September Tsunami

What are the practical implications of the impending Palestinian unilateral declaration of independence?

By DANIEL RUBENSTEIN
June 21, 2011 13:02
Erez Crossing in northern Gaza

Erez Crossing 311 (R). (photo credit: Mohammed Salem/Reuters)

THE PALESTINIANS ARE continuing to prepare for September 2011, even though US President Barack Obama has warned them not to ask the UN General Assembly in its September session to recognize an independent Palestinian state in the 1967 borders. And indeed it’s likely that the appeal for recognition will be overwhelmingly accepted.

However, the practical implications of such recognition are still not at all clear. What, for example, will be the legal status of the Israeli military, which controls most of the West Bank and all the external borders of both the West Bank and Gaza? What will happen to Israel’s international status? And what will be the fate of the nearly half a million Israelis living outside the 1967 borders (some 300,000 in the West Bank and some 200,000 in the parts of East Jerusalem that were formally annexed to Israel) if the areas where they live become part of the unilaterally declared Palestinian state?

In fact, although Defense Minister Ehud Barak has called it a diplomatic tsunami, the unilateral declaration of independence will apparently have little immediate impact. The Palestinians won’t be able to throw the IDF out of their virtual state within the 1967 borders, nor will they be able to get rid of the settlers and the Jews who live in East Jerusalem. The new Palestinian state will not be able to exert much control over Area C, which composes some 60 percent of the area of the West Bank and includes the settlements, the main roads, the entire Jordan Valley and the Judean Desert. And they won’t be able to get full control of water, air space, or communication channels anywhere in the West Bank.

True, the demand for sovereignty over the entire West Bank and Gaza Strip will certainly be reinforced by the decision in September; but the Palestinians will gain little, if any, control over anything.

So what can they do to assert their independence?

Throughout the world, since time immemorial, minting coins has always been a symbolic, political decision. They’re discussing this in Ramallah these days, according to Chairman of the Palestinian Finance Authority, economist Dr. Jihad Al-Wazir (son of Khalil Al-Wazir, one of the founders of the Fatah and a first deputy to Yasser Arafat, who was killed in an IDF raid on Tunis, in 1988).

Jewish history certainly knows the significance of minting coins. During the revolt against the Romans in the last days of the Second Temple, the Jews minted independent coins, embossed them with the dates of the revolt and declarations such as “For the freedom of Zion” or “Holy Jerusalem” and added symbols, such as the gates of the Temple, a sheaf of wheat or the etrog and lulav. The Roman rulers squashed the revolt and destroyed the Temple, then issued coins of their own embossed with a palm tree, a Roman soldier, a Jewish woman at his feet and the inscription, Judaea Capta (Judaea captured). In modern times, the original Jewish symbols were incorporated into the first coins of the State of Israel.



The demand to mint Palestinian money first came up during the negotiations between Israel and the PLO that led to the Oslo Accords. Then-PLO chairman Arafat strongly demanded the right to mint money, but Israel refused. Actually, the Palestinian economists who were representing the PLO weren’t too enthusiastic, either, to put it mildly: They were afraid that Arafat would turn the Palestinian treasury into a money-printing machine, which would create run-away inflation. This is a well-known illness that affects developing countries, from which Israel also suffered during its first years of existence. In this context, they suggested to Arafat that instead of printing his own money, the Palestinians would print their own postage stamps. And indeed, Palestinian stamps now bear all the symbols of Palestinian nationalism, but the Palestinian Authority still does not have its own currency.

On the West Bank and Gaza, the Israeli shekel continues to be the legal, accepted currency. Ostensibly, this is strange. Once, after the Hamas take over, I asked a bank manager in Gaza, “Aren’t you and your friends ashamed to be using Israeli coins and bills, with all their Zionist national symbols?” He laughed heartily and answered, “If you happen to decide to print banknotes inscribed with ‘Death to Arabs,’ I’ll accept those bills, too. The more money – the better.”

In other words, a national currency may have symbolic value as a declaration of sovereignty and independence, but it doesn’t have any economic value. What matters is the strength of the currency.

