Palestinians leery of Kerry's promise of prosperity

US Secretary of State John Kerry on Sunday outlined a vague plan to revive the Palestinian economy, and the moribund peace process, through an injection of billions in foreign investment. But his talk of grandiose development projects actually rubbed many Palestinians the wrong way.

Speaking at the World Economic Forum Middle East conference in Jordan, Mr. Kerry outlined what sounded like a private sector equivalent of the Marshall Plan, saying that $4 billion in investment could be found for new ventures that would cut Palestinian unemployment by two-thirds over the coming years and boost economic output by 50 percent.

However, the plan is up against 20 years of dashed hopes and blueprints for nation building that have led many Palestinians to conclude that it's simply impossible for them to achieve lasting economic development without an Israeli withdrawal from the West Bank and the establishment of a sovereign state.

“I think is the grandest smoke-and-mirrors game yet played. We’ve been here before. This is just on a grander scale,” says Sam Bahour, a Palestinian businessman. “If we read any of the reports that have been issued over the last 10 years from the World Bank we see beyond a serious doubt that no sustainable and no serious Palestinian economy can be built under Israeli occupation – that has been the model of the last 10 years and it's failed colossally."

Mr. Bahour was referring to the development program of Prime Minister Salam Fayyad, who has touted the very opposite proposition: that Palestinians could begin laying the building blocks for statehood before achieving statehood. Despite praise from the international community that the Palestinians were moving in the right direction, the Palestinians in the last year found their government struggling to remain solvent and delays in the payment of public sector salaries.

While the notion of enhanced prosperity contributing to peace seems obvious, Palestinians consider talk of putting the economy first as an Israeli scheme to buy quiescence while the fruits of genuine statehood are delayed. At the outset of his second administration in 2009, Israeli Prime Minister Benjamin Netanyahu promoted the idea of an “economic peace” that would lay the groundwork for a final peace.

Sensitive to this reluctance, Kerry has repeatedly stressed that his economic plan would improve the atmosphere for political talks – not replace them. At the conference he said that his investment plan would be impossible without progress in negotiations. That didn’t assuage Palestinians.  

Economic peace?

“Since when is our cause about money?” says a Palestinian negotiator who was not authorized to speak on the matter publicly. “It's misleading when people talk too much about the economic package and not the situation on the ground.... We are not against economic development but it cannot happen until an end to occupation. Some international players are just waiting to have negotiations for the sake of negotiations.”

Kerry’s initiative dovetailed with the public launch of a Palestinian-Israeli business forum – ”Breaking the Impasse“ – which claimed hundreds of members and vowed to lobby for a return to negotiations. But, fearing the initiative would stir up opposition among Palestinians, initiative co-founder Munib Masri declared at the end of a press conference, “No to economic peace!”

Kerry said that his plan represents the fruits of weeks of brainstorming among international businessmen and consultants and enjoys the support of both Israeli and Palestinian leaders. He pointed to untapped potential for tourism – noting that Syria, Jordan, and Egypt outdraw Israel – and suggested that Israel and the Palestinians could swiftly attract new visitors in an atmosphere of peace.

But Palestinians say that Kerry’s plan sounds like visions of self-sufficiency that have been touted going back to the original establishment of the autonomous Palestinian government in the 1990s, the establishment of a customs union with Israel, and the promotion by Israel of joint industrial zones. (To be sure, the Palestinian Authority allegedly squandered hundreds of millions of dollars in aid over the past two decades.)

Now they say they feel they are trapped in a trade regime that is tailored to the Israeli economy and hurts burgeoning Palestinian businesses. They also complain that their economic development is hindered by the lack of access to wide swaths of the West Bank that remain under the control of Israel and physical barriers to movement around the West Bank.

“Everybody comes to the conflict with an economic plan,” says Bashar Azzeh, a Palestinian businessman from Ramallah. “Since the Oslo Accord, Israel has gone from a $70 billion to a $290 billion economy. They’ve benefited from peace; we’ve only gone from a $6 billion to a $9 billion economy. So you can see who is getting the economic benefits of peace.”