No deal of the century

Donald Trump  photo: Carlos Barria, Reuters

The US economic plan for our region leaves out key issues and key players, lacks sources of finance, and has no takers.

The deal of the century is ostensibly made to measure for US President Donald Trump: solutions that lay a solid economic foundation for the protagonists in the Middle East conflict will incline them towards political solutions, which will be postponed to a later stage.

Since its founding in 1994, the Palestinian Authority (PA) has not managed to graft a real economy onto its shaky political structure, corruption, and unsuccessful centralized management (except during the term of Prime Minister Salam Fayyad). Other factors were the PA's prolonged temporary status and the government and economic authority possessed by Israel. All-out conflicts like the second Intifada may have ended, but the security situation is still tense, and the controls and roadblocks are also a significant barrier.

In the neighboring countries, mainly Jordan, the Palestinians have been classified for decades as "refugees," and constitute an economic and social burden. The US plan correctly recognizes this problem, and therefore proposes general regional solutions.

The obstacles facing the US plan are many, and its chances of success appear especially poor.

1. The political obstacle: The Palestinians do not want it

The election of Trump as president and the cries of joy that issued from the Israeli right wing make it clear to the Palestinians that the era of Barak Obama (from whom the Palestinians also got nothing) had ended. When Trump kept his promise to move the US embassy to Jerusalem, relations between the Palestinians and the US were severed. The leaks from the plan, according to which that it did not directly mention a Palestinian state, sealed its fate. The Palestinians declared all-out political war against it.

Senior Fatah leader and former PA minister Ashraf al-Ajrami told "Globes" that the PA had received a great deal of aid from the donor countries, and that it had all gone to waste because of continued Israeli control in Area C, which contains most of the area in the West Bank and its land reserves. "We are supposed to build the economic infrastructure in these areas, including industrial zones and other infrastructure," he said.

al-Ajrami, who is also a party to the Geneva initiative, says that rebuilding the economy starts with control over the border crossings, the ability to trade freely with the world, the right to enact independent legislation, and so on. All of this can take place only in an independent state managing its own affairs. In other words, there is no chance of economic progress without ending the Israeli occupation in all of the West Bank and real Palestinian independence.

"We don't want to participate in a political project that is very bad for us, which ignores the refugee problem, portrays the problem of Jerusalem as marginal, and mentions neither an Israeli withdrawal nor the 1967 borderlines. Let Trump and the others go to hell with their money. First of all, we want our own country. Only then can the money solve problems," al-Ajrami says.

He therefore says that the Palestinians will cooperate with no part of this project, which destroys the international infrastructure for peace and undermines the legitimacy of all of the previous initiatives and decisions.

"The US is trying to buy us, but the Palestinians want honor and independence. Without this, nothing will move," he sums up.

The report in "Globes" that the plan contains a path to an independent state does not satisfy the Palestinians. They want to reverse the process - first a state and then money to rehabilitate the economy.

From a short-term internal Palestinians perspective, the plan is well-timed for PA chairperson Mahmoud Abbas. Opposing it is restoring a lot of the popularity that he has lost. His supporters are organizing demonstrations against the plan and trying to bring the color back to the cheeks of Fatah members and ordinary Palestinians in general.

The "moderate" Arab countries are ambivalent. On the one hand, they want to advance a solution to the conflict. Jordan and Egypt hope that this will help solve their own enormous problems. The Gulf states are weary of the political deadlock that divides the Arab world and weakens it against the Iranian threat. Palestinian opposition, however, debilitates this support. None of them, including Saudi Arabia, will be willing to go ahead unless the Palestinians enter negotiations - something that appears very remote at the moment.

2. The economic aspect: No financial resources

According to Yossi Beilin, one of the architects of the Oslo Accords, had the question of the financial resources for the plan been seriously addressed, the plan itself might have been taken seriously. In practice, however, the plan is not serious because it does not specify real financial resources, although it looks nice and the projects are interesting.

He also says that the plan "ignores" as he puts in, the biggest expense - compensation for the Palestinian refugees and the Jews who left Arab countries. The amount mentioned in the old Camp David negotiations was $30 billion at a minimum, amounting to $40 billion in today's terms. If the world has to choose between the Trump plan and a solution to the refugee problem, the money will go to the refugees. Beilin says that the plan was adapted to Trump's regular modus operandi - someone else will pay.

The Palestinians cite the classification of a large part of the money as "loans" as proof that the economic burden will eventually fall on them, and they will have to become beggars in order to repay the loans.

3. The political aspect: Israel in an election campaign

Elections are imminent. Prime Minister Benjamin Netanyahu and the Israeli political system have brought Trump's plan to a standstill. The plan was to present it early this year, including the diplomatic part, which has yet to be published, but it was delayed by the elections in April. The failure to assemble a coalition and the new elections scheduled for September are preventing Israel from discussing the matter, leaving Trump no choice other than to deal solely with the economic aspect. This is also moving in low gear because of the opposition that the Palestinians have manage to arouse among leaders of Arab countries.

Even if some progress is achieved at the economic workshop in Bahrain, the far-reaching diplomatic plan will not be presented before winter, following the formation of a government in Israel. This is also when the US election campaign swings into full gear. Experience shows that under these circumstances, US presidents do not have enough time to devote to such complex and difficult initiatives. The few efforts that were made were unsuccessful.

4. The Chinese were left out

Institute for Structural Reform founder and president Adv. Shraga Biran says that the US is making a big mistake by not including China in the plan. He explains that the Chinese, who depend on oil from Iran, Saudi Arabia, and Iraq in the Persian Gulf, have an absolute need for tranquility in the region. The Chinese will not allow such dramatic initiatives to go forward unless their interests are preserved.

According to Biran, the Chinese have invested more $1 trillion in the region over the past 15 years in what is called the "New Silk Road," and are therefore unwilling to be left out. This is liable to defeat the plan.

5. The Palestinian split: Ignoring the needs

In effect, the plan ignores the internal Palestinian split and Hamas's control over the Gaza Strip. The responses of Hamas and Islamic Jihad to the conference in Bahrain and the plan are much more extreme, even though the Gaza Strip needs economic reconstruction far more than the West Bank. This split is preventing the execution of many projects for which international financing already exists, such as desalination, power infrastructure, sewage, etc. For example, the planned railway track between the Gaza Strip and the West Bank is nothing but a dream (even without taking the Israeli position on the matter into account).

Nevertheless, this economic plan has a vision - mainly for the Palestinians, but also for the entire region - a kind of new Middle East, very specific, with precise cost calculations and tables summarizing the increase in GDP and the expected profits, and solid economic models. It gives a concrete portrayal of the potential, gives all those lacking hope, who are leaving the Gaza Strip and the West Bank for Europe, that there is another chance.

The plan includes conditions with political significance, for example control by the Palestinians over the border crossings and trade and economic independence. Israel will not be enthusiastic about these aspects, but they are essential for the existence of an independent Palestinian economy.

The plan will not happen tomorrow, it will not get underway, certainly not before the political plan is presented, but it gives the Palestinians a pleasing picture of making their land flourish. The US hopes that the seed will be planted, and that both the public and the decision-makers will see the potential and refrain from dismissing such a program out of hand. At the moment, this appears unlikely.

Published by Globes, Israel business news - en.globes.co.il - on June 24, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Donald Trump  photo: Carlos Barria, Reuters
Donald Trump photo: Carlos Barria, Reuters
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