Decolonizing Palestinian Political Economy

De-development and Beyond

M. Turner, O. Shweiki, M. Turner, O. Shweiki

• Publisher: Palgrave Macmillan
• Year: 2014
• ISBN:
  9781137448750
• Topic: Politics & International Relations
• Subtopic: Middle Eastern Politics
• Index: Politics & International Relations

The volume brings together cutting-edge political economy analyses of the Palestinian people: those living in the occupied territory of the West Bank and Gaza Strip, those living within Israel, and refugees in Arab states. It is a must-read for those who wish to understand the historical origins and contemporary realities that face Palestinians.

Part I

De-development Explored

1

The Economic Strategies of Occupation: Confining Development and Buying-off Peace

Sahar Taghdisi-Rad

If Hebron’s electricity grid comes from our [Israeli] central grid and we are able to pull the plug and thus cut them off, this is clearly better than a thousand curfews and riot-dispersals.

Israeli Minister of Defence, Moshe Dayan, 1967^*

Since its creation in 1948, the state of Israel’s main goal has been to safeguard its security and survival at the expense of the economic and political rights of the people whose land it is occupying. It, therefore, sought to limit the development of the Palestinian economy inside Israel and, after 1967, inside the occupied territory of the West Bank and Gaza Strip (oPt). The Palestinian economies in these areas have been subjected to a range of Israeli strategies, such as forced integration, physical separation and asymmetric containment. Although seemingly contradictory at times, these strategies have all been aimed at denying the Palestinian collective the rights and resources vital for their empowerment inside Israel, and the establishment of an independent and viable Palestinian economy and sovereign state within the oPt.

This chapter analyses Israel’s strategies towards the Palestinian economy in the oPt (for an analysis of the Palestinian economy inside Israel, see Chapter 6), highlighting a strong continuity in their purpose despite the different methods employed at various phases. It argues that the main aims of Israel’s policies have been, firstly, to integrate Palestinian resources, where beneficial, to its own economy; secondly, to limit and undermine the development of an independent Palestinian economy (for example, by confiscating and/or denying control over key Palestinian economic resources); and thirdly, to discourage Palestinian demands for sovereignty and self-determination by creating mechanisms and ‘rents’ which would ensure compliance with Israel’s security priorities, as well as political and economic priorities, and buy-off resistance, or obstruct indigenous institution-building.

It will also be argued that the policy frameworks and institutional arrangements established after the Oslo Accords, far from helping to develop the oPt have in fact merely institutionalized Israel’s strategies towards the Palestinian economy. In this vein, the development policy prescriptions of the Palestinian Authority (PA), to a large extent designed and reinforced by the international donor community, have been inadequate to face the challenges created by prolonged occupation.¹ For the PA’s adoption of a neoliberal policy framework has ignored the necessity of creating a productive capacity base for the economy. Instead, it has focused on a process of continuous reform of Palestinian institutions, as well as on meeting the budgetary and ‘security’ requirements of both donors and of Israel (see Chapter 9 in this book). Hence, to prevent further de-development of the Palestinian economy, the PA’s development framework needs to be radically altered. This radical shift must involve instituting and supporting processes of independent economic activity and employment generation, reinforcing cohesion in the oPt in the face of territorial fragmentation, and breaking away from Israel’s control over Palestinian resources and policy space.

The chapter will follow a chronological structure. The first section will analyse the period up to the first intifada; the second section will focus on the period from the outbreak of the first intifada until the Gulf War of 1990–1991; while the third section will chart the period up until the peace process. The fourth and fifth sections will, in turn, critically interrogate the period between the peace process until the outbreak of the second intifada, and the period up to 2010. The chapter will conclude by arguing that the future development of the oPt is more bleak and challenging than ever before.

