With no political deal, is Palestine economic peace just a dream?

Trump administration is promoting $50bn plan to invest in infrastructure of West Bank, Gaza, and neighbouring states.

Protest in Ramallah against “Deal of the Century” plan
Palestinians have protested against the economic workshop taking place June 25 and 26 in Bahrain's capital, Manama [Issam Rimawi/Anadolu]

The United States has heralded Tuesday’s gathering in the Gulf kingdom of Bahrain as an economic gateway to a long-awaited Israeli-Palestinian peace plan, labeled as President Donald Trump‘s “deal of the century”.

Though a handful of businessmen from both sides of the conflict are scheduled to attend the conference in Manama that aims to encourage investment, there are notable absences.

Sceptical of what they see as a bribe to force them back to the negotiating table, no Palestinian officials are attending – and as a result, nor are any Israeli officials. 

Though the no-show of key players bodes poorly for genuine progress, some veteran Middle East commentators see a fatal flaw in the White House’s “Peace to Prosperity” framework. Without a political foundation to build on, they say, the plan is tantamount to putting the cart before the horse.  

Many policy experts believe only a diplomatic path to statehood will resolve the intractable conflict. And the centrepiece of the long-standing international formula for a political solution remains an independent Palestinian state in the occupied West Bank, East Jerusalem and Gaza – coexisting with Israel.

Zaha Hassan, a visiting fellow in the Middle East program at the Carnegie Endowment for International Peace, told Al Jazeera that donors will not put up “the significant outlay of funds called for under the plan in an uncertain political environment”. Donors could condition their contributions on diplomatic arrangements that have not materialised.

Hassan criticised the plan as a “marketing brochure” that consists mostly of “old initiatives advanced by previous administrations which were never executed because of Israel’s refusal to give the needed permissions, and allow movement and access of people and goods”.

She added that “any new Israeli coalition government is likely to call for the annexation of Area C, the 62 percent of the West Bank” needed for the energy and transportation aspects of the plan, precluding “meaningful sovereignty for Palestinians in the territorial unit”.

‘Sustainable economic growth’

The $50bn plan takes an economy-first approach to ending the decades-long Israeli-Palestinian conflict, reflecting a pragmatic, businesslike orientation that could be interpreted either as naively simple or refreshingly bold.

In total, 179 local projects bankrolled by a “master fund” would cover everything from water and agriculture to education and healthcare. 

The plan’s tourism section even touts the sweet appeal of “trademark dishes and flavors, from Ramallah’s Rukab ice cream to the famed knafeh of Nablus”, referring to well-known Palestinian desserts.

Most of the money would go towards Palestinian infrastructure: constructing new roads, building natural-gas power plants, and establishing efficient cargo terminals. A $5bn road and rail link would connect not just the two parts of Palestine separated by Israel, but also the urban areas of the occupied West Bank – from Hebron and Bethlehem in the south to Jenin in the north.

Within 10 years, the plan aspires to double the size of the Palestinian economy, create one million new jobs, and halve the poverty rate.

Yet critics say that without unified governance of the territories – ruled since 2007 by the rival Fatah and Hamas factions – the concept of a “Singapore on the Mediterranean” in Gaza City may be far-fetched. They also contend that the viability of a Palestinian economy hamstrung by the daily costs of occupation is severely limited.

Moreover, analysts note that while Jordan and Egypt may be happy to receive billions of dollars in international investments, some neighbouring states – particularly Lebanon – may not be willing to accept that financial carrot if it is tied to facilitating permanent resettlement of Palestinian refugees.

Critics also argue that many of the proposed development projects have been tried before but, ironically, had their funding cut when the US withdrew funds from Palestinian aid programs.

The massive price tag is left mostly to the Gulf states – governments and individual investors – as the plan is designed to be bankrolled by a combination of grants, loans and private capital.

General view of Bahrain Seef district in Manama
A United States ally and host to the US Navy’s Fifth Fleet, Bahrain has been making workshop preparations for weeks [Hamad I Mohammed/Reuters]

“The Peace to Prosperity workshop in Bahrain is a chance to present our economic vision, share ideas, and solicit feedback from regional leaders,” a White House official said in a statement provided to Al Jazeera by the US Department of State.

“Real, sustainable economic growth is not possible without peace,” it said, adding that the expansive – and expensive – blueprint outlines “what we believe is possible, and a plan to make it possible”.

The statement said, however, that the proposal championed by White House Senior Advisor Jared Kushner is “not about economic peace” but is focused on “developing an approach to truly transform the lives of the Palestinian people should we reach a comprehensive peace agreement”.

