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The economic mirage in the West Bank - Ramallah

Middle East Monitor

MEMO, February 25, 2011

Ramallah in the West Bank is seen as a beacon of economic success and the symbol of economic development as the Palestinian Authority has pursued peace with - Israel. As a sprawling metropolis has begun to develop and the sound of construction can be heard echoing across the city, Ramallah is viewed as evidence of economic progress in the West Bank. This is despite the fact that the West Bank remains in the grip of a military occupation and is stifled by checkpoints, settler-only roads and the apartheid wall. The economic strangulation of the whole West Bank has worsened as Israeli "security" incursions increase and illegal settlements thrust deeper into occupied Palestinian territory. With the growth of industry in the city, Ramallah has become an economic mirage oft cited by Israel's supporters against criticism of the occupation.

Peddling the myth of economic peace

During a recent Foreign and Commonwealth Office questions session in the House of Commons, Conservative MP James Clappison cited the economic development of Ramallah as an example of the prosperity in the West Bank and a sign of improvement. Foreign Secretary William Hague responded by pointing out that Ramallah is not representative of the overall situation in the occupied West Bank.

Politicians such as Clappison and Louise Ellman (Labour) often seek to justify and defend Israel's continuing occupation of the Palestinian Territories by citing Ramallah as an example of what happens with improved relations between the Israeli government and the Palestinian Authority. Yet whilst Ramallah is used as an exemplar in this way, it belies its own fortunes; alongside the construction of new homes and buildings stand refugee camps, home to Palestinian refugees from the Nakba of 1948 as well as the 1967 war. However, internationally, politicians have pedalled the message that peace in the region will really take root with the development of economic harmony between Israel and Palestine in the guise of the Palestinian Authority (based in Ramallah) as the main interlocutor in the stalled peace process.

During Tony Blair's premiership and in the run up to the elections in Palestine of 2006, the G7 nations called for greater economic co-operation between Israel and the Palestinian Authority. Ed Balls MP, then a minister in HM Treasury, said that he believed that "economic regeneration [would be] a catalytic agent for peace". At the time there were calls to rebuild infrastructure in the West Bank, create jobs and open borders in order to regenerate the Palestinian community. Since then, Israeli Prime Minister Benjamin Netanyahu has called for an "economic peace" to exist between Israel and Palestine. This would, of course, provide a convenient substitute for a real agreement between the two parties, sparing Israel the trouble of having to address the numerous abuses it commits with its occupation. The hope of many in the international community was that economic development would create a prosperous economy which would alleviate the social problems facing the Palestinians living under the illegal occupation. Yet Israeli restrictions on such development have continued even though the theory is that economic regeneration will act as a driving force for peace and social justice. The Palestinian economy is one of the many victims of the illegal occupation of the Palestinian Territories, despite claims that industrial and commercial development in Ramallah is much more than a facade.

Ramallah's bubble

Ramallah is, in fact, a bubble within the Palestinian economy of the West Bank just waiting to burst. As the home of the Palestinian Authority and the Palestinian Legislative Council, as well as numerous government and political buildings, Ramallah has been the beneficiary of international financial investment. For example, £112 million has been given by the Britain's Department for International Development between March 2008 and 2011 to fund a general government and civil society project. With the growth of Ramallah as the political and administrative centre of the West Bank the city has attracted a growing population with people moving there from across the West Bank in search of work. This population shift has led to the growth of the private sector so that Ramallah has slowly but surely become the economic centre of the West Bank. New buildings have cropped up across the city to house newcomers, businesses and other commercial and financial ventures. Indeed, visitors to the city in July 2010 commented that the growth in construction since their previous visit post the second intifada inspired comparisons with the building boom in the United Arab Emirates.

Although much of the economic development is funded by international support, it is significant that Ramallah has seen large investment from expatriates who have poured money into the city. It is this expatriate investment which is the catalyst for the construction projects that have gathered pace over recent years. Walking around Ramallah, one is faced with features found in many other modern cities, such as bowling alleys, hotels, restaurants and cafes, as part of the new cosmopolitan feel that the city is encouraging. The international luxury hotel chain Movenpick expects to open its first Palestinian branch in Ramallah.

Nevertheless, the mayor of Ramallah noted in an interview with the American Task Force of Palestine that whilst the growth is welcome Ramallah is not the "new Jerusalem", and herein lies the problem. While the city appears to come into its own, the hope of the Palestinian people remains that Jerusalem will be the future capital of a Palestinian state. Ramallah, though, remains separated from Jerusalem by the network of Israel roadblocks and checkpoints, the apartheid wall and other Israeli incursions into the OPTs which make travel between the two cities very difficult. What should be a ten-minute journey between the two cities is now subject to so many barriers placed by the Israeli "partners for peace" that the trip can take many hours, dependent largely on the whims of the soldiers at the checkpoints.

In the aforementioned interview Ramallah's mayor described the occupation and settlement of the West Bank, illegal under international law, as a hindrance to the economic growth of the city; the "political situation" inhibits growth. However, displaying the resolve present in the city she noted that despite the occupation the Palestinians would continue to encourage the growth of the city and not allow the occupation to stifle them. The occupation has undoubtedly hindered growth beyond Ramallah's boundaries; businesses cannot trade with other parts of the West Bank because transport between cities, towns and villages is hampered by the wall, the settler-only roads and the numerous checkpoints and roadblocks. Inevitably, as exports and imports are rendered nigh on impossible by the occupation, so too are business and commercial aspirations stifled, with a calamitous effect on the workforce.

