Palestinians, not Israel, need a "Peace Dividend"

Posted in Israel / Palestine | 06-Nov-07 | Author: Judith Apter Klinghoffer| Source: History News Network

Israel's economic success frustrates her opponents or as the Financial Times writes Israel's high-speed economic growth defies experts." Why? Because they so wish to make the "peace dividend" argument to the wrong party. They should be making it to the Palestinians but for ideological reasons they make it to Israel. Israel would unquestionably benefit (especially psychologically) from an end to Arab/Muslim hostility, but the Palestinians would benefit much more.

The first Intifada (1987) ended an era of rapid Palestinian development and all the aid dollars and all the NGO experts which accompanied the so called "Peace Process" could not save them from the negative influence of Palestinian Authority. The latter needed continued anti-Israeli Jihad to justify their corrupt and tyrannical rule. But instead of focusing on the cost the violence extracted from the Palestinians, they marvel at the Israeli resilience. Tobias Buck writes:

The country’s remarkable economic success has given a twist to the debate on the “peace dividend” – the additional boost that the Israeli economy could receive through striking a comprehensive peace agreement with the Palestinians and the country’s Arab neighbors.

While previous peace efforts were accompanied by offers to link the Israeli economy with its neighbors, economists today argue that regional integration would be of limited value to the country.

Israel is also no longer dependent on the Palestinian territories as a source of cheap labor. The country’s building sites and orange groves are today filled with workers from Asia and eastern Europe.

Of course, the opposite is true about the Palestinians. Their conditions have been deteriorating despite international efforts to protect them from the consequences of their own actions. In an article entitled Will Massive Infusions of Aid Rescue the Palestinian Economy? Steve Stotsky points out:

During the Six Day War in June,1967, Israel took over the administration of the West Bank and Gaza from Jordan and Egypt, respectively. From 1968 to 1986, a period of economic growth and rapid improvement in standard of living ensued for Arab residents of the West Bank and Gaza.. By 1986 per capita GDP had doubled, and the Palestinian economy's growth rate was higher than even the rapidly growing Israeli economy (See "The Palestinian war-torn economy: aid, development and state formation," The United Nations Conference on Trade and Development - UNCTAD, 2006). Arabs in the West Bank and Gaza enjoyed a higher standard of living than their immediate neighbors in Jordan and Egypt. Despite recent setbacks in the Palestinian economy, the Palestinians still remain above the regional average by all standards of measuring health and education. Palestinian literacy is the highest among Arab states and their life span, childhood mortality rates, immunizations, access to clean water and school attendance are all among the highest in the region.

Improved well-being did not stop the Palestinians from launching a campaign of violence in 1987. It is a curious fact that both the first and second Intifadas were launched during economic upswings. The first intifada broke out on the heels of the highest annual growth in 12 years and the second highest on record. This suggests that economic progress and political progress are not linked.

As could have been expected, the violent Intifadas created a rift between the Israeli and Palestinian economies and post Oslo massive foreign aid counter intuitively merely served to exacerbate the devastating rift this caused the Palestinians.

Instead of pointing out the results of the Palestinian self destructive behavior, the international community blamed Israel's defensive measures. Palestinians are not necessarily blind. They know and, once in while, one of them even dares speak out:

The assessments of none other than George Abed, a Palestinian and senior IMF economist, and of James Prince, a consultant to the Palestinian Investment Fund, offer an important summary of the phenomenon of increased aid correlating with economic deterioration. Abed recognized the futility of providing donor aid, asserting that it was counterproductive. . . . This view was echoed in Prince's conclusion that, "many of the donor programs have not only been ineffective, they have harmed the economy." ( "Expert says Palestinians don't need financial aid," San Francisco Chronicle, Sept. 5, 2005)

Given this reality, Palestinian aid should be expected to be withdrawn and articles should be filled demonstrating to the Palestinians and their supporters the boomerang effect of their anti-Israeli violence and the benefits ending it would bring. The opposite is true. The argument is not made to the party suffering more but to the one suffering less. Indeed, the recent attempt to boycott Israeli professionals and products is yet another attempt to counter this ideologically inconvenient truth that freedom trumps tyranny as do decent leaders who put the welfare of their countrymen ahead of their own political needs as Benjamin Netanyahu has done.

