Palestinian Statehood must start with Economy by Stephen Glain

The National


By Stephen Glain


In the immediate aftermath of Beijing's 1989 clampdown on pro-democracy protesters, Hong Kong industrialist Gordon Wu was asked how the crisis would effect his development plans for China.

"Tanks don't pay tolls," he replied.

China recovered, of course, and Mr Wu and the rest of the world's businessmen ploughed back in. But Mr Wu is not likely to be pitching his services in the Palestinian Territories, garrisoned as it is by Israeli tanks, bases, and checkpoints, the security belt that girders an ever-expanding Jewish settler movement. The Bush administration correctly, if lamely, protests settlement-creep as an impediment to the goal of Palestinian statehood. In doing so, it perpetuates the intuitive but flawed assumption that the road to Middle East peace leads through a Palestinian state. In fact, peace, if it comes, will flow first from a viable Palestinian economy. The two are not necessarily mutual. While an economy can thrive without the imprimatur of statehood, a viable state is impossible without a stable economy. At times, the main principals in the peace process have either forgotten this basic fact or have chosen to ignore it.

Statehood can be defined in many ways. For Yasser Arafat, a warlord who didn't know economics from gefilte fish, it meant personal control of a dozen security agencies, an honour guard, an official jet, and a war chest of international aid for buying allies. For Washington, it is an expediency, a promiscuous term employed to signal support for Palestinian national yearnings while ignoring Israeli resistance to an equitable deal. For Israel, it is a cluster of hamlets divided by and sealed behind a massive security barrier. Like the blind men and the elephant, each party interprets what a Palestinian state should look like consistent with its own political interests. As sovereignty is by definition political, it is easily politicised – into oblivion, in the case of Palestine.

An economy is a different matter. It either creates wealth or it does not. And by every available metric, the Palestinian Territories – home to some of the world's most prolific entrepreneurs – has been declining economically since well before Washington embargoed the Palestinian Authority after Hamas' election triumph two years ago. As early as the mid-1990s it was clear the legacy of the Oslo peace accords would be more a burden than a reprieve. By dividing the Palestinian Authority into areas controlled by Israel and others by the Palestinians, the Oslo process unwittingly enabled Israel's Balkanisation of the West Bank and Gaza. (Ironically, occupied Palestine was probably more robust economically before Oslo, when there were no Palestinian-controlled areas and thus no Israeli checkpoints to delay or shut down the movement of goods and people.)

Despite this, the US-Israeli complex insists on fetishising Palestinian statehood at the expense of the Palestinian economy. During the inconclusive Camp David sessions led by the then-US president Bill Clinton in 2000, when the two sides were allegedly closer to a major agreement than they had been in years, trade and commercial matters were all but ignored. In the years since Oslo, the former Palestinian trade minister Maher Masri once told me: "There has never been a meaningful economic pact signed between Israel and the Palestinian Authority."

All of which makes perfect sense, assuming Israeli hardliners want to deny the one thing they perceive as a bigger threat to its security than a notional Palestinian state: a real and sustainable Palestinian economy. The former can be easily finessed. An exchange of ambassadors here, a new parliament building there, and behold, a new nation. The latter would oblige Israel to concede to the Palestinians control of their borders, their air and sea ports, and their export earnings. That would require the kind of political courage that no Israeli prime minister has yet displayed. But that shouldn't stop the Palestinians from demanding the brick and mortar of a sustainable economy and everything that implies.

Rather than investing what little diplomatic capital he has left in the bankrupt dream of a two-state solution, the US President George W Bush should commission an international, blue-ribbon team of economists, businessmen and investors to write a survey of the basic conditions for a durable Palestinian economy. That study, rather than the administration's current "road map", would form the basis of a peace agreement and the contours of a future Palestinian state.

If the Israelis dig in, they will betray their true intentions. Even America's most emphatically Zionist president since Harry Truman would have a hard time aiding and abetting that.