An independent state will not automatically end this dependency, and complex mechanisms will be required to prevent Israeli business interests from taking advantage of the economic weakness of the Palestinian state.

Establishing direct trade relations with new markets, providing employment opportunities for Palestinians who used to be employed in Israel or in the illegal colonies would require large and sustained government efforts.

The dependency also complicates Palestinian foreign trade policy. Protective customs could lead to a deterioration of trade with Israel, while free-trade with Israel will leave the Palestinian market defenceless against Israeli monopolies.

A Palestinian currency is one of the central dilemmas facing a future state. Issuing a separate currency will create an opportunity for speculators to bet against the Palestinian currency, and the constant need to convert Palestinian currency to and from the Israeli Shekel (for imports and exports) will prevent the Palestinian monetary authority from adopting a free foreign-exchange policy. However, not issuing a separate currency will leave the Palestinian state at the whims of monetary policy determined by the Central Bank of Israel, or by Jordan or Egypt.

A state based on the 1967 borders will be one of the smallest states in the world, and will thus be extremely dependent on trade with other countries. Access to world markets through quality infrastructure and not only through Israeli intermediation is thus a crucial requirement. It is not even clear at this point how the PA believes it will establish territorial continuity within the Palestinian state, and how Israel will be forced to evacuate its illegal colonies from the West Bank.

Palestine is also poor in natural resources, especially water. With the exception of natural gas off the shores of Gaza and marble near Hebron, the country will have to rely on human capital in order to produce exchangeable value.

The Palestinian industrial and financial sectors were prevented from developing by the Israeli occupation forces, and many years will be needed to bring them to the level necessary for a healthy economy.

On the other hand, one must not overlook the advantages of the Palestinian population and the assets they could use to achieve economic sovereignty.

Palestinians enjoy high levels of human capital, with the highest rate of university graduates in the Arab world. Tourist attractions (especially for religious pilgrims) are another resource that can be developed.

Palestinians enjoy high per-capita levels of aid disbursement compared to most areas in the world, because many donor countries recognize that ending the conflicts in the Middle East is in their interest as well. Aid disbursement so far has focused mainly on sustaining the status-quo and has actually helped Israel pay the costs of its occupation, but donors must recognize that suddenly stopping aid disbursements will likely cause an immediate setback in the political situation, a humanitarian catastrophe and violence.

The Palestinian refugee population from around the world is one of the important assets of the future Palestinian state. Many refugees live in the OPT, and when their right to return and to compensations will finally be implemented, those refugees will be able to work in Israel and send remittances to the Palestinian state, and will surely spend some of their compensations in the Palestinian market.

However, the most important asset of the Palestinian state is the debt owed to it by Israel for decades of occupation. Once Israel is made to pay compensations to the Palestinians, these funds – if handled carefully – could be the basis for building a stronger and healthier Palestinian society with higher standards of living and better public services.

Conclusion

The political considerations can never be separated from economic considerations, especially when state building is discussed.

While Palestinians deserve freedom, there are Israeli strategies being formulated to make the Palestinian state a hollow concept, and find ways to maintain control of the Palestinian territories, population and economy.

Since the collapse of the Oslo negotiations, a rapid change has taken hold in Palestinian public opinion. The past decade has seen a growing support among the Palestinian population for an overhaul in Palestinian strategy, a move from separatism to a civil rights movement. This support is widespread in the Popular Village Committees, among the left and especially among young people. It is even more prevalent in the Palestinian diaspora around the world, from Palestinian intellectuals and has received strong international support from the rapidly growing Palestinian-led international BDS movement.

The prospect of a democratic state in which Palestinians will be equal citizens is more threatening to the Israeli government than an independent Palestinian state in the West Bank and Gaza Strip, and because of that the Israeli government will implement, and has already began to implement, mechanisms by which to turn the PA into a subcontractor of occupation. It is the responsibility of members of the international community, who are interested in helping the Palestinians achieve their inalienable rights, to do so in a meaningful way, and to ensure that their efforts are not subverted by Israel to keep the Palestinians subjugated further, even if officially they will have a separate state.