Jump-Start Palestine: A Story of Economic Survival

10/27/2017 01:26 pm ET
Nisreen Musleh, Managing Director of Ritaj Managerial Solutions and Sam Bahour,  Managing Partner of Applied Information Mana
Nisreen Musleh & Sam Bahour
Nisreen Musleh, Managing Director of Ritaj Managerial Solutions and Sam Bahour, Managing Partner of Applied Information Management

By Sam Bahour and Nisreen Musleh

Not a day goes by without one of us being asked if Palestine really has an economy, given that we have been living for five decades under an increasingly well-entrenched Israeli military occupation. The question usually comes from people passing through on a short visit: some are Palestinians living in the diaspora, others are foreigners who come either singly or in groups; and some visitors arrive, under a variety of auspices, to study our reality. More troubling than to hear this question from outsiders is how often we hear it from our recent graduates. To all, our answer is yes – unequivocally.

If you happen to be one of those who question that an economy, despite aspects that are truly painful, nonetheless survives under Israeli military occupation, we ask for your indulgence. Palestinians are not superheroes who can sustain their prolonged struggle for freedom and independence without putting bread on the table or pay their children’s tuition, let alone love, marry, establish families, buy homes, purchase cars, and eat out. And so forth.

This article is a call to jump-start the nation of Palestine, economically. Palestine’s economy is in an iron fist grip of the State of Israel. Forty-four thousand Palestinians are graduating and entering the labor market every year. Only around 10,000 of them are being absorbed in the market, in both the public and private sectors. Palestine’s economic survival, and maybe political survival as well, depends on finding livelihoods for many more Palestinians, and at an unprecedented rate. This is our collective challenge.

We who are writing this are both blessed to have, in our respective surroundings, positive people. At home and at work, along with our respective circles of loved ones, colleagues and friends, we refuse to dwell on the negative. Instead, we analyze our bitter reality, look around at our own children and siblings, and always come to the same conclusion: We simply must find ways to create meaningful livelihoods for us and for them, because otherwise we would be reinforcing the longstanding Israeli fantasy that all Palestinians will, eventually, voluntarily, emigrate from Palestine -- family by family, new graduate by new graduate. Or, worse yet, we would be fueling extremist elements in our society by giving them ready-made fodder to recruit from—a generation of youth in despair.

Our future and our families are at stake, so we engage with our damaged economy as a means of survival, while entertaining no illusions that we can properly develop it under Israeli occupation.

Just to make sure we are clear about how bitter our reality is, we share with you the opening paragraph of the Executive Summary of the World Bank’s latest Economic Monitoring Report to the Ad Hoc Liaison Committee (AHLC) from September 18, 2017. It speaks volumes.

Despite its potential, the Palestinian economy is currently heavily distorted and failing to generate the jobs and incomes needed to improve living standards. Restrictions on trade and the access to resources, along with a decade long blockade of Gaza have hollowed out the productive base. The share of manufacturing in the economy has halved in the last twenty-five years, while agriculture is only one third its previous size. The economy is import dependent with imports over three times the size of exports and a trade deficit close to 40 percent of GDP (one of the highest in the world), while trade is overly concentrated with Israel. Investment rates have been low with the bulk channeled into relatively unproductive activities that generate insufficient employment. As a result, growth, which has mainly been driven by consumption, has run out of steam. With a sharp decline because of the 2014 Gaza war and a drop in aid levels, growth in real Gross Domestic Product (GDP) slowed to 2 percent on average between 2013 and 2016, and dropped to a mere 0.7 percent in early 2017. Unemployment remains close to 30 percent on average, with youth unemployment twice as high in Gaza where the humanitarian situation has significantly worsened in recent months following the electricity crisis which has serious implications on the health, water and sanitation sectors as well as business activity.

That’s the bad news.

And the good news?

Nearly five million Palestinians awake every morning under military occupation with a stubborn determination to survive. As per the Palestinian Central Bureau of Statistics, 729,971 are infants (0-4 years), about 142,000 are in kindergarten, over 1.2 million are primary and secondary school students being served by 55,000 teachers, and over 207,000 are enrolled in universities and colleges, over 128,000 Palestinian workers work in Israel and Israeli settlements, and approximately 229,133 are 60 years and over. About 3 million residents are in the working-age (15 years and above), and over 1.5 million people are either working or seeking work.

