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September 2011

Palestinians Look to Make History With U.N. Vote POLITICS After decades of failed negotiations, dashed hopes and spasms of violence interspersed by periods of relative calm, it finally comes down to this: a last-ditch effort by the PLO to convince the world that the State of Palestine — with East Jerusalem as its capital — deserves official recognition among the community of nations.

In an ideal world, Palestine on Sept. 20 would become the 194th member of the United Nations, setting off celebrations in the West Bank and Gaza. But even the top Palestinian leadership concedes that this won’t happen. The United States has threatened to veto any such approval by the 15-member Security Council, meaning the most Palestinians can hope for is a highly symbolic resolution in the U.N. General Assembly recognizing Palestine as a non-member state.

Maen Areikat, the Washington representative of the Palestine Liberation Organization and the closest thing the Palestinians have to an ambassador here, has tirelessly lobbied for such recognition for months, though even he admits it’s been an uphill battle, given adamant U.S. opposition to the proposed resolution.

“Our goal is to dispel the myths and misconceptions related to the Palestinian-Israeli conflict in a way that will help the American public and government understand the motives behind the Palestinian decision to seek membership at the U.N., and to balance the information that members of Congress are getting from Israel and the pro-Israeli lobby,” Areikat explained. (Incidentally, nearly 20 percent of the U.S. House visited Israel during the August recess as part of a trip sponsored by an arm of the lobby group AIPAC.) Areikat said the decision to go to the United Nations wasn’t done overnight, nor was it done in a vacuum.

“Unfortunately, the U.S. and the

September 2011

international community have failed to convince Israeli Prime Minister [Benjamin] Netanyahu and his government to engage the Palestinians in serious, meaningful negotiations,” said the PLO ambassador. “We have repeatedly said that negotiation is our primary choice.

But in the absence of negotiations, the Palestinian leadership is compelled to provide its people with alternatives that will lead to a better life.”

He added: “The United States, the international community and even some Israelis have said that the status quo cannot be sustained — a status quo in which Israel is continuing to build facts on the ground and violating international law. This is a dangerous recipe which could lead to further violence and conflict in the region. The only way out is to establish a Palestinian state.”

Similar sentiments are being voiced by other Palestinian leaders, including Economics Minister Hasan Abu Libdeh.

“I don’t want to deceive you. The vote in the U.N. is not going to have any immediate positive impact on our economy,” he said by phone from Ramallah.

“We will continue to be under Israeli occupation. Things will not change on the ground until Israel decides to change them.”

Abu Libdeh, interviewed the same day an attack against Israel killed eight people near the southern city of Eilat — an attack that prompted immediate Israeli reprisals against Palestinian factions in the Gaza Strip, who Israelis accuse of perpetrating the attack — said such actions only underscore the urgency of finding a solution to the decades-old conflict.

“I’m afraid that if we do not move forward, things on the ground will deteriorate and become bloody for both sides,” he said. “Violence, regardless of where it happens, is not a good thing for anyone.

We do not want to see more bloodshed in this country or even in Israel. But these events must show the Israeli government that without going back to

President of the Palestinian Authority Mahmoud Abbas addresses the U.N. General Assembly in 2010. This year, frustrated with the lack of progress in the stalled peace talks, the Palestinians are set to make their case for statehood in front of the United Nations in September.

UN Photo / Aliza Eliazarov

negotiations, they are bound to see this kind of thing happen again.”

Most Arab leaders share the view that their “Palestine 194” effort at the United Nations shouldn’t be viewed as a unilateral declaration at all — but rather a natural response to unilateral settlement building that has continued unabated, contrary to international law — most recently evidenced by the announcement of 900 new units in the controversial “Har Homa” settlement in Jerusalem — and resulted in explosive settler growth, with more than 500,000 Israelis living in illegal settlements in the West Bank and East Jerusalem.

These “facts on the ground” have made the likelihood of a continuous Palestinian state increasingly untenable, most experts say, and the prospect of Palestinians claiming the 22 percent of historic Palestine (the West Bank, East Jerusalem and Gaza Strip) that they’ve

been fighting for since 1967 more distant than ever. Areikat himself estimates that with walls, checkpoints and “Israelionly” roads, more than 82 percent of the West Bank is kept out of Palestinian hands.

