Part in Israeli-Palestinian Direct Trade, As Well As in Palestinian Regional and Foreign Trade

Globalization 5 Imprisoned Ideas A Discussion of Palestinian, Arab, Israeli and International Issues Adel Samara 1998 Al-Mashriq/AlA’mil for Cultural and Development Studies Ramallah, P.O.Box 1010 West Bank 6 Imprisoned Ideas Globalization, the Palestinian Economy, and the ‘Peace’ Process 1. Introduction The so-called ‘peace settlement’ of the Israeli-Arab conflict took place during a period in which globalization (especially its economic aspect) was dominating international relations. Despite all the arguments that globalization is an international phenomenon, its effects and benefits are different in central and peripheral formations. While Western capitalist countries benefit from liberalization of trade, access to increased world markets, free movement of capital and goods (though not labor power), it means, for the periphery, a termination of the nation state’s power, restriction of its markets, and further blockades on its development.1 The effects of globalization on developing countries are already well known: in May 1996, at the ninth session of the UN Conference on Trade and Development (UNCTAD) “several leaders from developing countries described how globalization and liberalization had forced their local companies out of business and marginalized their economies”.2 Similarly, Tanzania’s President Benjamin Mkapa told UNCTAD that countries undergoing liberalization and privatization under World Bank/IMF-style policies had suffered heavy social costs, including job losses, cuts in health care and education, and instability.3 Despite these negative effects, some critics have argued that developing countries should seek to take advantage of changes in the world economy, “but they have to be discriminating in the way that engage with the world economy. They must liberalize their trade regime, but this does not mean they should not leave room for protecting their domestic economy ... They “Globalization has increased the power of the big corporations, but has eroded the authority of political masters, Swiss Finance Minister Kaspar Villiger, in The Third World Network, July 4 1996 ‘Backlash Grows Against Globalization’, in Third World Network, Aug 19 1996 ibid. See also, ‘New-Liberalization in Action’, in Third World Economics, May 16 1997, no. 161, p.5, “The privatization of Argentina’s state-held oil company- YPF- eliminated jobs that not long ago seemed so abundant that they could support any one who wanted work...Argentina is the country with the highest unemployment rate (17.4%) in the region” Globalization 7 must go for export-led growth, but this does not mean that there is no space for producing for their own markets. They need foreign direct investment, but this does not mean they should not build up their indigenous capability. There is need to modify the policy prescriptions for developing countries.”4 What is important here for the Palestinian context is that despite the experiences of many developing countries, the Palestinian Authority (PA) is categorically accepting and adopting the waves of globalization, with seemingly little awareness of any alternatives, nor of the experiences of other developing countries who have already gone down this road. 2. The Legacy of Direct Occupation The aim of briefly summarizing the policies imposed under Israeli occupation, and their effects, is not to make a historical survey. Rather it is to show that the main components of occupation policies are continued through the Oslo Accords, both in theory and practice. A few days after the Israeli occupation of the West Bank and Gaza Strip (WBGS) in 1967, the Israeli military governor, which was later called the Civil Administration (a change in name, but not in nature or role) started issuing military orders which would re-shape the lives of the Palestinians living in these two parts of Palestine, in accordance with Israel's Zionist ideology and its economic interests. Throughout the occupation, Israeli military orders on economic affairs have constituted 50 percent of all military orders which were implemented towards Palestinians.5 It was, and still is, the aim of the Israeli occupation to ‘adjust’ the economy of the Occupied Territories to fit in with the interests, needs and structure of the Israeli economy. This has been effected through military force. Accordingly, the relationship between the two economies was, in fact, a relationship of ‘armed’ and unequal exchange. The military orders started by cutting all relationships between the Occupied Territories and the world, making their economy captive to the Israeli economy. Israel became the source of export and import for the Gamani Corea, Third World Network, July 4 1997:2 Adel Samara, Israeli Obstacles to Economic Development in the