A group of people well-informed on Middle East issues (not just the usual suspects) has written an open letter to the Quartet asking them to dismiss Tony Blair as their special Envoy. Apart from the havoc in Iraq, the letter-writers say his success in improving the economic plight of Palestinians has been negligible. Tony Blair’s office replies.

“The PA can say anything it wants and no one will listen because it’s not providing an alternative” says a young Palestinian waiting in the dark for the bus to Sodastream. If the issue at the heart of this is the quest for personal dignity then earning a good wage in a decently-run factory in part sets off the humiliation imposed by the checkpoints and harassment. The same checkpoints and barriers make developing the West Bank economy impossible.

For the last few years the US and EU have been throwing money at various agencies in Palestine/Israel in the hope that this will somehow ‘do something’ to change the stalemate. With clear anger, Sam Bahour explains that the occupation crushes all efforts to escape the poverty, humiliation and dependence enforced on Palestinians. Gideon Levy argues that as sanctions worked against Iran, so they will against Israel.

International energy for a just Palestinian-Israeli peace is expended on everything but the one thing that matters – ending the occupation. The PA, under then-PM Salaam Fayyad’s direction, worked hard to produce the state institutions demanded by the West. So what? As the World Bank report, and this FMEP report, both make clear the Palestinian economy cannot grow while it is squeezed within an inch of its life by Israel’s restrictions, regulations, checkpoints, barriers on movement, and so on. The claim that all these are imposed in the name of security is laughable.

It seems so simple: boost the Palestinian economy, invest in its infrastructure, grow towards Palestinian economic independence – result! For a decade the US and EU have been pursuing this strategy even though they know, as the World Bank has said, that the Palestinian economy is shrinking due to restrictions on the movement of people, material, products, movement which is the essence to economic growth.

Of course, the message from the World Bank, in its report on Area C, was nothing like so rude and direct. But that is its message. Although Israel is committed to the capitalist model, that model requires the free movement of capital and labour, both of which Israel prohibits in the oPt. This was thought to be an unfortunate byproduct of its security concerns. Now it seems more like a purposeful attempt to destroy any hope of a functioning Palestinian economy.

In the recent Palestinian protests about high prices both President Abbas and PM Fayyad were blamed. But, as these articles from Bloomberg and the Carnegie Middle East Center show, there is little either man can do given dependence on foreign donors, with trade between outside markets and the West Bank and Gaza trip strictly limited by Israeli authorities and internal movement choked in the name of Israel’s security.

The Paris Protocol, an annex of the Oslo Accords which deals with economic relations between Israel and the oPt, has quickly replaced PM Fayyad as the focus of the West Bank protest. While the malfunctioning Palestinian economy remains the target of protesters’ anger, the cause is now seen as the governance of economic relations with Israel as dictated by the Paris Protocol. 4 articles.

The Palestinian economy has neither the state-power of China-style development nor the freedoms of other ‘Asian tigers’ – which makes the advice of the World Bank, 2nd, pretty pointless. The PA’s financial dependence makes it a weak actor in the economy. But IT is one industry that does not depend on freedom of movement, hence the hopes that Ramallah might become an IT hub in the region (Ist).

Political independence for Palestinians depends on economic independence. But with their products effectively boycotted by Israelis (1, Al Arabiya) and heavily dependent on donors and tax transfers from Israel (2, Bitter Lemons), the Palestinians’ economy needs a determined focus by their leadership.

Kieron Monks provides a strong critique of aid to Palestine which he characterises as ‘not sustainable development [but…] a permanent life-support system’, a critique he applies both to UNWRA support and widespread foreign aid more generally which is presiding over – and contributing to – a devastating collapse of the Palestinian economy.

Industrial free trade zones similar to those in Egypt and Jordan are planned for the West Bank as part of the peace process nominally underway between Israel and the Palestinians. The zones will bring jobs and economic development to the Palestinians, the logic goes, soothing the economic grievances that might otherwise stand in the way of a comprehensive deal.
Sam Bahour argues that, to the contrary, these “Economic Prison Zones” will reinforce Palestinian economic dependence on Israel while diverting labor and resources from more promising development venues.