Moreover, Palestinians say they have little choice but to turn to the United Nations for help given the dismal lack of progress by Netanyahu and the failure of the international community to resume substantive and meaniful negotiations.

We go to the United Nations now to secure the right to live free in the remaining 22 percent of our historic homeland because we have been negotiating with the State of Israel for 20 years without coming any closer to realizing a state of our own,” Abbas wrote in May 16 op-ed in the New York Times.

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Palestine’s Economic Challenge: Breaking Barriers to Achieve Real Growth BUSINESS & INVESTMENT Whether or not the United Nations recognizes Palestine as its 194th member nation come Sept. 20, the reality is that this nascent state faces enormous economic challenges that will endure for years to come.

It may not seem that way, given rosy World Bank projections and the construction frenzy gripping Ramallah and its immediate environs. However, that can be highly misleading, warns Hasan Abu Libdeh, the Palestinian minister of economy.

“Our economy has been doing relatively well, but this is not sustainable,” Abu Libdeh said in a phone interview from Ramallah, headquarters of the Palestinian Authority. “Our growth during the last few years is basically thanks to heavy government spending and international assistance — and this is not how you achieve growth.”

At present, annual per-capita income stands at $1,500 in the West Bank and $1,300 in Gaza. Earlier this year, the World Bank projected 2011 growth would exceed 8 percent, he said, “but many things have since changed in the Arab world and internationally, which have resulted in a severe retraction of the economy.”

He added: “This has not been a good year for Arab assistance to the Palestinian people. Less than 20 percent of what was promised has been delivered. I will be very delighted to see growth of 5 percent this year.”

Mohammad Shtayyeh, president of the Palestinian Economic Council for Development and Reconstruction (PECDAR), agrees with that grim assessment.

PECDAR, with the capacity to spend $100 million annually, oversees infrastructure development in the Palestinian territories and is also engaged in specific activities like microcredit for women.

“You see new buildings rising in Ramallah every day, because 32 banks have their headquarters here, the president sits in Ramallah, and 1,200 NGOs are here,” he said. “But this money is generated from outside the West Bank. Ramallah is not really the model for development. There is very little economic activity in the rest of the area.”

Shtayyeh, who was minister of public works and housing up until a few months ago, noted that Palestinians have no access to the entire Jordan Valley, which comprises 18 percent of the West Bank’s total land area.

“That’s where agriculture is the most important sector, yet it’s heavily dominated by agriculture cultivated by settlers who deny access to Palestinians,” he said.

In addition, 62 percent of the rest of the West Bank is under direct Israeli control. “There isn’t any development in this area. You need to get a permit to do this or do that from the Israeli military governor, and they usually don’t give permits for this sort of thing,” he said.

“Going to the United Nations will move the issue forward politically, because it will actually help us get membership in new venues. For example, we will become full members of the World Bank, the IMF and all economic and political institutions. On the ground, this is not going to change much. Things will not

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be dramatic immediately, but you need to break the Israeli occupation first and get rid of it in order for the Palestinian economy to function.”

And that won’t happen a moment too soon for Shtayyeh, who said that while Israel exports around $4 billion in goods and services to the Palestinian Authority each year, the PA’s exports to Israel come to only $350 million to $400 million.

“This month, the Palestinian Authority will not be in a position to pay its salaries,” he said. “Our minister of finance had to borrow $1 billion from commercial banks, and up to $200 million in arrears to the private sector. The situation is already really difficult, and the budget crisis has nothing to do with us going to the United Nations. It’s been here for quite some time.”

Abu Libdeh said the Paris Protocol of 1994 specifically regulates Israeli-Palestinian economic activity.

“Unfortunately, this protocol hasn’t been fully respected by the Israeli side, the result of which is that our economy suffers greatly from its inability to grow in accordance with its potential,” he explained. “Without very significant measures from the Israeli side to relax their firm hand on the Palestinian economy and some of their so-called security measures against imports and exports, we will not see serious economic growth — even if we manage to get U.N. backing for the creation of a Palestinian state. On the contrary, some members of the Israeli government have been threatening that if we go to the U.N., they will collapse the Palestinian economy.”