Occupied Palestinian Territories (JMCC: Jerusalem, 1992); Israeli-issued Military Orders 1967-1992 (JMCC: Jerusalem, 1993) 8 Imprisoned Ideas Occupied Territories. This process enforced on all social classes the necessity of dealing with the Israeli economy, a policy which has, as intended, created a Palestinian social dependency on the Israeli economy. For the Palestinian working class, laborers became dependent on the Israeli labor market since Israel prohibited the Palestinians from building their own infrastructure. Accordingly, Israel became the main place of work for the growing labor force from the Occupied Territories, especially for the surplus labor power from the refugee camps and rural areas. Before Intifada started in 1987, there were nearly 165,000 such laborers working inside Israel. For the capitalist class, the only route open to them was to become agents, marketing Israeli products in the Occupied Territories. This was the main factor behind the evolution of a new comprador Palestinian class/faction, which replaced the factions who had been privileged under Jordanian rule. When some Israeli capitalists realized the profitability of investing in some sectors in the Occupied Territories’ economy, they did so jointly with Palestinians. This led to the evolution of the sub-contracted Palestinian capitalist class/faction, which dominated and even replaced the weak nationalist bourgeoisie. In doing so, Israel in fact annexed to its economy two of the three main classes of Palestinian society, the workers and the capitalists. Accordingly, the natural equation of labor to capital, which is found in most societies, has been deformed for the Palestinians in the Occupied Territories, since both working class and capitalist sectors became integrated separately to the Israeli center. The situation of the peasants was no different, considering that most of the laborers from the West Bank who worked in Israel were from rural areas (see below). Israel’s policy towards the Palestinian peasants in the Occupied Territories was as follows: Confiscating as much of their land as possible (more than 60% of the land, mainly the most fertile land has been confiscated or is under Israeli control) Prohibiting agricultural exports Globalization 9 Encouraging the peasants from the Occupied Territories to produce what is required by the Israeli market6 This policy led to more deterioration of the peasantry. Part of the surplus labor power emigrated to the oil-rich Arab regions. In the rural areas those harmed most were the independent and small producers many of whom lost land through land confiscation, or were unable to compete with crops produced by Israel or at least imported through it. The rest of the surplus rural labor power, who failed to find jobs in the local towns and cities, finally looked for work inside Israel. Fundamentally, the colonial Israeli occupation targeted the capture of land and had a clear policy for land confiscation, unlike the Palestinians.7 This policy works in harmony with the Israeli sub-policy of not giving Palestinians licenses to start productive projects in the Occupied Territories. The policy, which continued until 1990, reflected some changes in the Israeli conception of the mechanisms of dependency of the Occupied Territories’ economy on that of Israel. The new Israeli conception was that the economy in the Occupied Territories, after continuous shaping and re-shaping throughout the years of occupation, had reached a point at which it was unable to compete or de-link from the Israeli economy. So now by simple exchanges, such as requesting building licenses, Palestinians are automatically perpetuating dependency and integration with the Israeli economy. But what is at issue here is not just that industry is still weak, but that the PA’s industrial policy is still pointing in the direction of further entrenching dependency. To elaborate, the following is a summary of the main features of the Occupied Territories’ economy during the Israeli occupation: An Economy Without a Center: All of the Occupied Territories became a periphery for the Israeli economy. Every city and its district became related and directly dependent on the Israeli economic center. The city itself was nolonger a commercial or industrial center for its surrounding villages. A direct relationship was even created between Adel Samara, Iktisad Taht Al-talab. An Economy of Stand-By (Al-Zahra Publications: Jerusalem, 1989). Adel Samara, ‘The Palestinian National Movement: No Land Strategy’, News From Within, vol XIII no. 2, Feb 1997, pp.26-8 01 Imprisoned Ideas villages and the Israeli centers. Every economic sector and social class became related to the Israeli economy. The same is still true after the so-called ‘peace agreement’. An Economy

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