With skyrocketing unemployment rates that now exceed 30%, to wish or hope that Palestinians remain steadfast without livelihoods is the equivalent of praying that your car will run without gasoline or electricity.

That noted, this month alone we have engaged two separate projects emerging out of the Massachusetts Institute of Technology (MIT) aiming to create jobs in Palestine; we have met with the Country Director of the International Monetary Fund (IMF) who is exploring the state of venture capital and equity funds in Palestine. Also, a meeting is already planned with Switzerland’s Federal Councilor Johann Schneider-Amman, Head of the Federal Department of Economic Affairs, Education and Research, who is leading a 50-person delegation of academics and businesspersons to Palestine. Bottom line, there are loads of global interest in Palestine to leverage.

Enter the real Palestine

Palestine’s economy did not drop fully formed from the sky with the signing of the Oslo Peace Accords in 1993 and the establishment of the Palestinian Authority. Historically, in addition to consumer trading, the economy has revolved around agriculture, tourism and laborers who work in Israel. Since 1994, a new service sector has been added, mainly communications and financial services, as well as a mini-army of professionals serving civil society and civil servants serving the government bureaucracy.

Sustained Israeli actions have nearly paralyzed two of our most promising sectors, agriculture and tourism. The World Bank has stated that structural damage has been made to our agriculture sector. This is not surprising, given that agriculture is about land and water, two front lines in this conflict. Additionally, the World Bank notes that, in general, the “…continued existence of a system of [Israeli] closures and restrictions is creating lasting damage to economic competiveness [sic] in the Palestinian Territories.” (Economic Monitoring Report to the Ad Hoc Liaison Committee, March 19, 2013).

Tourism is a sensitive sector by nature and the illegal Separation Wall as well as the volatile security situation have suffocated our tourism sector, but not to the point where it has disappeared. Instead of buckling under to Israeli-invoked actions aimed at our de-development, our tourism sector has turned to the domestic tourism market and to alternative tourism products, including political, rural and experiential tourism, to keep going.

Our laborers who work in Israel are the untold saga of our five-decade old economic reality. These are the nameless and faceless who put their health, their family relations, and even their lives at risk to cross Israeli checkpoints in the early morning hours, day after day, returning home long after nightfall and after a back-breaking workday to find their children sound asleep. These Palestinian workers, if given the opportunity for decent livelihoods in their own communities, would be the first to benefit from fuller employment opportunities in Palestine.

Looking forward

Together with colleagues, as a group of Palestinian private sector stakeholders, we are seeking new, creative and sustainable ways to more significantly challenge our reality. We are exploring how to put our capital, knowhow and efforts into business opportunities that would employ a critical mass of Palestinians. Yes – we are aiming for a critical mass of jobs under military occupation. That is our challenge because this is our reality.

We fully respect and would never belittle, under any circumstances, the many small-scale projects that hire a few persons here and there. In fact, we work in that domain every day and will continue to do so. However, we see that the scale of these projects involving a low number of employment opportunities will only keep us behind the curve, despite the fanfare they typically receive.

We have set for ourselves a goal, to come up with 3-5 new business opportunities—structured either for-profit or as social enterprises—to research, each of which will have the potential to hire 100 or more persons located in one or more locations in Palestine. Our hope is that those reading this will come forward with new idea, market connections, actual business opportunities, and the like. We stand ready to invest where needed, train where needed, and manage where qualified to do so.

So, addressing all of you who yearn to assist Palestinians in their non-violent struggle for freedom and independence: We are placing this challenge in front of you, too. Help us conceptualize real business opportunities, that will serve real markets, that will employ real Palestinians and will place real bread on the table. Send your ideas via www.aim.ps/contact_us.html.

* Sam Bahour, Managing Partner of Applied Information Management in Ramallah and chairman of Americans for a Vibrant Palestinian Economy. He blogs at epalestine.com. Follow Sam Bahour @SamBahour

* Nisreen Musleh, Managing Director of Ritaj Managerial Solutions in Ramallah and vice chairwoman of the Palestinian Trainers’ Association. Follow Nisreen Musleh @nisreen_musleh

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