The Palestine Investment Conference

Perhaps the greatest achievement of last week’s Palestine Investment Conference was not the announcement that $1.4 billion would be invested in the West Bank and Gaza or that 35,000 new jobs would be created, but the fact that the conference was held in the first place.

Although much of the investment had already been agreed on, Palestinian prime minister and World Bank-trained economist Salam Fayyad said to the Palestinian daily Al Ayyam, “convening the conference in Palestine is in itself a message of hope and an attempt . . . to attract investors, officials, and interested parties to take part in our life for two or three days, to see our condition . . . as well as our determination to succeed.”

Just securing the entry of over 500 businesspeople from outside the Palestinian territories—including many expat Palestinians as well as Saudis, Qataris, and Emiratis— and over 100 from Gaza was no small feat. Mara Rudman of the Center for American Progress described her surprisingly smooth trip in Tuesday's Middle East Bulletin. “Greeters with ‘PIC-Bethlehem’ signs met me, politely expedited my entry, took care of my passport and escorted me all the way to my taxi.” It was the first time, Rudman noted, that she was so well received when declaring at Tel-Aviv’s airport that she was going to the Palestinian territories.

Rudman’s description may not seem unusual to the casual observer. However, at a time  when 1 in 5 West Bank Palestinians is out of work, and those who are employed routinely complain of getting stuck between checkpoints and roadblocks—not to mention being unable to get in and out of the territories— a “normal” trip to the West Bank for a conference is extraordinary. It would not have been possible, furthermore, without the active cooperation of Israel and the effective work of the Palestinian security services.

The appearance of normalcy was in fact meant to show outside investors that “business as usual” is possible in the Palestinian territories, that people and goods can move without delay, and that Palestinians are ready and able to get to work.  

According to Danny Rubinstein, however, the conference’s most important message was not for the outside world but for Palestinians. Writing in Israel’s new financial daily, the Kalkalist (the Economist), Rubinstein noted that the conference “was geared mainly for domestic purposes. It was a means for the PA officials themselves to build up their own strength and become reinvigorated. . . . They need that because their political standing and their national prestige are on the decline because of Hamas.”

“The only way that they have to fight against Hamas,” Rubinstein continued, “is to show the million and a half Palestinians who are besieged in Gaza that there is a way out of that distress. The officials in Ramallah know very well that Fatah has no military option for retaking the reins in Gaza. . . . This leaves the PA with the option of showing the residents of the Gaza Strip that life on the West Bank is becoming better and easier. There are investments, the economy is flourishing, unemployment is decreasing—and then there is a chance that the people in Gaza will rise up against Hamas rule.”

Rubinstein’s explanation not only reflects one of the Fatah aligned government’s goals in hosting the conference, but also a widespread view within the Bush administration and some Israeli circles that if the West Bank thrives while Gaza starves, Palestinians might choose the moderate Palestinian Authority over Hamas rule.

While Hamas has gotten stronger, the gap between Gaza and the West Bank is as stark as ever. The presence of foreign dignitaries and financial investors in Bethlehem at last week’s conference only highlighted the difference. It was “as if Alice had stepped through the looking-glass and found herself,” in the West Bank, Isabel Kershner wrote in the New York Times on May 22.

Israel’s economic blockade of Gaza, which was imposed after Hamas’ January 2006 electoral victory and was intensified when Hamas took control of Gaza, has placed a stranglehold on economic activity in the region and has made Gazans dependent on international aid for their daily bread. Without sufficient income or employment opportunities, some 80 percent of households in Gaza (or 1.3 million people) rely on international food assistance. Since June 2005, the number of working establishments and working employees in Gaza have plummeted 95 percent, from 3,900 to 195 working establishments and from 35,000 to 1,750 working employees.

But Gaza—and 100 of its businessmen, Bank presidents, and investors—was not left out of the discussion. Bank of Palestine’s Vice President, Ma’moun Abu Shala, argued in a conference session called “Revitalizing Gaza,” that Gaza’s labor force is young (66 percent of Gaza’s population is under 25), educated (Palestinians have one of the highest literacy rate in the region, 92.4 percent), and skilled. In addition, Gaza has trade agreements with other countries, modest taxes, a modern banking system, and flexible laws. Abu Shala said that 24 projects worth $1.9 billion were ready to start tomorrow “despite the situation in Gaza.” 

But while Abu Shala drew attention to Gaza’s potential, the need to change its current political status before any economic achievement is possible could not be ignored. Prime Minister Fayyad continually urged that “the crossings in Gaza must be opened” and concluded the Gaza plenary by stressing that “the movement of goods and people cannot flourish unless restrictions are lifted.” 

If it served no other purpose, the conference demonstrated that with coordination, movement could be facilitated without endangering Israel, at least in the West Bank. The key to making the conference succeed as it did, Mara Rudman explained, was the work of Israeli and Palestinian security services. “Top leaders in Israel had clearly given directions to make things run so smoothly and extraordinary efforts were made throughout the chain of command. The IDF soldiers manning the checkpoints entering and leaving Bethlehem, for example, were all officers, all spoke English (not just Hebrew), were easy-going in manner and were clearly instructed to speak courteously and treat as guests all those going to and from the conference. At the same time, the Palestinian security forces showed skill, commitment and professionalism as they managed crowds in and around Bethlehem. From the varied uniforms it appeared that multiple security services were deployed and coordinating their efforts, another mark of improved training.”

The Palestine Investment Conference was a test. By demonstrating that such an event could be pulled off and that Israelis and Palestinians have a mutual interest in its success, it showed the potential of the Palestinian business sector to flourish. But turning a successful three-day conference into a working, and thriving, Palestinian economy, will take much more than investment pledges. It will take great and sustained efforts from the business community, but also a serious change in the current political and security status quo. The conference was a glimmer of what can be accomplished.