Afternoon Tea in Jerusalem Blog

In addition to my work as a business coach, one of my interests is blogging about life in Israel. This is a country full of contrasts – over eight million citizens living in an area the size of Wales. You can see snow and the lowest place on the globe in the same day. Although surrounded by geopolitical extremes, Israel has achieved a decade of high economic growth. My work brings me in contact with an array of new companies, exciting technologies and dynamic characters. Sitting back with a relaxing cup of strong tea (with milk), you realise just how much there is to appreciate in the Holyland. Large or small operations, private sector or non profit, my clients provide experiences from which others can learn and benefit.

Palestinians have long blamed Israel and the ‘occupation’ for its economic woes.  For example, using selective quotes from the World Bank, they cite that if Israel ended its restrictions on Palestinian businesses and farms operating in “Area C” – 61 percent of the occupied West Bank – “this would add as much as 35 percent to the Palestinian GDP.”

And yet, as I have pointed out several times, until the Intifada, the World Bank had also observed how the Palestinians had one of the fastest growing economies on the global map. So where do we go from here?

Palestinian news agencies will seemingly report with near glee how their economy is in trouble. Strikes, not enough money to pay for the ever- growing number of civil servants, extreme weather, etc are just some of the disaster stories. There are a few bright spots, such as possible gas exploration and fleeting high-tech successes.

What some supporters of Israel may find surprising is that it has been the EU that recently pointed a way forward for the Palestinian economy. Now remember, depending on how you calculate it, the EU, directly, through member countries and through UNRWA etc contributes over one billion dollars annually to the Palestinians. As reported by Al Jazeera, “European officials recently warned the Palestinians that European countries were suffering from “donor fatigue” after spending billions of dollars in aid with limited results in achieving a lasting peace with the Israelis.”

Over what is written in the article,there is a greater concern, that of corruption. Evidently, the EU is concerned that billions has been ‘lost’ in the system. This was confirmed by a senior research assistant at Chatham House, a leading research institute in London. Entitled “Middle East peace – it’s not the economy stupid”, the paper considers that:

Corruption and inequality in the Palestinian territories are a significant factor behind public scepticism and cynicism about economic plans. Palestinians are well aware of corruption in business, and their negative views are exacerbated by socioeconomic divisions.

These “self-inflicted wounds” to borrow another commentator’s phrase simply damage the hopes and aspirations of Palestinians, who deserve better. The culture of corruption that was allowed and encouraged and utilized by Chairman Arafat continues way beyond his death.

Al-Shabaka is an independent non-profit organization whose mission is to educate and foster public debate on Palestinian human rights and self-determination within the framework of international law.” It argued in a research paper  how “while most Palestinians living under Israeli occupation are struggling to survive, a powerful group of Palestinian capitalists is thriving and growing in political, economic, and social influence.”

The report provides examples of the retail, banking and building sectors, where Palestinian capitalists have made huge profits. the centralization of economic power has come at the expense of millions, who are left to complain about the exploitation by Israelis. This is ironic in a week, when a leading official of Oxfam, one of England’s leading charities, called for Palestinians to stop working in Israeli factories, even though they earn much better wages there.

There is another route. The Israeli government has made great efforts in recent years to ensure that venture capital is increasingly available for the minority sector. Is it enough? Probably not? Does this provide an excellent start, leading to jobs and the creation of wealth for more? Seemingly so.

Effectively, what the EU and Al Shakaba are asking is: If only the Palestinian leadership had been able to demonstrate better financial leadership over decades, how much better off would millions of people have become today? And how would that have impacted on the peace process?

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