Palestine Economy: Update

I spent the day in Ramallah yesterday, attending a meeting of information technology and telecom entrepreneurs, and catching up with some of the folks I reported on in last month's Harper's: Palestinian business leaders who are, slowly but surely, laying the ground for Palestinian civil society; people fighting the limitations of occupation at every turn just to keep their businesses afloat, while the Netanyahu government boasts about "economic peace."

I reported, for example, on the stalled efforts to launch Wataniya, the Palestine Investment Fund-backed cell phone provider, which had been promised 4.8 megahertz of spectrum by the Israeli government. (Wataniya was conceived by the PIF to compete with Jawal, in effect, the monopoly provider that had been started by the dominant PALTEL, and which now has a million and a half subscribers.) It is important to understand that Wataniya would be stiffening the spine of the Palestinian economy as a whole by inducing competition, and bringing down prices, for services every emerging business desperately needs.

Wataniya--so its Chairman, the PIF's head, Mohamed Mustafa, told me--was organized to offer Palestine's first 3G network. When I wrote my piece, Israel had released only 3.8 megahertz but kept the rest without explanation, suggesting Jawal share what it had. Mustafa was threatening to bury the entire deal, rather than launch Wataniya with one arm tied behind its back. Anyway, Wataniya finally launched a couple of days ago, a "soft-launch" Mustafa told me, not without good cheer, practicing his elevator speech. The company would not be able to offer all the services it had prepared for; it would focus instead "on customer service" while offering 2.5G services like text and messaging.

It is hard to imagine a management more persistent or forward-looking. The conference was buzzing with hopes engendered by the PIF's various investments, not only in telecom, but in commercial office parks and micro-lending. Yet PIF investments are hamstrung by, among other things, its being shut out of Jerusalem. One feature of competition in Palestine's telecom industry is customer poaching by Israeli providers. (Palestinian companies have exclusive rights in Area A, the centers of Palestinian towns and cities where the Israel Defense forces tend to stay out; but in Areas B and C, where the army and settlers operate freely, and in East Jerusalem--altogether, in two-thirds of the Palestinian territories--Israeli cell phone companies operate illegally but with impunity.) In East Jerusalem, Palestinian providers have no access whatsoever.

WHICH BRINGS ME to increasingly ominous economic trends in East Jerusalem, the once and historic hub of all West Bank cities, including Ramallah. The former economics minister of the Palestinian Authority, Bassim Khoury, recently sent me his summary of depressing data ferreted out of Israel's Central Bureau of Statistics. The conclusions suggest why Ramallah's business class may well lose the race to preempt a Bosnia-type violence that may engulf them and Jerusalem both:

Per capita income of Arabs in Jerusalem is less than half of Jews, who are on average the poorest in Israel. Unemployment among Arabs is 25%, 10% higher than in the West Bank as a whole. Infant mortality is almost double that of Jews, though the birthrate is about the same. About 85% of the municipal education budget goes to Jews, 15% to Arabs, though Arabs are about 30% of the grade school population. 50% of Arabs live under the poverty line, while 25% of Jews do so. This means both Arabs and Jews have about 125,000 people officially defined as "impoverished," but the Jews get 88% of the welfare budget. The city of Jerusalem spends about five times more on Jews than on Arabs per capita for municipal services of all kinds (sewage, garbage collection, etc.). Jews get 98% of the "cultural" budget.

Remember, East Jerusalem is now separated from the other West Bank cities by a wall. The idea was to fence out deadly violence. But the trajectory of social relations in the city suggests violence is only being fenced in. (This was predictable.) Last week's disturbances at Al-Aqsa suggest how it will start, which is pretty much the way violence has started in Jerusalem since 1920. Considering the Jewish people's past, it would be rude to call East Jerusalem a kind of ghetto. So let's just call it a walled-in, patrolled, increasingly impoverished enclave for people with diminishing political rights and unlimited encouragement to leave.

Yasir Barakat, among the most established merchants in the Old City, tells me he knows "nobody whose educated children are not planning to leave Jerusalem if they can." Yasir is one of my oldest friends in Jerusalem. He is not sleeping well. His daughter is now in Dubai, a son is studying in England, and another son, with a degree in network security from England, is working (for now) in Ramallah. “Let’s be honest. There is no give-and-take anymore. The Jews think this all belongs to them and that’s that.”