As Israel counts its votes, what next for Palestinians?

By Dan McCurry

In the late 19th century the Ottoman Empire began a policy of land registry in the region that we today call Israel/Palestine. Local entrepreneurs offered to take up the title deeds on their behalf of the peasants and deal with Ottoman taxes in return. Many uneducated Palestinians agreed. Jewish refugees fleeing the pogroms didn’t only find hostilities from these local tribes, who stopped fighting each other in order to attack the newcomers, but also discovered that this was hardly the land of milk and honey; rather it was dusty, arid and best described as The Armpit of the Middle East. However, the prosperity of the immigrants grew and there was no shortage of Palestinian land-owners who were keen to sell the title-deeds to the newcomers. This story is typical since it demonstrates the Israelis understanding of western norms such as property rights and the ability of the Palestinians to be shafted by their own people.

There then followed a series of wars each of which were disastrous for the Palestinian estate, with the subsequent appropriation of land, but each of which failed to produce amongst the Palestinians an institution which could negotiate with the Israelis. The only significant body to emerge that could speak for the Palestinians as a whole was the PLO, but Yasser Arafat’s famous speech to the UN, “In the one hand I hold an olive branch, in the other a gun,” proved to be a 50% lie. By 1967, Israel was an industrialised economy and the Palestinians had lost much of their subsistence economy and were worse off than ever.

However, Israel needed a cheap source of labour and the Palestinians needed jobs, so the opening of the ’67 borders allowed the Palestinians to find their Comparative Advantage in the building of the Israeli state and allowed the Israelis to discover the delights of haggling in West Bank street markets. This should have been the new beginning, but the opening of the borders also brought violence into Israel which resulted in the curtailing of Palestinian rights. The Israeli shopping experience came to an abrupt end with the stabbing to death of a woman in a crowded West Bank market where not one single witness came forward. Meanwhile a massacre orchestrated by General Sharon in Lebanon managed to stoke the extremists and sideline those benefitting from the construction boom, leading to a new and unexpected confrontation.

The First Intifada of civil disobedience was more akin to Mahatma Ghandi in contrast to the murder of the Israeli Olympic team by the PLO. The Israelis considered it to be the Palestinian nation finding its identity. As the Intifada ran out of a steam a new political organisation emerged which raised money from abroad to spend on social programs. Israel believed that this new political organisation could unify the Palestinians and be a partner in peace, and that’s how Israel funded the founding of Hamas. They later discovered that the raison d’être of Hamas was Jihad and their economic policy was socialism funded purely by the aid.

Israeli impatience with their neighbour degenerated into tit-for-tat military crack-downs together with orchestrated efforts to deny Palestinians the benefits of the Israeli economy, a reversal of policy that would further the misery of the Palestinians. Hamas went on to orchestrate the Second Intifada which resulted in 200 suicide bombings and 1,000 deaths. Again, this could not be described as a call for dialogue. It resulted in a wall being erected boxing-in the Palestinians and making their economy even more dependent on aid, which brings us the modern day.

Small countries rely totally on cross-border trade to survive due to the economy of scale. In the western world, the country with the greatest proportion of world trade to GDP is tiny Belgium, while the country with the smallest proportion of world trade is the giant USA. Palestine is tiny compared to tiny Belgium. Gaza does have a massive asset in a long stretch of Mediterranean beach, but no one will want to sun themselves on the Gaza strip. Remittance is tiny as no one wants Palestinian immigrants in their country. The only hope for the Palestinians is to offer their abundance of cheap labour in the hope of attracting some kind of industry, but the cheapness of the labour is countered by the expense and unreliability brought about by a closed border and both Israel and Egypt will not open the borders while violent Hamas are in charge. I may be wrong, but I don’t believe that Israel and Egypt plan on changing their minds on this issue.

So the Palestinians can’t leave to find jobs because nobody will have them. They can’t attract jobs to come to them because the borders are closed. The borders won’t open because Hamas is in charge, so the aid economy is the only economy they have, but the aid is only intended as a stop-gap. So the question is, if the aid stops, what happens then?

Something’s got to give.