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A Tale of Two Palestine` by Yousef Munayyer
By Yousef Munayyer
Palestine Center Brief No. 189
5 January 2010

While most would point out the differences between Gaza City, the impoverished and destitute administrative center of the Hamas-run Gaza Strip, and Ramallah, the burgeoning administrative center of the Fateh-run West Bank, there are important commonalities between what seem to be diametrically opposite poles.

A common misconception, which has gained considerable attention as of late, is that management or governing styles of different parties are responsible for the stark differences in the realities on the ground. This certainly plays into the narrative that we often hear emanating from Washington about engaging one Palestinian party and not the other. However, the fact of the matter is that the most important thing both Palestinian locales have in common is the underlying reason for their differences: the role of external factors in their economic conditions.

Gaza City, the largest city in the Occupied Palestinian Territories, is home to about 400,000 Palestinians. The densely populated strip of land that surrounds the city and takes its name, is home to over 1.5 million Palestinians. Eighty percent of the inhabitants of Gaza are refugees and a similar number rely directly on food aid for daily sustenance. While this number has historically been high since the creation of the refugees by the state of Israel in 1948, it has never been that high.

The plight of Palestinians in Gaza has been exacerbated in recent years due to Israeli restrictions on the Strip. This began after the election of a Hamas government in the Palestinian Legislative Elections in 2006 and accelerated in 2007. The immediate Israeli and international response was to cut off funds to the Palestinian Authority (PA). International players dried up aid and the state of Israel froze Palestinian tax revenue, preventing it from reaching the Palestinian governing body.

Imports and exports were likewise severely curtailed because of the siege. The Palestinian National Trade and Development Organization, PalTrade, reported that `imports into and exports from the Gaza Strip before the closure in 2007 reached a monthly average of 10,400 and 1,380 truckloads, respectively. This declined to about 2,834 truckloads of imports and no exports after the recent military operations. Immediately after the operations, there was only one isolated instance in which exports of flowers were allowed from the Gaza Strip in March 2009. Some 134 truckloads of cash crops were exported in total between June 2007 and May 2009.`

As the siege tightened, we began to see more dramatic numbers and facts reported by a wide range of international organizations and NGOs. In 2007, the International Committee of the Red Cross called on Israel to `lift the retaliatory measures which are paralyzing life in Gaza`. In 2008, Amnesty International reported that `Gaza`s fragile economy, already battered by years of restrictions and destruction, has collapsed. some 90 percent of industry has shut down.`

Then the brutal 22-day campaign termed `Cast Lead`, which required hearts of cold steel to perpetuate, further decimated Gaza. Along with the significant number of Palestinians killed, over 1,400 most of whom were civilians, the attacks leveled a devastating blow to an economy that was already in tatters. The attacks partially or completely destroyed 700 private sector establishments.

In 2005, for example, the furniture, garment and processed food industries in Gaza employed 6,500, 25,000 and 2,500 people respectively and included 600, 660, and 100 businesses respectively. After `Cast Lead,` the employment figures dropped to 70,110 and 144, while the number of businesses dropped to 26, 10, and 16. Exports from these industries which were all triple-digit numbers in 2005 dropped to zeros across the board after last winter`s attacks.

Yet just as Gaza`s economic woes can be credited to the Israeli siege and the destruction levied during `Cast Lead,` Ramallah is also indebted to external factors for its apparent successes.

Today, Ramallah has become known for its bars, nightclubs and cosmopolitan feel. Internationals and locals, working for outfits funded by hordes of donor dollars (many from the U.S.), are pouring the shekels they earn into nights on the town.

It wasn`t always like this in Ramallah. Just a few years ago, after Hamas was elected to the PA, Palestinian civil servants, teachers and bureaucrats in the West Bank and Gaza were equally out of luck and out of money, as Washington-led sanctions prevented the PA from meeting payroll for months on end. Things started to change in mid-2007, however, when the Hamas-led PA dissolved and Fateh took control of the PA`s institutions in the West Bank.

In mid-2007, to avert a serious and immediate financial crisis President Bush wanted to send funds to the now Fatah-led PA, but he needed to assure Congressional hawks that the funds would not end up used for violence or in the hands of Hamas or lining the pockets of officials often blamed for corruption. A trusted caretaker was needed and one with an accounting background was preferred.

Enter Salam Fayyad. The western educated former World Bank and IMF man, with no discernible political experience, took over as the newly appointed Prime Minister of the PA. In Washington, few things say passivity like a clean-shaven be-speckled accountant. Presidential waivers began to be issued to circumvent the sanctions levied against the PA by AIPAC-sponsored Congressional legislation . Every 6-months, a waiver; every 6-months an injection of funds to the new PA based in Ramallah, and till today President Obama continues this trend. Every donor dollar coming into the PA goes through Ramallah, and Ramallah, more than any other town in the West Bank, has felt the effects of this.

But despite the growth that donor dollars have produced, one can`t help but notice how artificial the growth is. Economic studies on this issue tend to come up with the same conclusions. Yes, there has been growth in the West Bank, but (and this is a big but) that growth is due largely to an economy kept afloat by donor dollars and a relaxation of Israeli closures.

A recent IMF report indicates that expenditures in the PA budget for 2010 is $2.9 billion, $1.9 billion of which would not be covered by domestic revenue and would be financed by external support. The report also states that there has been an increase of 6 percent in real Gross Domestic Product (GDP) in the first quarter of 2009 as compared to the first quarter in 2008.

In the U.S., many have clung to bits and pieces of reports like this, and declared victory for the policy of propping up one Palestinian party and sidelining the other. Headlines of articles on the issue declare unprecedented economic growth. Realistically, however, this would be like declaring unprecedented drops, from the previous year, in the number of homeless in New Orleans two years after Hurricane Katrina. Without controlling for the drastic conditions that existed beforehand, it`s hard to call this growth. Years of occupation, restrictions, closure and high unemployment have left Palestinians below zero. But I guess going from negative 20 to negative 15 is still growth.

A finer reading of the economic reports reveals the truth behind the numbers in the West Bank. Assumptions of future growth are based on `a continuation of the process of lifting restrictions on movement in the West Bank and the blockade on Gaza`.

Perhaps the bias in reporting on the economic realities is in part based on a western desire to have their `secular` partner in Palestine succeed. Washington is, after all, more likely to cooperate with the pole where one can make time for happy hour, than the one where the most important time is the call to prayer.

Yet, regardless to the perceptions from Washington, Ramallah, Gaza or elsewhere about the parties involved, the reality is that both administrative centers are not in control of their destinies. Rather, what happens to the people of Palestine today, as in the past, remains in the hands of others.

In sum, the successes or failures of both Gaza and Ramallah, like all occupied Palestinian locales, are overwhelmingly determined by Israeli or American actions and intentions and not the actions of the respective regimes. This is not to absolve Hamas or Fateh of their responsibilities to the people they govern, but rather this puts their apparent successes and failures in the proper context: that is, the context of an ongoing illegal Israeli occupation that ultimately has more control over the daily lives of Palestinians than any of their representatives.

Yousef Munayyer is Executive Director of the Palestine Center. This policy brief may be used without permission but with proper attribution to the Center.

The views in this brief are those of the author and do not necessarily reflect those of The Jerusalem Fund.

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