Thus, Ramallah remains in its own economic bubble and while the International Monetary Fund expects the economy in the West Bank to experience an 8 - 10 percent growth, the real time effect will be minimal as poverty remains high, with an estimated 60 per cent of the population living below the official poverty line.

The economic truth

In a World Bank ranking of 156 countries relating to the ease of doing business, Palestine was ranked at 135. Unsurprisingly, the World Bank reported that Palestine remains one of the most difficult countries for business, despite some growth in the economy of the West Bank (boosted mainly by Ramallah's statistics). Despite the huge natural resources available in the West Bank the agricultural sector amounts to only 17 percent of the labour force; 68 percent is based in the service industry. The World Bank described the illegal occupation of the West Bank as having created "a fragmented set of social and economic islands or enclaves cut off from one another" which has choked the Palestinian economy. It noted that the "apparatus of control... affect(s) every aspect of Palestinian life including job opportunities, work and earnings".

As a result of the continuing occupation the Palestinian economy has remained solidly reliant upon international aid. In 2008 foreign aid investment was estimated at approximately $1.8 billion; that's around $487 per Palestinian per year in the West Bank. With the Palestinian Authority one of the main employers in the Occupied Palestinian Territories, a huge number of people are reliant upon the international "development" aid which funds the PA to pay their wages. Though there have been numerous calls for the PA to develop its own funding sources, it remains a victim of the occupation as much as the rest of the West Bank economy, unable to focus on its own domestic economic agenda as it pursues a peace settlement and negotiations with Israel, its officials "salary slaves" beholden to the occupying power. The West Bank economy remains in the grip of the Israelis who exert full control over the occupied territories. In November 2010, the Portland Trust reported that the World Bank had yet again increased its funding to the PA by $40 million. Yet despite the input of international aid the West Bank economy remains a casualty of the occupation.

Poverty in the West Bank - crisis point

In June 2010 the European Commission funded a report by Save the Children which declared that some of the poorest areas in the West Bank were worse off than those in the Gaza Strip, which has been blockaded illegally by Israel (with Egyptian help and Western support) ever since the election of Hamas in 2006. Despite the on-going blockade and the destruction caused during Israel's infamous Operation Cast Lead which is as yet unrepaired, some parts of the West Bank have been so severely damaged by Israel's occupation that children living in these areas face harsher living conditions than their peers in Gaza. The worst areas according to Save the Children were those in Area C - the area of the West Bank under direct Israeli administrative control; infrastructure has been damaged and the Israeli authorities have refused permission for its redevelopment.

As illegal settlements expand across the Occupied Palestinian Territories the land left to the Palestinian population must rely on virtually non-existent water supplies, as Israel has used its control of the water table to divert the supply and availability of water away from Palestinians towards its own population and the illegal settlers. Israel has also imposed restrictions on land use which means that only minimal agriculture can be developed. Agricultural produce is then faced by export restrictions imposed by the occupying forces. It is the lack of access to fresh agricultural produce which was suggested as a reason for the malnourishment of children in Area C in the EC-funded report. Save the Children commented that a lack of fresh food was the reason for so many Palestinian children being ill, which is ironic given that the region is extremely fertile and has an abundance of agricultural produce; Israel is one of the EU's main trading partners for agricultural produce despite its appalling human rights record. The favourable EU-Israel trade agreement allows Israeli produce favourable import export tariffs, even when a great amount of produce appears to come from illegal settlements; companies such as Agrexco maintain dominance over the fruit and vegetable market in the EU. Yet in the Save the Children study 44 percent of the children suffered from diarrhoea and nearly 50 percent of the families received no international humanitarian assistance to combat poverty or ill-health. The survey estimated that 79 percent of the population in Area C lacked sufficient food; the figure in the Gaza Strip is 61 percent.

As homes, schools and roads remain unrepaired due to the Israeli authority's refusal to grant building permits and permission for repair work, the infrastructure across the West Bank continues to deteriorate. It is Israeli whims which have led to a purely man-made poverty across the West Bank and it is more or less condoned by the international community. While Israel strangles the wider Palestinian economy and maintains its military occupation, governments in the West point ostrich-like to Ramallah as a beacon of economic success, concluding that if Ramallah has managed to develop so effectively then the wider West Bank situation cannot be as bad as critics claim.

This is where the danger lies, because the development of Ramallah is part of a massive deception reported faithfully by the media and cited by politicians as the model. It should be obvious that this cannot be a true reflection of the overall situation in the West Bank as long as areas of the West Bank are worse than those of the "prison camp" of Gaza, as British Prime Minister David Cameron described it last year. It is the myth of economic success which conceals the truth - Israel is continuing to inflict its torturous occupation by every which way it can, including the destruction of the Palestinian economy.

Ramallah is a useful mirage for the Israeli authorities but behind the façade of economic peace and stability the Israeli government continues to colonise the land it is occupying illegally. The international community has been blinded by the limited economic success of Ramallah, while the rest of the occupied West Bank and Gaza Strip remains constricted in the most brutal way imaginable.
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:: Article nr. 75351 sent on 26-feb-2011 05:06 ECT


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