Economic Hardship in the West Bank

by Dr. Abdul-Sattar Kassem

The territories occupied in ‘67 have suffered from an abnormal economic condition since 1967, and this abnormality has passed through phases, which I summarize below:

First: the phase of occupation up until the establishment of the Palestinian Authority, which relied on the following two principles:

Not starving the people, because of the danger this would pose to the security of the occupation, but without letting them enjoy any real abundance of living, so that they would not rise up out of a need for self-respect. For this reason, the economic condition of the people in the land occupied in ‘67 oscillated between a poverty line never quite reached and a line of sufficiency never quite reached either. People remained like a clock’s pendulum between these two lines: at times in economic and financial hardship, at other times in some relief that never amounted to real abundance.

Squeezing Palestinian production, and expanding people’s dependence on external aid and on work inside Israel, because production constitutes a basic source of freedom of will. The occupation worked to keep people within a circle of dependence on others — whether that “other” was Israel, PLO funds, or funds from Arab countries — in order to paralyze their political will.

Second: the phase of the Palestinian Authority, which began in 1994. Here, alongside Israel, the global strategic economic plan entered the picture. This phase relied on the following principles:

Tying the Palestinian people’s daily bread to donor-country funds, which took shape following the Paris Economic Protocol, in order to confiscate the people’s political will and ensure they would not rebel against the Oslo Accord and the agreements that followed it. Most donor-country funds come from Arab states, but the global plan — represented first and foremost by the United States and its principal global instrument, the World Bank — does not trust the Arab regimes, however collaborationist or treacherous they may be. The Americans, and the states and international organizations allied with them, wanted control over the sources of funding for the West Bank and Gaza.

Crushing Palestinian production, or what remained of it, so that Palestinians would not think in terms of a free Palestinian will. To this end, the following steps were taken:

Opening the market of the West Bank and Gaza to global trade, which led people to flock to cheap goods coming from abroad, particularly from China, and to turn away from local goods of better quality and higher price. The markets of the West Bank and Gaza were flooded with Chinese goods, and the presence of Palestinian-made goods receded.

Tying financial activity in the West Bank and Gaza to global financial activity, by linking the banks located in the West Bank and Gaza to the Israeli financial system, which is itself tied to the global financial system. The West Bank and Gaza are not a state; they possess no competing global economy; they are under occupation; and financial openness is utterly unsuited to their situation. But the American-Israeli master wanted to tighten the noose around the people.

Alongside the crushing of Palestinian production, it became necessary to increase the number of employees dependent on salaries coming from donor states. Farmers, blacksmiths, carpenters, chair-makers and makers of various kinds of furniture, shoemakers, weavers, tailors, and so on, were all struck down, and tens of thousands were turned into non-productive government employees. On the one hand, more than two hundred and fifty thousand people were stripped of productive capacities, and about a hundred and fifty thousand were shifted onto the payroll. One group produces nothing and has begun waiting for aid through its various channels, including non-governmental organizations; the other produces nothing and waits for its salary at month’s end. Large numbers of people were thus turned into economic prisoners, beggars ready to be ridden like mounts.

A major expansion of services, without any concern for real economic development based on production. A visitor to the West Bank notices development in services such as roads, telecommunications networks, electricity, and banking services, and may even be dazzled by this development under occupation. This raised the value of families’ monthly bills without any grounding in real production to cover the purchase of these services. In economics, this constitutes a great danger, because individual indebtedness will rise, and people are likely to be unable to repay it. This has served the occupation well, in that people’s thinking has come to focus on consumer matters rather than the national interest, on the burden of bank loans and bill payments rather than on the search for selfhood, independence, and freedom. And naturally, the World Bank comes along, as usual, distorting the facts and claiming that economic growth in the West Bank has risen.

Third: the phase of the separation between Gaza and the West Bank, characterized by the following:

The siege of Gaza — because it broke away from the house of obedience, and fear arose that it might acquire a free political will of its own. It was important to impose a siege that would squeeze the people of the Strip, in order to pressure Hamas into abandoning its position. Israel, and those who support it, have persisted in using people’s pain and grief as a means to achieve political ends; the siege is one of the tools of this policy.

The war on the West Bank, through diverting people from their central causes toward the concerns of the pocket and the stomach. A fierce war was waged in the West Bank, and it still rages, aimed at creating consumerist preoccupations among people and getting them to abandon their political will and their commitment to Palestine, in favor of an abundant standard of living. This is a policy that comes close to moral and human degradation, in that it turns a person, through it, into a mere consuming animal, unconcerned with honor, dignity, or self-reliance. This policy has achieved some success, though not the full measure of success desired by Israel and America.

Burdening people with prices, government fees, and taxes, as a gradual means of self-erosion. Israel and America are not interested in continuing to disburse funds to the Palestinians indefinitely, nor are the European states that bear part of the donor funding. Israel and the Western states are interested in using the money to kill the people’s national spirit, and to divert them from their vital, existential causes — but the disbursement must eventually stop, once these states are satisfied that the people of the West Bank have become entangled to a degree from which they cannot return to a spirit of struggle against the occupation.

For this reason, it has become necessary for the Palestinian people to begin financing itself, but without possessing any real agricultural or industrial production. The Palestinian Authority is now required to impose various fees on government transactions of every kind, in order to collect as much money as possible, and to raise these fees wherever it can. It is also required to broaden and tighten its collection of taxes. Tax offices are now active across the West Bank, reaching even the end-of-service bonuses of non-government employees, bank interest should interest rates rise in the future, and individual itinerant economic activity — popularly known as tahdir or hadara (peddling) — and so on. West Bank Authority officials are required to gradually raise their own contribution to the Authority’s expenses, and this can only come at the expense of a people already burdened by prices too high for their incomes.

There was thinking, back in the 1990s, of turning Jericho into a great winter house of prostitution to generate income for the Authority, by establishing various facilities to serve this purpose, and importing prostitutes from Eastern European countries. This project began with the gambling casino in Jericho, and was later halted. And although Jericho has now turned into a vital hub for the American Central Intelligence Agency, the idea of establishing such a tourism project to help fund people in the West Bank could well resurface.

People in the West Bank are now facing rising prices, part of which is attributable to the global rise in prices and the global financial crisis. They also face an escalating crisis specifically tied to debts owed to banks in the West Bank. My estimate is that these economic crises will only increase with time.

The Way Out

If we want to escape the grip of the Western states and Israel economically, and to ease economic and financial matters for ourselves, I see the following steps as necessary:

Escaping the trap of the global economic system, freeing ourselves from the Paris Economic Protocol, and from the yoke of the World Bank and USAID.

Changing the sources of funding.

Focusing on production, particularly agricultural production, for the security of livelihood it provides.

Returning to the old patterns of bringing money into the country, and abandoning the banks because of their ties to the Israeli and international financial systems.

Converting the employees of the security apparatuses (with the police kept, to some degree, as an exception) into productive facilities. The security apparatuses consume about 45% of the Ramallah Authority’s budget, while we ought to make do with 5% for the police force, whose task should be to maintain civil order.

Obstructing imports from foreign countries in order to encourage Palestinian production, and bringing life back to farmers, craftsmen, and manufacturers.

Insisting that Arab states deliver their funds directly to the Palestinian people rather than through the donor-state mechanism.

8. Accepting a lower standard of consumption than the one prevailing now.

Developing an economy suited to the tasks of liberation, instead of an economy suited to the goal of degradation.

Source: Translated from the original Arabic, “الضائقة الاقتصادية في الضفة الغربية” by Dr. Abdul-Sattar Kassem.