SPEAKING
FREELY Palestinians knocking on Asia's
doors By Oren Rawls
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
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Palestinian Foreign
Minister Mahmoud al-Zahar is in Asia this week on
a fundraising tour for the nearly bankrupt
Palestinian Authority. With financial isolation
exacting a steep price on the Hamas-led
government, the Palestinian foreign minister is
turning to Indonesia, Malaysia, China and Sri
Lanka to help defray the costs.
Before
Zahar's hosts rush to open their checkbooks,
however, they would do well to examine the bottom
line from his previous fundraising campaign. While
his tour of the Middle East in April netted
several headline-making pledges of foreign aid, it also
underscored the need for real
investment in Palestinian society - in particular
by those defending loudest the Palestinians'
democratic rights, their Arab brethren.
During last month's tour, Zahar secured
commitments of nearly US$200 million from
governments in the region, including $92 million
from Riyadh and $50 million each from Doha and
Tehran. Now, $200 million is no paltry sum,
particularly given the short time in which the
money was raised.
But as
Zahar's Asian hosts consider making a similar
expression of solidarity with the Palestinian people,
they might want to consider this: barring
totally unexpected developments, the Palestinian
Authority will continue to face a monthly
recurrent budget deficit of $130 million. In other words,
to balance the books, the Hamas-led government will
need to ask for a $200 million handout every seven
weeks.
The United States, the European
Union and other international donors have made
clear that they have no intention of doing
business with Hamas, and have frozen aid to the
Palestinian Authority. Israel, for its part, has
suspended indefinitely the transfer of tax
revenues it collects on the authority's behalf,
which amount to at least $54 million per month.
The US, European and Israeli moves
have predictably sparked outrage in the Muslim
world. But to all those now demanding that the
world respect the Palestinians' democratic will,
let this question serve as a response: Are you
prepared to shoulder the Palestinian government's
economic burden?
The bill is indeed high.
To begin with, there are the salaries of the
Palestinian Authority's 174,000 employees. Last
year, finance minister Salam Fayyad estimated the
wage bill to total $938 million. Then there are
civil service and security retirement
expenditures; last year's estimated figure was
$625 million. Add in other non-wage outlays, and
expenditures total roughly $2 billion annually -
10 times the amount of aid Zahar secured from
Middle Eastern governments in April.
The
situation in the private sector is just as bleak.
Even before the government found itself unable to
pay the salaries of its own employees, the Finance
Ministry was warning that the bloated public
sector would be unable to absorb the 40,000 youth
entering the job market annually. And since Hamas
won the Palestinian Legislative Council elections,
the youth have not been the only ones having a
tough time finding jobs.
On an average day
last year, roughly 45,000 Palestinians worked in
Israel, not counting those with East Jerusalem
residency permits. After the January
elections, the Israeli government took steps to
restrict the labor flow; now, on an average day at
least a third fewer Palestinians make a living in
Israel. Based on last year's figures, that means a
loss of about $135 million in earnings -
roughly 2.3% of the Palestinian gross domestic
income.
And the labor flow will only
become more restricted. Of the 45,000 Palestinians
working in Israel on an average day in 2005, more
than 40% entered either clandestinely or illegally
from the West Bank. When the separation fence
between the West Bank and Israel is completed -
and given the overwhelming support the project
enjoys among the Israeli public, it would be naive
to think that it will not be finished, and soon -
those 18,600 or so Palestinian workers will find
it awfully hard to sneak into Israel. That means
an even more saturated job market in the West
Bank, which ultimately translates into dimmer
prospects for putting pita on the table for more
and more Palestinians.
That a humanitarian crisis is
looming is well known to the international donor
community. The United States and the European
Union have gone out of their way to point out that
they are still funneling aid to Palestinians, just
not through the Hamas-led government. And as
pictures of desperation increasingly emerge from
the West Bank and Gaza, we can expect to see more
pledges of the sort made last month by five large
Arab investment funds, which earmarked $50 million
for Palestinian humanitarian projects but refused
to deal directly with the Palestinian Authority.
Such
humanitarian aid is undoubtedly well appreciated
by needy Palestinians. Ultimately, however, what
they need is not more handouts, but more jobs.
A welfare check helps make ends meet, but
it does precious little for the self-respect and
independence of the unemployed. Some Palestinians
may find honor in fighting for statehood, but how
many find pride in fighting a losing battle for a
job?
For more jobs to be created,
of course, more businesses need to operate in the
West Bank and Gaza. And for that to happen, more
companies in the region are going to have to take
a leap of faith and do their part to support the
Palestinian economy.
To be sure, foreign
direct investment in the West Bank and Gaza is a
risky proposition. And undoubtedly Israel has
been, and will continue to be, in no small measure
to blame. Yet it is disingenuous to argue that
Israeli policies are the sole reason for Arab
businessmen investing far less in the Palestinian
economy than in those of other Middle Eastern
countries - as the recent dealings of Mohamed Ali
Alabbar illustrate.
In February 2005, the
chairman of Emaar Properties, the Dubai-based
joint stock development company, secretively
offered to buy for $56 million the 21 settlements
Israel was scheduled to abandon in Gaza. The deal
was to include not only the settlers' houses and
agricultural plots, but also 12 fully functioning
factories. The factories employed thousands of
Palestinians, and the development project surely
would have employed thousands more.
No
sooner did word get out about Alabbar's offer,
however, than he was angrily criticized around the
Arab world. In the face of supposed expressions of
solidarity with the Palestinian cause, he backed
away from the idea.
Eight months later,
Alabbar received a far different reception when
his company announced plans to build Damascus'
first fully planned communities, a project valued
at $3.9 billion. In stark contrast to the public
outcry that greeted his Gaza proposal, his plans
for developing the Syrian capital were embraced at
a high-profile press conference. At the Dubai
developer's side when he unveiled the deal stood
Syrian Deputy Prime Minister Abdulla al-Dardari,
who said it was an "honor to be working with an
internationally recognized company like Emaar".
How else but politics - politics at the
Palestinians' expense - to explain how Alabbar's
two deals were treated so differently? On paper,
at least, the investment climate in Syria is not
so spectacularly better than that in the West Bank
and Gaza.
In the "Ease
of Doing Business Index" compiled by
the International Finance Corp, the World Bank
Group's private-sector arm, the West Bank/Gaza is listed 125th out of
155 countries. To be fair, that may not sound like
the kind of place that Arab businessmen would feel
confident investing in, but then neither does
Syria, which is ranked 121st on the index.
Nor, for that matter, do more than a few
other countries in the region. Egypt, which
outperforms the United States, Japan and Germany
when it comes to the amount of foreign direct
investment attracted relative to economic size, is
ranked 16 places below the West Bank and Gaza on
the "Ease of Doing Business Index". Algeria, which
recently sent $35 million to the Hamas-led
government to help it pay Palestinian Authority
salaries, is also ranked lower than the West Bank
and Gaza. So, too, are Arab League members Sudan
and Mauritania.
The numbers, in short,
just do not add up - and no handout from Zahar's
hosts this week, no matter the amount, will lessen
the need for investing in more Palestinian jobs.
Oren Rawls is the opinion editor
and European bureau chief of The Forward,
America's leading Jewish newspaper.
(Copyright 2006 Asia Times Online Ltd. All
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Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