In this context, Al-Wazir has suggested that the Palestinians mint coins with their national symbols – but that the currency will be linked to a stable currency, such as the American dollar. To make it perfectly clear to his countrymen just how dangerous it is to create an unlinked currency, Al-Wazir always keeps in his pocket a Zimbabwean banknote with a nominal value of one trillion Zimbabwe dollars – a bill that is now worth absolutely nothing.

Obviously, it would be most convenient for the Palestinians to link their national currency to the Israeli shekel, since almost all of their trade is with the State of Israel. Palestinian leaders and officials are currently mulling over that political decision.

THE PALESTINIANS COULD ALSO demand abrogation of the customs agreements between Israel and the Palestinian Authority. This was also discussed extensively in the Oslo Accords. During those years of negotiations, 1993-1995, movement of people and goods between Israel and the West Bank was fairly free, and there was even a degree of openness between Israel and the Gaza Strip. Israel thus feared that if the Palestinians were allowed to determine the custom rates in the territories, smuggling in both directions would quickly develop. If, for example, the Palestinian customs taxes on cigarettes were lower than those in Israel, then smugglers would immediately begin bringing cigarettes into Israel form the territories, and the same would be true for everything from cars to shoelaces.

At that time, it was agreed that Israel would handle the customs for all of the goods imported into Israel. Israel then transfers the customs levied on goods that end up in the Palestinian territories to the Palestinian government. More than half of the Palestinian budget is financed in this way.

But since then, a critical change has taken place – there is no longer free passage between the territories and the State of Israel. The border with the Gaza Strip is completely closed off and tightly monitored; fences and walls separate Israel and the West Bank. Since there is a physical border between Israel and the territories, officials in Ramallah are investigating the possibility that after September, they will turn to the Israeli government and say: “Let us collect our own customs on goods imported into the West Bank and Gaza. We no longer need the Israelis in the middle, and Israel won’t suffer since the borders are sealed.” It is also likely that they will demand the right to determine their own customs regulations and impose, for example, import taxes in order to protect their own industries.

In fact, I frequently hear Palestinian manufacturers complaining that imports into Israel, based on cheap labor in China, are destroying Palestinian industries.

Like currency, customs controls are also symbols of independence and sovereignty.

Throughout the world, travelers who pass from one state to another must first present their passports, then pick up their baggage and go through customs. But strangely, in passing between Israel and the West Bank, all of those checks are done on one side only – the Israeli side. No Palestinian immigration officers inspect documents, no customs officials check the baggage. The reasons for this are political: The Palestinian Authority doesn’t recognize these border crossings, since most of them are located in the West Bank. If the crossing points were set up precisely on the 1967 lines, the Palestinians would probably set up passport control and customs stations on their side (as they have in the Gaza Strip, where the crossings are in fact on the border).

And then there’s another problem: What will the Palestinians do with the settlers? It is likely that after the unilateral declaration of independence inside the 1967 borders, the Palestinians, in an effort to assert their sovereignty and control over the region, will escalate what they refer to as the popular non-violent struggle.

Following the dramatic success of the Arab Spring, which has toppled the regimes in Tunisia and Egypt and threatens to take down the regimes in Syria, Yemen, Libya and perhaps other countries in the region, popular uprisings have become a call to action. Throughout the region, demonstrators are carrying signs and shouting slogans that begin with the words, “The people want….” In Egypt, it was “the people want to get rid of the president.” In Syria, it is, “The people want to take down the government.” Over the past few months, the Palestinians have been shouting, “The people want an end to the split [between Fatah and Hamas].” Hundreds of refugees have marched along Israel’s borders on the Golan Heights, Lebanon and Gaza, demanding, “The people want an end to the occupation.”

Encouraged by the Palestinian Authority, popular demonstrations have been taking place on the West Bank for some time, especially in Bil’in, Ni’ilin, and Nebi Salah in the northern West Bank and in Wallaja, Silwan, and Sheikh Jarrah in East Jerusalem. Hundred of demonstrators have been turning out, and the Israeli security forces have so far managed to deal with them without extensive casualties. But will happen if thousands, or even tens of thousands, of Palestinians, with the aid and support of the entire international community, take to marching to demand recognition of the independent Palestinian state?

That’s the real danger that the impending September tsunami poses to Israel.


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