“Our economic plan has the potential to unleash sustainable, private sector-driven growth,” it said, clarifying that such development would only be feasible once final-status issues are addressed.

In effect, the Trump administration is betting that the political chips for a deal will fall into place once all the regional parties – most notably the Palestinians – realise the tremendous monetary benefits not just of laying down arms, but of forfeiting much of their political capital that hinges on resistance to Israel.

Danny Danon, Israel’s ambassador to the United Nations, wrote on Monday in an op-ed titled “What’s Wrong With Palestinian Surrender?” that the Palestinian Authority would be wise “knowing when to give up”. His position appears to represent the Israeli government’s view that the Trump plan is a net positive, even if it hints at some future concessions. 

‘Money is important’

Refusing to deal with the Trump administration for the last 18 months, Palestinian President Mahmoud Abbas said on Sunday, “Money is important. The economy is important. But politics are more important.”

“We’ll see if anyone lives long enough to see that $50bn,” said Abbas, referring to the amount that the US hopes to fundraise at the conference inside the Four Seasons Hotel, located in Bahrain’s capital on an island reachable only by bridge.

Saeb Erekat, Secretary General of the Palestine Liberation Organization, said the plan was dead on arrival because it extends “Israeli control over Palestinian natural resources, electromagnetic sphere, borders, airspace, maritime boundaries and every single basic aspect of any economy”.

“In other words, the Trump Administration is not offering anything else than the normalisation of Israel’s theft of Palestinian land and resources,” Erekat told Al Jazeera. “Let’s put it in terms that a bankruptcy lawyer or a real-estate agent could understand: Palestine is not for sale.”

Let's put it in terms that a bankruptcy lawyer or a real-estate agent could understand: Palestine is not for sale

by Saeb Erekat, Palestine Liberation Organization

The chief Palestinian negotiator also said that “conservative estimates a few years ago showed that the equivalent to about 80 percent of our GDP [gross domestic product] is lost in costs of occupation”.

He added that “the Palestinian government is facing a severe [budgetary] crisis, first due to the Israeli occupation, and second due to the financial war conducted by the Trump administration”.

‘New paradigm’ 

Some analysts argue that with past peace initiatives having failed, it is time for a new approach.

“Since the beginning of the Oslo accords, the hegemonic paradigm was that the ‘national’ interests of the Palestinians were the first priority – above individual, social and economic interests,” said Kobi Michael, a senior fellow with the Institute for National Security Studies at Tel Aviv University.

“What we see in Bahrain is a manifestation of a new paradigm,” he told Al Jazeera. “Arab leaders – together with Israeli businessmen, Palestinian businessmen, Americans and Europeans – are looking for other options to paint a new horizon for Palestinians and the entire region.”

Michael added that the Palestinian leadership believes successful infrastructure projects in the West Bank could appear to legitimise the Israeli occupation by improving the standard of living without an Israeli withdrawal from territory that it has held since 1967.

This could mean the Palestinians “can live freely and prosper, even with an Israeli presence, and that is something against their [PA] interests”.

While it’s hard to dispute that peace and prosperity go hand in hand, Israelis and Palestinians are far from seeing eye-to-eye on the core areas of disagreement.

Palestinian Businessman
Palestinian businessman Abed Alkarim Ashour shows the invitation letter for the Bahrain conference from the United States Department of the Treasury [Mohammed Salem/Reuters]

For its part, the Trump administration is emphasising that political and economic improvements should occur in tandem. The US president has demonstrated a business-first approach toward international affairs in general.

In addition to the high-ranking American officials in Bahrain – Kushner, along with Middle East envoy Jason Greenblatt and US Treasury Secretary Steven Mnuchin – a litany of finance officials from around the region are attending this week’s conference.

Jordan, Egypt, the United Arab Emirates, and Morocco dispatched finance ministry representatives. Saudi Arabia is represented by its economy minister, Mohammed al-Tuwaijri, and sovereign wealth fund chairman, Yasir al-Rumayyan.

Qatar, the main regional donor to the Palestinians, has also sent a delegation.

The head of Russia’s sovereign wealth fund, Kirill Dmitriev, is participating, as well as the European Bank for Reconstruction and Development, the World Bank, and International Monetary Fund.

Jamie McGoldrick, the UN humanitarian coordinator for the Palestinian territories, is also joining the Manama meeting.

Source: Al Jazeera, News Agencies