Some members of the U.S. Congress, too, have warned that if the vote goes forward, the United States will cut off all economic assistance to the Palestinian Authority.

“Any penny less than what was promised now will have very serious repercussions on us,” Abu Libdeh warned. “I think the U.S. should weigh its options. If Congress does pass that law and stops its assistance to the Palestinians, it will only result in the deterioration of the well-being of the people, and this will lead to a shifting to the right.”

Mohammad Mustafa, chairman of the Palestine Investment Fund, said the $200 million contributed annually by the United States represents a fraction of the funding that the PA receives. Most of its funds come from Europe, Japan and the Arab world.

Even so, he said, “the loss of this money would obviously have a negative impact on the Palestinian Authority’s finances. It’s not something we’re looking forward to. My feeling is that at the end of the day, the U.S. will understand and appreciate the Palestinian point of view, and therefore we hope they will do the right thing.”

Mustafa, who’s originally from the town of Tulkarem, explained that the Palestine Investment Fund (PIF) is a publicly owned fund with around $870 million in assets under management.

“Our main objective is to invest — along with our partners in the Arab world — in strategic sectors in Palestine: real estate development, the energy sector and telecommunications,” he said.

Mohammad Mustafa, chairman of the Palestine Investment Fund, which is publicly owned and has around $870 million in assets under its management, says that the fund’s main objective “is to invest — along with our partners in the Arab world — in strategic sectors in Palestine: real estate development, the energy sector and telecommunications.”

Among other things, the PIF took the lead in helping to establish a second mobile operator, Wataniya Palestine, back in November 2009. Qatar-based Qtel is the majority shareholder in Wataniya Telecom, which in turn owns 57 percent of Wataniya Palestine.

In less than two years, Wataniya has grown to 415,000 subscribers in the West Bank; it’s preparing to expand to Gaza in early 2012.

But Mustafa complained that it took three years to win approval for radio spectrum allocation and importation of mobile telecom equipment from Israel’s Ministry of Communication.

“Palestine’s economic development has been undermined and constrained by the existing political arrangement. It’s been very limited in terms of creating job opportunities and employment,” said Mustafa, who spent 23 years in the United States — 16 of them at the World Bank. “As a result, what we have today is two-fold: a government with a high budget deficit, and a very high unemployment rate.”

At present, that jobless rate stands at 17 percent in the West Bank and 35 percent in Gaza, translating into overall unemployment of 24 percent.

“You cannot create sustainable economic development and strong private-sector investment under occupation,” Mustafa said. “There’s very high political risk and there’s no control of borders, including crossing points with neighboring countries like Egypt and Jordan. The Palestinian Authority has no control over ports and airports, which makes the movement

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September 2011

Religious Tourism Holds Unrivaled Promise for Palestinians Home to the world’s oldest city (Jericho), the birthplace of Jesus Christ (Bethlehem) and the Tomb of the Patriarchs (Hebron), Palestine has unrivaled potential for religious and archaeological tourism — yet realities on the ground are keeping potential travelers and investors away.

Kholoud Daibes, the country’s minister of tourism and antiquities, said tourism last year generated revenues of around $900 million, or 15 percent of Palestine’s GDP. “That gives you an idea how it would be if the political situation were stable, if we had control of our borders, if we had an airport gateway with the possibility of welcoming tourists directly,” she said. “These are the ABCs of any tourism destination, which are lacking here. It is very challenging for us and also for the private sector to develop tourism with all these restrictions on movement and limited control over our cultural and historical sites.”

In 2007, the Ministry of Tourism reported only 400,000 visitor arrivals. Last year, with the easing of Israeli-Palestinian tensions, arrivals skyrocketed to around 2 million. Yet maintaining or even increasing that level requires political stability.

“Most of our tourists spend only a few hours or a day on the Palestinian side. We are trying to increase the length of that stay,” explained Daibes, who joined the government in March 2007 and for a time was also minister for women’s affairs. “There has been a significant increase in overnight stays. We hope we can sustain that growth this year.”

Traditionally, the main source of tourists to Palestinian holy sites was Western Europe (Germany, France, Italy and Great Britain) and the United States. But in the last few years, that’s changed — and now Palestine’s top source of tourism is Russia, followed by Poland and other former communist countries.

