A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Leuenberger, Christine; El-Atrash, Ahmad Article Building a neoliberal Palestinian state under closure: The economic and spatial implications of walls and barriers economic sociology_the european electronic newsletter Provided in Cooperation with: Max Planck Institute for the Study of Societies (MPIfG), Cologne Suggested Citation: Leuenberger, Christine; El-Atrash, Ahmad (2015) : Building a neoliberal Palestinian state under closure: The economic and spatial implications of walls and barriers, economic sociology_the european electronic newsletter, ISSN 1871-3351, Max Planck Institute for the Study of Societies (MPIfG), Cologne, Vol. 16, Iss. 2, pp. 21-31 This Version is available at: http://hdl.handle.net/10419/156051 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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(Brenner and Theodore Studies, [email protected] 2002: 349) Bard College/Al-Quds University, Jerusalem, [email protected] The contextual embeddedness of such restructuring pro- jects has produced policies, institutions, and regulatory From Dependency to Neoliberalism landscapes that have left minimal “policy space” (Khalidi and Samour 2011: 12) for local stakeholders, apart from In 1947 economic sociologist Karl Polanyi pointed out that negotiations and struggles over the prescribed neoliberal the market economy had created a new type of society market reforms. Indeed, in order for leaders from the (Polanyi 1947: 111): in this society, market logic pervades Global South to be heard in economic policy discussions, every aspect of life, organizations are presumed to be they have had to “learn to speak the language of the heg- subject to the principle of economic determinism, and emonic discourse, the language of neoliberalism” (Owusu human nature is supposed to be describable in terms of 2003: 1665). Consequently, economic development – “homo oeconomicus.” He called upon the scholarly com- whether in Palestine or the DR Congo – has become path- munity to recognize the fallacy of such assumptions and dependent on the dictates of the neoliberal paradigm. reminded us that humans are not just economic, but also “Open” markets are supposed to help in building up non- social beings. However, due to the institutional conquests existing or weak states and strengthening their capacities, of mainstream economics and its impact on policy-making while “open-door policies” – characterized by deregulation, (Yonay 1994), Karl Polanyi’s words were soon forgotten. privatization, and an influx of foreign capital and investment By the late 1970s and 1980s, as policy-makers faced a – were supposed to bolster developing economies. global recession and a crisis in the “Keynesian” welfare state, neoliberal policies were introduced to remake socie- Against the backdrop of a global neoliberal market place, ties and their economies. Spurred on by global hegemons the Palestinian national liberation movement, which had such as the Bretton Woods institutions – the World Bank emerged in the early 1960s, was superseded by a Palestini- and the International Monetary Fund – neoliberalism be- an state-building program that is supposed to be achieved came the dominant political and ideological force shaping through neoliberal institution-building. What neither politi- capitalist globalization. Developing economies, from the cal activism, armed struggle, nor peaceful negotiation were Middle East to Sub-Saharan Africa, which were still rever- able to deliver, neoliberalism was to accomplish: national berating from the consequences of colonization, were liberation (Khalidi and Samour 2011; Samara 2000; PNA supposed to remake their economies by following the 2009). Palestinians were to attain national independence “free market” dictates of the global hegemons. with the IMF, the World Bank, and the Bretton Woods insti- tutions, as well as the United States channeling economic In an increasingly globalized and interdependent world, policies and investments, and with the occupying power, 1 the developmental trajectories of neither Palestine in the Israel, on their side. The Palestinian economy was therefore Middle East nor the Democratic Republic of Congo in Sub- “designed from the very beginning by the policies and pre- Saharan Africa can be understood in isolation. Instead: scriptions of globalizing institutions” (Samara 2000: 21). economic sociology_the european electronic newsletter Volume 16, Number 2 (March 2015) Building a Neoliberal Palestinian State under Closure 22 For instance, export-oriented industrial zones were created During the 1970s and 1980s, almost one third of Palestinian in response to donor recommendations and in line with employment was in relatively well waged Israeli jobs and by the Palestinian Authorities’ (PAs’) neoliberal policies (Tartir 1988, whole rural communities came to depend entirely on 2013). Cross-border industrial parks were to attract inter- work in Israel … Due to their dependency on easily accessible, national or Israeli capital, make use of cheap local labor, low-skill wage labor, these communities have undergone a and achieve growth through exports. Observers are divided process of de-development, stemming from the deskilling of the over the effectiveness of such neoliberal initiatives: labor force, and from the lack of incentives to develop local economic infrastructure and resources independently of Israel. The PA, its international sponsors, and the PA-dependent (UN/UNESCO 2005: 14–17) private sector see the industrial zones as a pillar of the state- building effort that will bolster the Palestinian economy and While the fact that Palestine became Israel’s economically achieve sustainable development. The zones’ critics argue that dependent auxiliary may have temporarily stabilized its they reinforce and legitimize the occupation by making the economy, it also simultaneously contributed to the under- Palestinians even more subservient to Israel given that the PA development of local Palestinian industries and markets, has to rely on the occupiers’ good will for access, movement stifled the diversification of local job opportunities, exacer- and for transfer of tax revenues. (Tartir 2013: 1) bated the deskilling of the Palestinian population, and was a factor in the de-development of the Palestinian Territory For Gadi Algazi (2006), such “offshoring at home” – (UN/UNESCO 2005; Roy 1987). whether in industrial parks or Jewish settlements in the Occupied Palestinian Territories – serves political interests The I and II Intifada and the Oslo by colonizing and managing land and resources, and caters Accords: Conditions for Economic to economic and capitalist interests. Moreover, observers FragmFragmentationentation from the Global South have pointed out that, ever since colonial times, such economic arrangements have tended With the start of the first Intifada 2 in 1987, however, the to enrich local and international elites, while local infra- Israeli government re-imposed the Green Line’s function as structure, resources, and human capital have remained a full-fledged border. As a result, legal economic inter- untapped and underdeveloped. At the same time, while change was minimized – unlike cross-border criminal activi- raw materials, minerals, and resources hemorrhage away ties, which flourished – and foreign workers from Thailand, to supply the high energy-consuming developed world, China, and Romania started to replace the former Palestin- economic aid packages to developing economies have ian workforce within Israel. Until 1993, economic links tended only to exacerbate dependency relations. Aid is not between the West Bank and Israel came to a virtual stand- trade and does not open up markets, which is so im- still, with severe economic consequences for West Bank portant for a country’s economic viability (Owusu 2003; Palestinians (Brawer 2002). However, with the beginning of Sen 1999). In