Whereas Dr. Hazboun wrote his paper before the most recent (and
possibly disastrous) Israeli elections, my own paper is a difficult
post-election effort. This may account for some of the differences.
Although we cannot separate politics from economics, I will begin
with the optimistic, but possibly erroneous, assumption that the
final-status Oslo-based talks will continue to a satisfactory
completion - i.e., the establishment of a politically separate
Palestinian state. If not, all the talk of economic separation
becomes meaningless in the face of creeping annexation.
Both Dr. Hazboun and I have felt ambivalent about the two extremes
on the spectrum - Palestinian-Israeli economic separation or
economic integration - even if we both previously tended to support
a high degree of economic cooperation.
The Israeli closures of the Palestinian territories (despite some
recent easing) and the declared support for closure by many
political leaders ¬both left and right - have provoked a
not-unjustified reaction by Hazboun and other Palestinians in favor
of economic separation.
'Siege Policy'
For over a decade (1984-1995), I have steadfastly supported,
researched and written about equitable economic relations, while
opposing and exposing the colonial-type economic domination by
Israel of the West Bank and Gaza (WBG). Dr. Hazboun writes about
"siege policy," which may imply deliberate economic warfare by
Israel. However, in reality the inequitable, unfair and
exploitative relationship before the closures was based less on
"siege policy" and more on a mixture of economic injustice,
economic egocentricity, political domination combined with economic
neglect, favoritism for Israeli economic activities and the natural
tendency of the stronger economy to control the less developed
areas. Admittedly, with the closures, a large punitive element in
response to suicide bombings was implemented.
The past Palestinian inequality with Israel was inherent in the
different economic starting levels and indigenous socioeconomic
reasons. In practice, it stemmed from unequal trade structure and
relations; hostile government ordinances; lack of self-governing
Palestinian institutes in both the political and economic spheres;
a neglected physical infrastructure; and an unfair division of tax
revenues.
With the signing of the Oslo accords in Washington, the Paris
economic accords and the Taba Oslo II accords, certain functions
were transferred to the Palestinian National Authority (PNA), as
well as most of the Gaza Strip and most major West Bank towns. The
accords implied that there would be a high degree of cooperation
between Israel and the Palestinian entity ¬including the
employment of Palestinian labor and a near-common market. In the
wake of closures, both of these have been affected, especially the
access of Palestinian labor, and to a lesser extent, goods to
Israel. Closure has proved to be an economic calamity to the
emerging Palestinian entity. As a result, calls for economic
separation have been made.
Economic Cooperation
If (and only if) peaceful relations can be reestablished and
terrorist attacks eliminated, then a high degree of economic
cooperation can be possible between our two peoples. The past
history of economic exploitation notwithstanding, the Palestinian
economy is highly dependent on that of Israel, and Israel is the
most likely market for Palestinian goods. Even if, as Dr. Hazboun
implies, the wages paid and the Keynesian public infrastructure
efforts should provide a market in the occupied territories
themselves, this would be limited.
I would call attention to the break in economic (and other)
relations between Guinea of Seka Toure and France of De Gaulle, a
quarter of a century ago, when they abruptly achieved independence,
with severe economic repercussions.
The Arab markets - via Jordan and Egypt - are no substitute for the
Israeli market. At present, only seven percent of Arab trade is
conducted within the Arab market. Israeli-Palestinian industrial
and agricultural cooperation provides more opportunities, as do
joint advanced services. Border industrial free zones based on
close cooperation can provide much employment and income. A break
in such cooperation, Dr. Hazboun admits, would result for the
Palestinians in a lower per-capita income and lower wages.
Progress is dependent on a more equitable relationship between the
two parties. I must, however, confess that at present, despite
their stated position to cooperate, I see no sign by the bulk of
Israeli industrialists to a more equitable division of the pie. I
see no effort on the part of Israeli importers to share with
potential Palestinian importers their sole foreign agencies or
representations. I see little attempt to really permit Palestinian
agricultural produce to enter Israel as called for since, at the
least "security" excuse, this is stopped. I see Palestinian
agriculture and construction workers in Israel being replaced by
overseas workers (with consequent difficulties for both Israel and
the WBG).
All Depends on Political Progress
Nevertheless, given that a Palestinian state may be established
(despite the declared opposition of the new government) by the end
of the final-status talks in 1999, then certain options could be
available to the PNA. It should aim at maximizing benefits from
cooperation with Israel, especially in trade, industry,
agriculture, water and infrastructure, while also aiming at
achieving equitable relations in those areas. These should be
clearly spelt out in formal agreements at both governmental level
and at the level of economic organizations (e.g., chambers of
commerce, manufacturers' associations).
All of the above is highly speculative but desirable and depends on
political progress. Dr. Hazboun is right when he suggests "reducing
Israeli economic hegemony" and a search for "new ways of
sustainable growth." But, without a higher degree of equitable
economic cooperation, there will be a continued economic crisis in
the Palestinian territories, and this, despite Hazboun's correct
call for public infrastructure development in the WBG.
Finally, should the new government not move towards political
separation, involving all or at least the greater part of the WBG,
then economic separation would be ruled out, despite likely
closures and boycotts and a renewed ¬or worse - resumed
Intifada. Also, emerging economic relations with the Arab world
would halt, and foreign investment in Israel would be
reduced.
Let us hope and work for maximum political separation, combined
with maximum but equitable economic cooperation, to the benefit of
both our peoples.