Why has the Israeli economy thrived? Tobias Buck explains:

The economic strength reflects two broad, long-term trends.

The first came in the form of tax cuts, lower welfare spending, privatizations and capital market reforms implemented when Benjamin Netanyahu took over as finance minister in 2003.

The second change has to do with Israel’s successful integration into the global economy – which has proved an increasingly receptive market for its exports of high-technology products, manufactured goods, pharmaceuticals and services such as consulting.

“We are reaping the benefits of something that has happened over the last few years, and that is how well the Israeli business sector has exploited globalisation,” says Leo Leidermann, chief economist at Bank Hapoalim, Israel’s largest commercial bank.

And while Israel’s over-reliance on software and information technology made the country a prime victim of the technology downturn in 2000, today’s export performance is far more balanced.

Missing from this analysis is another FT report about Israel’s vibrant ‘factory of ideas’

“Israel is like a big factory of ideas,” says Kobi Marenko, the founder of Logia, a wireless content company.

This is why investors and technology companies continue to return to the country in search of innovation.

Indeed, fund managers pumped $1.6bn into Israeli high-tech start-ups last year – a five-year high – while foreign companies spent $9bn snapping up local technology companies.

But what makes Israeli entrepreneurs so innovative and good at starting new businesses? Foreign delegations regularly visit hoping to discover the “Israeli model” that turned a country of only 6m people into a high-tech powerhouse on a par with Silicon Valley.

No such model exists, especially in a country better known for its Mediterranean spirit than for its discipline. “Nothing happens by design in Israel,” quips Gilad Nass, a research director at IDC, the analysts.

Nothing, indeed. A few years ago I was asked to give a lecture about the threat of militarism to the Israeli society at the Harvard Club. Forget it, I told them. Israelis continue to see war as a necessary nuisance. Even the Israeli military is free wheeling. When all said and done, Israelis, like Jews throughout the centuries, survive and sometime thrive by turning disadvantages into advantages. An Intel corporate executive told me how amazed he was to discover that the company's Israeli component remained its most productive unit during the worst days of the second Intifada. Now this is what I call real resistance though Israelis call it "Ein Brera!" (no choice) for as the popular song says I have no another country."

Many entrepreneurs point out that Israel, founded less than 60 years ago, is something of a start-up itself. They also tend to attribute its success to a confluence of cultural and systemic factors such as being a highly educated, immigrant population with strong military training, and a high tolerance for risk.

Yehuda Zisapel, who along with his brother Zohar has founded close to 30 technology start-ups, believes that Israel’s strength in innovation is not casual or easy to replicate. “It’s not something artificial that high-tech is here. It is very complex to create a high-tech industry that is competitive.”

Israel is small. There is no mass consumer market and the local IT market is worth only $4bn. This leaves technology entrepreneurs with little choice but to export, throwing them in competition with larger operators in the US and Europe.

“Your market here is nearly zero, but you’re competing for the same customers as the US start-ups are,” says Zeev Holtzman, chairman of Giza Venture Capital.

This plays to the Israeli tolerance of risk, says Oren Nissim, the chief executive of Telmap, a navigation software vendor.

Starting ventures seems to suit the Israeli character, perhaps better than managing a larger enterprise does. “There aren’t that many good Israeli managers, but starting a business from nothing is a battle very well fought by Israelis,” notes Mr Nissim. ”

Israelis also tend to act quickly, often ahead of the competition. “Foreign companies are constantly amazed at our speed. It’s a competitive advantage,” agrees IDC’s Mr Nass.

Let's be honest, if Arab/Muslim leaders truly cared about their own people, no action would help improve their lot more than real peace with the Jewish state. The Arab world has paid dearly for its relentless hostility towards Israel and the Jewish people. The opposite is also true. Becoming the ideological/financial ward of the "international community" has done nothing but turn perfectly decent and able people into an impoverished suicide bomber factory run by ruthless religious mafias.

The time has come for those who care about the Palestinian people, as opposed to the abstract idea of Palestine, to change course and advice the Palestinian leaders to do the same. After all, neither can feign innocence any longer.