From ‘economic union’ to ‘sharing the costs’ of occupation

In the period of the British Mandate, despite the explicit desire of the Yishuv² to separate Jewish and Palestinian economic activities as a prerequisite for establishing an independent Jewish state, various forms of economic exchange existed between the two communities. Nevertheless, during this period, the Jewish economy emerged as the stronger party due to its links with the British and hence European economies (largely due to the political and economic favour afforded by the Mandate authorities), and the transfer of technology, capital and intellectual know-how as a result of large flows of immigrants. Compared to the flourishing Jewish economy, the Palestinian economy was largely rural, with limited trade and financial links and limited infrastructure – setting the foundation for an imposed and unequal economic relationship. In fact, the 1930 Shaw Commission reported on the crisis of rural pauperization where 30 per cent of the Palestinian rural population had become landless, mainly due to the land purchase of settlers, thus helping to trigger the 1929 riots.³

After the Nakba and partition in 1948, traditional economic, political and geographical links between Palestinian communities in the whole of historic Palestine were severed, dividing economic activity between the West Bank and Gaza Strip and the Palestinian areas inside the newly created state of Israel. The Palestinian economy inside Israel became the poorest and weakest segment of the Israeli economy due to lack of access to, and unequal allocation of, resources. Per capita income of Palestinians inside Israel has remained well below that of Jewish-Israelis, with the former experiencing very low rates of access to higher education, and very high rates of unemployment. Lack of access to resources and the confiscation of large areas of Palestinian land in central and northern Israel have, over time, resulted in the contraction of the agricultural sector of the Palestinian economy inside Israel, producing high rates of unemployment given the sector’s key traditional role as a major source of employment. Unemployed Palestinians in these areas were, thereafter, forced to find employment in the low-skilled sectors of the Jewish-Israeli economy, such as in manufacturing and construction.⁴ The marginalization of the Palestinian economy inside Israel, which continues to this date, thus reinforces the need for a Palestinian development strategy that includes the needs of this (often neglected) section of the Palestinian people. However, further analysis of this is beyond the scope of the current chapter, which concentrates on the Palestinian economy inside the oPt.

In the oPt after 1967 and prior to the Oslo Accords and the establishment of the PA, the Israeli Civil Administration (CA) had full authority over Palestinian economic, political and institutional affairs – including taxation, customs, banking, money and insurance, agriculture, industry and crafts, land and water, labour, and other resources. Israel wanted to maintain some order in the economic affairs of the oPt while not advancing the latter’s economic interests, and ensuring that the regulation of economic activity corresponded to the general pattern of policy and legislation in Israel. This policy was summed up by the official stance that, ‘there will be no development [in the oPt] initiated by the Israeli Government, and no permits will be given for expanding agriculture or industry, which may compete with the State of Israel’.⁵

Israel thus imposed high taxes (customs, income tax and VAT) and strict licensing requirements for Palestinian producers and traders from the oPt. It also took control over communication and electricity resources, and instituted high levels of protection for Israeli producers and exporters. This policy, often referred to as ‘imposed, impure, economic integration’, was aimed at imposing a cap on the activities and development of the oPt economy, while introducing elements that made resistance a very costly choice for Palestinians in the oPt – such as control over key infrastructure.⁶ This strategy deprived Palestinians in the oPt control over vital resources, and prevented independent development that could have potentially competed with Israeli industries, such as textiles and food. As a result, a large number of workshops and plants in the oPt notably in textiles and clothing, became subcontractors for Israeli industries.⁷ The regulatory restrictions on financial and commercial transactions aimed at protecting Israeli producers and exporters also made the oPt subservient and vulnerable to the Israeli economy and its political decisions. For example, the recession in the Israeli economy in 1986, together with the government’s austerity programme aimed at increasing wage and price controls inside Israel, had direct dire consequences for the Palestinian labour market (by reducing wages and employment opportunities in Israel), private social expenditure and, ultimately, the living conditions of Palestinians.

Despite an ‘open bridges’ policy pursued by Israel after 1967 – seemingly aimed at allowing Palestinian exports to Arab and regional countries over the Jordan River bridges – the large number of obstacles related to customs, transportation and infrastructure prevented it from stimulating Palestinian trade with non-Israeli partners. This policy was largely utilized by Israel to stimulate Israeli exports, disguised as exports from oPt to Arab countries in order to bypass the latter’s economic boycott. Israeli–Palestinian trade relations, hence, remained dominated by much higher levels of Israeli exports to the oPt undermining Palestinian agriculture and manufacturing which remained focused on low value-added, uncompetitive, labour-intensive production processes. The oPt’s dependency on Israel as its main economic and trading partner is a destructive feature that has remained in place ever since, and was reinforced ...

Table of contents

• Cover
• Title
• Introduction: Decolonizing the Study of the Political Economy of the Palestinian People
• Part I  De-development Explored
• Part II  De-development Applied
• Part III  De-development Resisted
• Index