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The
“Intifada” put an almost complete stop to the economic development of the
West Bank and Gaza,
disintegrating the fragile tissues of an independent state in creation. This
is reflected in a negative rate of growth, an incredibly high rate of
unemployment, poverty and other high- impact social costs with severe consequences.
At the same time it exacerbated the recession trends in the Israeli economy
due to the international conditions in the hi-tech markets, reinforcing the
slowdown in growth and investments.
A political settlement between Israel and a Palestinian state in
the near future seems now quite plausible. Mounting pressure by the United States
and other major countries are highly probable. The parties concerned seem now
more than ever eager to yield to such pressures as the hostilities claim an
intolerable toll.
As the West Bank and Gaza
strip economy has hardly developed to provide even a minimal standard of
living, massive international economic aid is likely to be channeled to
foster the peace process.
In the early stages of the “post-Oslo” period such aid did
not create a momentum of development for a variety of reasons, including
allegedly a large misappropriation of funds. Ultimately the main source of
Palestinians economic income, directly and indirectly, was their employment
in Israel, mostly in
agriculture, construction and services and to some extent some other services
and commodities exported to Israel.
A long lasting peace between Israelis and Palestinians
depends not only on the termination of war, border fortifications, signature
of peace treaty and international guarantees. A sustainable peace between
nations that experienced long and bitter hostilities requires adequate
national policies and cooperation to cope with its natural fragility.
Economic cooperation is one of the major fields needed to
strengthen the process and make it viable in the long run. The resumption of
free trade between Israel
and a future Palestinian
State is certainly one
form of such cooperation, which can produce immediate dividends to both
countries. But it should be kept in mind that the major commodity exported to
Israel-labor-has a very limited potential for several reasons. First, Israel
is still experiencing economic recession. Secondly, Palestinian workers were replaced
by a large inflow of foreign workers, legal and illegal, whose numbers
already exceed 300,000 people. Thirdly, the long hostilities produced a
natural reluctance to employ Palestinians.
One may well pose the question to what extent the employment
of Palestinians in Israel,
as a major commodity in their trade is beneficial to both sides in the long
run. The same question applies to importing cheap labor indirectly, via
commodities produced on Palestinian soil with a high content of cheap labor.
It has been said that such patterns of trade between nations are the
"Grapes of Wrath" of the globalization. They are considered a form
of "social dumping” that tends to perpetuate the underdevelopment of the
low-income states keeping wages at their lowest levels and depriving the
workers of minimal social benefits. While such economic relations may exist
between distant countries, it is already clear that they are not compatible
with a sustained peace process between neighboring Israelis and Palestinians
.It has already been said that the Palestinians became "hewers of wood
and drawers of water" of the Israelis. True or false, it is obvious that
a durable peace requires a more balanced structure of economic relations.
Restoring the pre-Intifada structure of economic relations between the two
nations will therefore not serve the cause of peace in the long run.
Being endowed with large resources of human capital and
advanced technologies, Israel
became in recent years a leading factor in the hi-tech industries worldwide,
boosting considerably its exports and attracting large foreign investments.
The recent plunge of the hi-tech markets in the world had a severe impact on
the Israeli economy, reducing the rate of growth and increasing unemployment.
For the first time in its economic history unemployment reached the most
skilled workers in the hi-tech sectors of the economy and it may take
sometime to reintegrate this vast human capital. It is at this point that new
opportunities arise as these temporary idle resources of hi-tech personnel
can be utilized to begin a vast training process of young Palestinians who do
not find professional employment upon completing their studies. Israel
could allocate the vocational staff to train these Palestinians in hi-tech
professions which would both offer new employment possibilities and foster
their self-confidence to integrate in more sophisticated industries. No more
"hewers of wood and drawers of water" in construction, agriculture
and services but proud qualified high-tech engineers and technicians that
could create a nucleus of such industries in the Palestinian state.
The creation of a large educational and vocational system
would require large investments, which could be financed by major industrial
countries, wealthy Arab countries, the World Bank and other organizations.
Thus Israeli technology and hi-tech personnel plus international finance,
could be utilized to make a change in a backward economy without hope to
support its increasing population. This could serve to strengthen a long
lasting peace and stability in this region.
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