“For many years, these people have not been able to travel, and now they’re open and there’s big demand,” Daibes said. “And once there’s peace and political stability, we will be open for people from Muslim countries as well. There’s such big untapped potential.”

Daibes was speaking from Bethlehem, which is visited by 80 percent of all tourists to Palestine. The birthplace of Jesus Christ, Bethlehem is also home to the Ministry of Tourism — making that ministry the only one not headquartered in Ramallah.

A continued source of frustration is the Israeli military authority does not allow Israeli citizens to travel into Palestinian terriortory, which limits tourism dollars. “Most of our tourists come through Tel Aviv. Since there is no direct access, tourists have to come through another country, in this case, Israel,” she said. “Also, Israelis are not allowed to enter into Palestinian territory. For example, groups cannot enter if the guide is an Israeli. This violates our agreement to guarantee access and freedom of movement for professionals working on both sides.”

She added: “Most of the tourists who come to the Holy Land visit both sides. Yet our share of the tourism revenue is only 5 to 7 percent. They spend only a few hours on the

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Palestinian side. This is a very unfair situation.”

One bright spot is the dramatic growth in hotel infrastructure. Within the last four years, said Daibes, the number of hotel rooms has doubled to about 5,000. The main hotels are in Ramallah, Bethlehem, Jericho and Gaza.

“This shows that the private sector is ready to invest, but there are no mega-projects in tourism,” she said. “Some projects are in the planning stage, especially on the shores of the Dead Sea, but they cannot be implemented under the current situation.”

Palestine is home to the birthplace of Jesus Christ and the Church of the Nativity in Bethlehem, above, as well as the world’s oldest city in Jericho, bottom photo, and other religious landmarks that attracted some 2 million visitors last year, although the government’s tourism revenue is still only a fraction of what their Israeli counterparts generate from visits to the Holy Land. Photos by Larry Luxner.

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of people and goods extremely difficult.”

In addition, he said, “we work with foreign companies who want to come and see how things look like and do their due diligence. It’s very difficult to get visas for them, especially for people of Palestinian or Arab origin.”

Abu Libdeh said the potential if these difficulties were removed is tremendous: “This is a country where many projects are needed, and because of the fact that we have special arrangements with many other countries, Palestine could become a hub for producing high-quality goods. We have a very skilled and educated labor force.”

“There are people who make money out of war, and people who make money out of peace,” Mustafa says. “I think there are very good opportunities here in Palestine. Things are calm, so the environment is actually good. American businessmen can invest in many industries: manufacturing, vegetable products, textiles, real estate development, tourism. It’s just that people are very frustrated because of the lack of political progress. The occupation has been ongoing for 44 years, and people would like to see the end of it. The issue is not salaries, it’s dignity.”

A wave of construction has swept Jenin, one of the largest towns in the northern West Bank; however, acAnother issue is the boycott encouraged by some overseas cess to roads and Israeli checkpoints have also stifled development. Palestinians say that without a political activists of products manufactured or grown in Israeli settlements solution, they won’t be able to sustain the economic strides they’ve made in recent years. in the West Bank to protest that occupation. Abu Libdeh confirmed that the PA actively boycotts products made under such conditions “The number of Palestinians working in Israel came down from 200,000 at its and strives to ensure that those products are not sold in the areas it peak to around 60,000 now, and between 20,000 and 25,000 of them are working controls. in settlements,” said Mustafa, noting that the jobs Palestinians once had in Israeli “In spite of the fact that Israel does not fully respect the Paris Protocol, we cities and kibbutzim have since been taken over by Thais, Romanians and other intend to continue respecting and adhering to it, meaning that Israeli products will be welcome in our market, but that settlement-made products are forbidden. foreigners.

“Obviously, our people don’t go to the settlements because they enjoy it, but Those Palestinians trading in Israeli settlement products will be taken to court, because they’re so desperate they’ll look for any job. That’s a measure of their according to the law.”

In addition, strictly enforced Israeli regulations on the importation of materials desperation,” Mustafa said. “If the Palestinian economy were allowed to develop, needed for development, like fuel oil and certain dual-use chemicals, has limited there would be no need to work in Israel or their settlements.”

