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.

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