Read or download the full paper by Tariq Dana.

Overview

While most Palestinians living under Israeli occupation are struggling to survive, a powerful group of Palestinian capitalists are thriving and growing in political, economic and social influence, and deal with Israelis as a “normal” business partner rather than an occupying power.

Influencing the Policy Process

Like other Palestinians, businessmen have struggled with statelessness, and sought the security that a state would provide. Many of them supported the Oslo accords as a key step towards establishing a Palestinian state, some even imagining that Oslo’s “peace dividends” would transform the West Bank and Gaza into the Singapore of the Middle East.

The open espousal of neoliberalism by the Palestinian Authority (PA) has helped to create an institutional framework that enables economic interest groups to manipulate policies in the service of private ends. Neoliberalism combined with political authoritarianism and corruption reinforced and consolidated what can be described as the PA’s crony capitalism.

By favoring privileged political and economic groups this system impeded market competitiveness and excluded the majority of the people’s access to meaningful economic opportunity. This was especially the case with regard to the PA elite’s political and security collusion with Diaspora conglomerates in managing large-scale public-private monopolies, with over 25 key imported commodities.

Social Control through Debt and Other Means

An aspect of social control is the facilitation of private lending, which encouraged a culture of consumption and pushed many people into the debt trap. It is estimated that 75% of public sector employees are currently in debt. The personal debt is primarily used to finance consumption. This has major social ramifications because it promotes a sense of individualism and drives personal private concerns, systemically pushing people to abandon crucial national issues.

Local capitalists also exploit and control factory workers, where workers are paid much less than the government’s minimum wage. This exploitation and control of the Palestinian labor force is exacerbated by the lack of effective labor unions, which have been dramatically weakened by both the PA and capitalists alike.

There are fears that the system of workers’ exploitation and control will be expanded and institutionalized through industrial zones that are intended to integrate Palestinian-Israeli-regional capital to exploit the pool of Palestinian cheap labor. Furthermore, industrial zones will not apply Palestinian or Israeli labor laws, wage levels and other workplace conditions, and the right to unionize will be prohibited.

Normalizing the Occupation the Economic Way

Economic normalization is institutionalized in a wide range of joint activities such as joint industrial zones, Israeli-Palestinian business forums, Palestinian investments in Israel and its settlements, and joint management of water resources. This is the highest level of normalization activity in the history of the Palestinian struggle for national liberation.

Groups working for Palestinian human rights and self-determination have openly denounced some of the Palestinian crony capitalists, who counter-claim that they are simply seeking to serve the Palestinian economy and people’s steadfastness.

What Must Be Done?

The political and social influence of Palestinian crony capitalists and their ongoing economic normalization of Israel’s occupation should alarm all those concerned about the future of the Palestinian cause. In chasing after profits without regard to Palestinian fundamental rights and national aspirations, these capitalists have gone too far. Several steps can and must be taken, including:

• Local businessmen and investors must resist Israeli attempts to involve Palestinian capital in normalization projects.
• Palestinian capital should be regulated and rigorously monitored to ensure that it serves Palestinian national goals.
• Sustained Boycott, Divestment and Sanctions campaigns are needed to make Palestinian capitalists’ position untenable.
• Investment and business development must take into account Palestinian human rights and dignity, and gradually reduce the levels of dependency on international aid.
• There is need to develop a model based on the concept of a resistance economy for a just redistribution of the national wealth.