Even before the signing of the Declaration of Principles, the
prospect of an Israeli-Palestinian accord had become a legitimate
topic of discussion in wide circles, particularly among economists
and businessmen. Hata'assiyanim, the quarterly journal of the
Israeli Industrialists' Association, devoted its entire April issue
to what it called, "The Economy of Autonomy and the Israeli
Economy." In it more than 30 articles by Israeli and Palestinian
businessmen, economists, academics, and political leaders take a
look at the economic implications of Palestinian autonomy.
The tone is set in a short introduction, which emphasizes the
connection between the peace process and local economic
developments, and concludes:
"The impression is that, despite sharp differences of opinion and
different points of view, the overall mood is one of optimism.
There is a feeling that, if businessmen and industrialists from
both sides talk business, this will be helpful, resulting in
progress toward peace agreements."
The topics range from the problem of customs and taxes to free
trade, and from the availability of Arab and international capital
to the degree of integration or disengagement of the Israeli and
Dov Lautman, the former head of the Israeli Industrialists'
Association, assumes that the Israeli economy and that of the
autonomous Palestinian region will remain closely entwined in the
immediate future. He advocates free trade in both directions and
states that Israeli businessmen should not fear competition from
their Palestinian counterparts. An increase in Palestinian
standards of living, he points out, means increased purchasing
power, and he sees in this an opportunity for Israeli
"Our response to autonomy should be positive and mature," he
concludes, "an economy that is now being exposed to competition
from third parties should not fear competition from the industry of
the autonomous region. Israeli industry is strong enough to cope
with the structural changes that will come with autonomy. We have
faced more difficult and more painful changes in the past."
This contention is echoed on the Palestinian side by Dr. Samir
Abdullah, an economist and a member of the Palestinian delegation
to the current peace talks, who points out that current Palestinian
industrial production is only some two percent of Israel's. How can
that be threatening? Noting that Israel will continue to be the
biggest employer of Palestinian labor and the largest market for
Palestinian produce, Abdullah calls for the lifting of all
restrictions on trade between Israel and the territories.
The thesis that Palestinian economic development is good for
Israel, and that consequently all the barriers should come down, is
strongly contested by several Israeli contributors, among them Muzy
Wertheim, chairman of Coca Cola in Israel. Warning that the
Palestinian penetration of the Israeli market could throw tens of
thousands of Israelis out of work, Wertheim calls on the
Industrialists' Association "not to succumb to euphoric
predictions, but to suggest to Israeli decision-makers practical
arrangements that will permit the Palestinians to administer their
own economy, but will control the flow of goods between Israel and
the territories to ensure fair conditions of competition."
Prof. Efraim Kleiman of the Hebrew University is another
contributor who sees Palestinian economic growth under autonomy as
both probable and good for Israel; but he sounds an alarm bell to
the Palestinians. Challenging "political voices in the territories
who advocate economic disengagement from Israel," he writes, "In my
opinion the realization of such a disengagement will bring about an
economic disaster for the Palestinians."
Against this, Samir Huleileh, director of the Palestinian Economic
Development Group, EDG, while considering the possibility of an
eventual Benelux-type arrangement with both Israel and Jordan,
states that the Palestinians will not agree to a unified economic
framework with Israel.
He predicts that the Palestinians, while making use of both
Jordanian and Israeli economic infrastructures will create their
own independent economic institutions. He further notes that purely
economic considerations will not necessarily be the deciding factor
in making decisions.
Israelis should not be permitted to invest in the territories, he
writes, until the matter of control over the land is thrashed out.
Nor should Palestinians enter into joint ventures with Israelis, or
put up their property as a guarantee to an Israeli bank, until the
land question is resolved.
"Ideas for future economic cooperation are positive," concludes
Huleileh, "but a headlong rush into joint business initiatives
could destroy the mutual confidence that must be built up in the
Ibrahim Haddad, the owner of an agricultural machinery plant in
Jenin, suggests that Israeli enterprises that have depended on
cheap Palestinian labor will not be able to survive the
establishment of autonomy. His solution is to move some of them
lock stock and barrel from Israel into the territories, and let the
others wind up. Haddad warns against an exaggerated reliance on
foreign investment, but hopes for eventual partnerships between
local and foreign business men.
Despite the differences of opinion - and even an occasional sour
note - it is difficult not to be impressed by the sensitivity,
pragmatism and lack of rancor on both sides. Most of the Israeli
contributors show an understanding of Palestinian aspirations; the
Palestinians are at pains to allay Israeli fears; both sides look
to the future rather than the past. Some see dangers; but more see
The majority opinion is that economic development, business and
trade is the opposite of a zero sum game: all sides win. Is it too
much to hope that the politicians will catch up with the
businessmen and the economists?