The economics of occupation in the West Bank

By Dr. Abdel Sattar Qassem

The Palestinian Territories occupied since 1967 have suffered from an odd economic situation ever since, in stages summarised as follows:

1. The Israeli occupation authorities adopted two main principles until the establishment of the Palestinian Authority:

a) The people were not exactly starved, as that would threaten the security of the occupation, but nor were they privileged to have enough to give them self-respect. Their economic well-being fluctuated between two points; the poverty line without ever really going below it, and the level of having enough food, without ever really surpassing it.

b) Palestinians’ means of production were destroyed, creating a dependence on foreign aid and manual work in Israel. Control of the means of production is to have control of free will. The Israelis kept the people on a cycle of dependency on Israel, PLO funds or donations from Arab countries in order to cripple their political will. 

a) Tying the Palestinians’ ability to feed their families to funds from donor countries. Post-Paris economic agreement, this helped to erode their political will and ensure that they will not reject the Oslo Accords and subsequent agreements. Most donor funds came from Arab countries, but the global scheme represented by the United States and its foil the World Bank does not trust the Arab regimes, no matter how pliable they are. America and its allies wanted to control the sources of funding for the West Bank and Gaza Strip.

b) Damaging Palestinian production, or what was left of it, by the following means:

i. Opening the West Bank and Gaza Strip to imports of cheap goods from abroad, particularly China, reducing demand for locally-produced goods of a better quality but higher price. The West Bank and Gaza were swamped with Chinese goods, and Palestinian producers suffered.

ii. Connecting the financial system in the West Bank and Gaza Strip to the global finance market, through linking the existing banks in the West Bank and Gaza to the Israeli financial system and through that to the global market. The West Bank and Gaza Strip are not a state and do not possess a competitive global economy. They are under occupation, and financial openness is not commensurate with their status at all, but the US-Israeli masters wanted to tighten the grip on the people.

iii.  Along with damaging Palestinian production, the number of staff who rely on wages coming from donor countries had to be increased. Farmers, blacksmiths, carpenters, furniture makers, shoe makers, weavers and tailors, etc., all had to be hit financially; The result was that tens of thousands of them were pushed by necessity into non-productive government work. More than 250,000 people have been stripped of productive capacities, while about 150,000 have been transferred to salaried status. People stopped being productive and began waiting for assistance from various channels, including NGOs, waiting for their salaries at the end of each month. Large numbers of people were turned, in effect, into economic prisoners and beggars.

3. Services were developed substantially without concern for real economic development based on production. Visitors to the West Bank can notice that there is development in services such as roads, communication networks, electricity and banking services, and perhaps they are astonished by such development under Israeli occupation. This has raised the cost of monthly bills for families without being based on real production that covers the purchase of services. In economics, this is dangerous because this will increase individual debts which will be hard to repay. This served the Israelis’ purpose in that people were focused on consumer matters without paying much notice to the national interest; concerns about bank loans and paying bills took priority over the struggle for freedom from the occupation. Plus, of course, the fake “facts” which claim to show that economic growth in the West Bank is increasing are provided by the World Bank; is it coincidental the PA Prime Minister, Salam Fayyad, is an ex-World Bank man?

The separation of Gaza from the West Bank was another stage in this process which was characterized by the following:

1. The siege of Gaza began because the peoples’ democratic choice did not fit with US and Israeli wishes. It was important to impose a siege on the people of the Gaza Strip order to put pressure on Hamas to abandon its mandate. Israel and its supporters have long used pain as a tool to achieve political purposes; the blockade is one such tool of this policy.

2. The oppression caused by the Israeli occupation and colonisation of the West Bank is, in effect, a war to divert attention from the main issues to the struggle to get money and food. The creation of a consumer-based economy has helped to strip people of their political will in exchange for the “privilege” of living under Israeli occupation. It is a policy intended to demoralise the people and strip them of their humanity; they become consumers and little else and with little dignity or self-reliance. This policy is succeeding, but perhaps not as quickly as Israel and America would like.

3. Burdening the people with high prices, government fees and taxes as a gradual means of eroding their autonomy. Israel and America are not interested in maintaining current levels of funds disbursement and neither are the Europeans. They want to use money to destroy the national spirit of the Palestinians to such an extent that they will not return to the struggle against the occupation.

It is necessary for the Palestinian people to start financing themselves without having the means of real agricultural or industrial production. The Palestinian Authority is required by its masters to impose various fees for various government transactions in order to collect the largest possible amount of money from its people, raising these fees wherever possible; it is also required to collect ever more taxes and levies. Tax and revenue departments are now active throughout the West Bank, affecting non-government employees’ end of service bonuses, dividends, and per capita economic and roaming activity, etc. PA officials in the West Bank have to raise their contributions to the expenditure of the Authority gradually, and that only comes at the expense of people who now already over-burdened by high prices disproportionate to their incomes.

There was a suggestion in the 19902 to create in Jericho a large house for prostitution that would generate a large income for the PA; the establishment of various facilities for this purpose including importing prostitutes from Eastern Europe. This project started with a casino in Jericho, but that went bankrupt. Even though Jericho has now become a vital centre for the CIA, the possibility of it becoming a major tourist destination to support the economy of the West Bank could resurface.

If the Palestinians want to move away from the economic grip of Israel and the West, and facilitate economic and financial matters for themselves, they need to take the following steps:

1. Break free from the Paris Economic Agreement and the yoke of the World Bank and USAID.

2. Seek alternative funding sources.

3. Focus on production, especially agricultural production.

4. Reintroduce traditional money transfer systems to break away from the stranglehold of the banks which are linked to the Israeli and international financial systems.

5. Transfer security services staff (excluding police officers to some extent) to production facilities. Security services consume about 45% of the budget of the Ramallah PA, almost entirely for the benefit of Israel over the people of Palestine. Meanwhile, the people have to make do with just 5% spent on the police service, which should preserve law and order.

6. Block certain imports to encourage Palestinian production, farming, artisans and craftsmen.

7. Insist that Arab countries provide donated funds directly to the Palestinian people and not through third-party donor countries.

8. Accept that consumer spending must decrease below what it is.

9. Develop an economy commensurate with the tasks of liberation rather than one commensurate with the occupation and demoralisation.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.