Olives and the economics of an intifadah

r The economic risks - and links - shared by two Mideast societies are underscored with the olive harvest.

For 55 years, an elfin, sun-wrinkled woman named Diyaa Shatara has come to these fields in early November, spreading blankets under the olive trees while the men in her family shake the fruit from their silvery green boughs. Olives fall, leaves are culled, the fruit is bagged. The rhythms are as old as the trees themselves - planted by the Romans, Mrs. Shatara says. But the recent violence is making this a bitter harvest.

Farmers have been shot, and trees bulldozed. For Palestinians, the risk to the olive harvest is one of many economic challenges stemming from their uprising or intifadah, along with Israeli limits on their movements and shipments. But if the economy is a weapon, it is a double-edged one, which hurts the Israelis as well.

The six-week-old uprising has only served to underscore the intimate economic relationship between the Palestinian and Israeli societies. Since Israel's economy is 20 times the size of the Palestinians', Israel has that much more insulation against financial hardship. On both sides, though, the fallout is plain to see.

West Bank construction sites stand empty. Gaza Strip grocery stores have so few customers that clerks convert checkout stands into food displays. And in homes across the territories, budgets are being reexamined.

In order to control the uprising that has claimed more than 190 lives to date, Israel has curtailed the movement of goods and people to, from and within the territories.

Day laborers working in Israel account for 20 percent of the Palestinians' $5 billion annual gross domestic product. With 120,000 of those workers now unable to get to their jobs, the loss of revenue has triggered an economic slide, says Palestinian economy minister Maher al-Masri.

"First labor is cut off, Palestinian purchasing power slows by the day, more businesses shut down, then industry slows because of lack of raw materials," says Mr. Al-Masri. He also says that imports and exports are deliberately held up by Israeli security checks.

Muhammad Shatayyeh, managing director of the Palestinian Economic Council for Development and Reconstruction, says the conflict shows the degree of Israeli control over the Palestinian economy.

He points out that not only is 80 percent of Palestinian trade with Israel, but Israel controls all Palestinian land-and-sea routes to the outside world. "They control 100 percent of our electricity, they have their hand on our water taps," he says. "It shows you how fragile our economy is."

For many ordinary Palestinians, the troubled olive harvest is a more immediate concern. They must be picked now or lost. Olives are a central part of life and account for a quarter of Palestinian agricultural output. This year promised a bounty crop after a few drought-plagued seasons, but getting olives off the trees has proved difficult.

The left-wing Israeli activist group Gush Shalom has documented several attacks by Israeli settlers on Palestinian farmers. At least two farmers have been killed while working in their olive orchards and scores have been injured, according to the Palestinian Agricultural Relief Committees. In the Gaza Strip, more than 250 acres of olive trees have been uprooted by Israel, according to the Palestinian Center for Human Rights.

The Israeli Army cuts down trees for security reasons. Israeli cars traveling to and from the settlements have been shot at, and by chopping down trees that line some roads, the Army is hoping to deprive snipers of cover.

But Diyaa Shatara says Palestinians have more to fear from the settlers than the other way around. The recent release, due to lack of evidence, of two settlers accused of murdering a farmer just confirms her views, she says.

"We're afraid," she says, standing at the side of her grove of 30 trees, "but we have to maintain our land. We came with all the other people from our village, we're sticking together and close to the road."

Her son Muhammad sees the economic crunch as a deliberate Israeli strategy. "It's a matter of Israeli policy and socialization to hurt Palestinians, and more than that, to hurt them economically," he says, squinting in the autumn sunshine. "They know that olive oil is part of [our] economy and they do everything to hurt it."

While Palestinian economic gears may be grinding, Israel's trade ministry says business on their side of the border is fine. It may be a case of premature optimism.

Tourism has clearly slumped. Holy sites, usually a year-round draw for the faithful of all stripes, now echo with the footfalls of a few camera-toting tourists.

Airlines are cutting flights, and hoteliers are bitterly unhappy. At the Royal Plaza Hotel in Jerusalem, guests fill only 5 to 10 percent of the rooms. At the Plaza's sister establishment, Jerusalem's new Olive Tree Hotel, occupancy has dropped from 90 to 60 percent, and 100 employees have been told to find work elsewhere. Remaining staff hover in the lobby, very eager to please.

The $2.5 billion tourism industry as a whole faces "disaster," says Rafi Farber, chairman of the Royal Plaza chain. But things aren't likely to change until the unrest is definitively over. A US State Department travel warning dampened the ardor of many would-be pilgrims, but television images have probably done even more to stem the tourist flow.

Ephraim Kleiman, an economist at Hebrew University in Jerusalem says, "you don't go places when you turn on CNN and you see people shooting."

Meanwhile, for Israeli firms that sell to Palestinians, particularly those marketing dairy products, the limits of the flow of goods is a real problem as their wares now don't get through checkpoints quickly enough, if at all.

There is a less tangible but more serious threat than the crates of curdling yogurt awaiting delivery to Palestinian grocery stores - and that is a matter of mood. After eight years of economic growth, Israel could face the prospect of a falloff in international investment.

The 1990s saw the peace process, a flood of Russian immigration, and the birth of Israel's high-tech industry, which boosted the country's fortunes and drew investors. The Ministry of Industry and Trade says there is "no reason to believe that the current problems will affect Israeli industry."

Mr. Kleiman, the economist, isn't so sure. Describing the boom as an "intangible, animal thing," he says, "I think we may have lost that, but it will take a while before we feel it."

(c) Copyright 2000. The Christian Science Publishing Society