According to a recent World Bank annual report, “Ultimately, sustainable the ability of Palestinian companies to grow and prosper. At the same time, economic growth can only be underpinned by a vibrant private sector. The latremittances from Palestinian laborers working in Israel have declined sharply ter will not rebound significantly while Israeli restrictions on access to natural in the 10 years since security restrictions were imposed after the violent intifada resources and markets remain in place. ” uprising of 2000.

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“We cannot wait indefinitely while Israel continues to send more settlers to the occupied West Bank and denies Palestinians access to most of our land and holy places, particularly in Jerusalem. Neither political pressure nor promises of rewards by the United States have stopped Israel’s settlement program.”

Abbas added: “Contrary to what Prime Minister Benjamin Netanyahu of Israel asserts … the choice is not between Palestinian unity or peace with Israel; it is between a two-state solution or settlement-colonies.”

“Netanyahu has not really been a partner in peace, and he was never interested in the peace process. He just talks about security, security, security,” charged Mohammad Shtayyeh, president of the Palestinian Economic Council for Development and Reconstruction. “I would like to see an Israeli leader who is ready to stand up and say, ‘I’m ready to end the occupation of 1967.’ This is the kind of leader I’d like to see, not one who plays with words.”

So would Abu Libdeh, who said the U.N. resolution is absolutely essential in the face of stepped-up settlement building by Israelis in the disputed West Bank, which is home to some 2.6 million Palestinians and nearly 300,000 Jews living in 185 settlements. Much smaller Gaza has another 1.6 million people — virtually all of them Palestinians — crammed into a strip of land measuring only 360 square kilometers.

If the vote to admit Palestine as a member state

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fails in the U.N. Security Council as expected, it’ll be because President Barack Obama has promised a U.S. veto. And if that happens, warns Abu Libdeh, it won’t be good for anyone.

“We will witness a gradual rise in poverty, but I warn against Americans holding the Palestinian food basket hostage in accordance with what Israel likes,” he said. “The Palestinians have gone out of their way to accommodate Israel to reach a peace treaty. Unfortunately, Israeli society is moving toward the right, and the current existing government is incapable of moving forward because they don’t believe in peace.

Look at all of Netanyahu’s speeches. This is not a cabinet you can make peace with.”

Abu Libdeh added that Israel’s Knesset should redirect money that would otherwise be spent on building West Bank settlements to marginalized Jews and Arabs living within the pre-1967 borders. Those funds could also be used to ensure more affordable housing within Israel proper, addressing an issue that drove tens of thousands of Israelis to the streets this summer to protest the high costs of living.

“The current crisis in Israel is encouraging some fanatical leaders within Israeli society to call upon Israelis to settle in the West Bank because it might be cheaper. This may result in accelerated settlement activity, which will eventually make it almost impossible to have a Palestinian state, and this is going to be catastrophic for Israel too.”

Abbas says that all arguments lead to the same conclusion: Palestine deserves its own state, which in the

end would also guarantee Israel lasting security.

According to Wafa News Agency, Abbas recently told visiting Norwegian Foreign Minister Jonas Gahr Store that going to the UN “does not mean abandoning negotiations, which remains the first choice for the Palestinian leadership.”

“We have the capacity to enter into relations with other states and have embassies and missions in more than 100 countries. The World Bank, the International Monetary Fund and the European Union have indicated that our institutions are developed to the level where we are now prepared for statehood. Only the occupation of our land hinders us from reaching our full national potential; it does not impede United Nations recognition,” he wrote in the New York Times.

“It is important to note that the last time the question of Palestinian statehood took center stage at the General Assembly, the question posed to the international community was whether our homeland should be partitioned into two states. In November 1947, the General Assembly made its recommendation and answered in the affirmative.

“Shortly thereafter, Zionist forces expelled Palestinian Arabs to ensure a decisive Jewish majority in the future state of Israel, and Arab armies intervened. War and further expulsions ensued,” Abbas added. “Minutes after the State of Israel was established on May 14, 1948, the United States granted it recognition. Our Palestinian state, however, remains a promise unfulfilled.”

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