Kerry's plan for Palestine

US Secretary of State John Kerry has been preoccupied with the Middle East recently. After visiting Egypt and Saudi Arabia in order to repair damaged relations, he headed to Geneva to participate in the talks amongst the 5 permanent members of the UN Security Council, along with Germany, to resolve the conflict regarding Iran’s nuclear programme. Kerry added to his agenda a meeting with Palestinian President Mahmoud Abbas and Israel’s Prime Minister, Benjamin Netanyahu, as well as a meeting with Jordan’s King Abdullah in an attempt to revive the faltering Palestine-Israel peace talks.

This US diplomatic activity and the possibility of reaching an agreement between Iran and the P5+1 have driven optimistic observers to expect a diplomatic breakthrough in Palestine-Israel, perhaps as soon as early 2014. This may even meet the 9-month time frame for the negotiations, set by Kerry in Spring 2013, for a “final status” agreement for Palestine. These same observers also believe that the agreement will be based on the “Clinton Parameters” issued in December 2000 and the Arab Peace Initiative in March 2002, as well as the development plan for the Palestinian economy.

Perhaps the strong American intervention will lead to an agreement that includes a number of political, security and economic elements; Kerry has the vitality and determination required to achieve this. However, what will remain of his bold initiative if the Palestinian-Israeli talks are stalled completely and a permanent peace agreement isn’t achieved? Netanyahu’s hostile responses serve as a reminder to Kerry that “America’s position towards settlements is that they are illegal”. Moreover, the preliminary reports that indicate the closeness of achieving an agreement between the P5+1 and Iran suggest that a painful political battle between the two sides is imminent.

If past experience is anything to go by, then the US administration will back down from a political confrontation with Netanyahu and his allies in Congress and the Senate, and instead will resort to the economic part of Kerry’s plan. When he addressed the World Economic Forum in Davos in May 2013, Kerry talked about attracting investments worth $4 billion in order to expand the Palestinian economy by 50 per cent in 3 years. It will focus on the housing, tourism and agriculture sectors, and will lower the unemployment rate by two-thirds and raise the average income for most Palestinians.

However, the problem with this “transformative” economic plan, as Kerry describes it, is that it is similar to the failed “economic growth” strategy adopted by the US and EU for the occupied Palestinian territories in 1993. Instead of directly eliminating the political obstacles preventing the achievement of a peace treaty, the Americans and Europeans lead the international community on a deluded path towards achieving economic growth that can “lead to significant benefits for the Palestinian people that will increase the momentum towards peace”, as explained by a document outlining the plan issued by the World Bank at the time.

Moreover, it was blatantly clear that the US and EU were not prepared to defend their economic strategy, which led to Israel’s closure of the borders from 1995 to 1999 for long periods of time, thus suffocating Palestinian trade and reducing the average income of individuals.

Israel’s “Operation Defensive Shield” and what followed in Spring 2002 led to damages amounting to $361 million to the infrastructure and civil institutions in the West Bank to an extent that did not match the scope of the actual fighting. It is worth noting that the international community later paid to repair the damage. When the American Administration and the World Bank drafted the “Agreement on Movement and Access” in November 2005, which personified the strategy of the donor countries for the development of the Palestinian economy within the framework of Israeli security, geographic and administrative control, the Israeli security establishment refused to apply it, which led to its complete and immediate failure.

Despite this negative record, the United States and European Union revived the “economic growth” strategy after the Palestinian Authority split into two rival governments in the West Bank and Gaza Strip in June 2007.

However, only two years passed before the World Bank concluded that the Palestinian economy “is failing miserably by exhausting its capacity, even during periods of security stability” and that it has been exposed to “a decline of the production sectors and an increased dependence on aid from donors to avoid financial collapse”. The additional irony is that the government led by Hamas in Gaza had achieved better economic indicators in 2010 than Prime Minister Salam Fayyad’s rival Western-backed government in the occupied West Bank, despite the fact that the latter received a large increase in international aid.

The past 20 years have witnessed a shift in international aid to the Palestinians from its original purpose of supporting economic growth, developing the private sector and building institutions, to the purpose of providing humanitarian aid, emergency plans, the creation of temporary jobs and the support of the Palestinian Authority’s budget.

This has led to the almost complete undermining of the ultimate goals and expectations involving the donor’s economic strategy, as they did not receive sustainable development, nor were credible institutions established, not to mention the failure to establish an independent Palestinian state by means of a peace agreement with Israel. Instead, it resulted in the Palestinians’ chronic dependence on foreign aid. In the latest report issued by the World Bank on October 2, the extent of Israel’s control over the West Bank was estimated at 61 per cent, excluding its control over East Jerusalem and indirect control on the rest of the West Bank and the Gaza Strip. This alone costs the Palestinian economy $ 3.4 billion annually in losses, or 35 per cent of the GDP.

Perhaps the United States and the European Union could have implemented the economic growth strategy if they had insisted on the establishment of the mechanisms of implementation and settlement of disputes in order to ensure the proper application of the economic arrangements agreed upon and to deter violations by enabling constructive sanctions. However, they quickly abandoned the attempt to create a monitoring mechanism, which was initially included as part of the “Roadmap for Peace” prepared by the International Quartet, led by the United States, in April 2002. This was then vetoed by Israel and, once again, the US and EU stuck to their strategy when the crisis in the peace process intensified, rather than rectifying their strategy.

Kerry offers a glimmer of hope by linking the economic aspect to the draft agreement that will lead to the end of Israeli control, albeit gradually. The result depends entirely on his adherence to this organic linkage. If that is not done, then Kerry’s economic plan will turn into a mere repetition, for the fourth time, of a failing strategy that will contribute to the deteriorating status quo that cannot be maintained or transformed for the better.

The author is a senior associate at the Carnegie Middle East Center in Beirut, Lebanon. This is a translation of the Arabic text published by Al Hayat newspaper on 15 November, 2013

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