A Palestinian shepherd 370.
(photo credit: REUTERS/Ronen Zvulun)
Back in December of 2012, Foreign Minister Avigdor Liberman raised eyebrows by
telling an American audience that if the Palestinians “achieve a GDP of $10,000,
we will achieve peace.”
Last week, Liberman picked up the economic peace
mantle yet again.
“We can talk seriously about a political settlement
with the Palestinians when their per capita GDP reaches $10,000 – not a day
before that,” Liberman said at a conference in Sderot.
Liberman, the Mideast Quartet recently revealed an ambitious new Palestinian
Economic Initiative, which seeks to dramatically revitalize eight key sectors of
the Palestinians economy and inject billions of dollars of private capital into
the territories. But as Quartet envoy Tony Blair made clear in introducing the
Economic Initiative, the success of this economic initiative, like any other,
relies in great part “on implementing large-scale Israeli easing measures” to
remove restrictions on economic development in the Palestinian
Writing in The New York Times this past Friday, Ali Jarbawi
pointed out one type of easing measure Israel could take toward that end.
Specifically, it could open Area C to Palestinian economic activity.
Liberman and the other “economic peace firsters” are serious about getting the
Palestinians to $10,000 per capita, they’ll certainly have to find ways of
permitting more open access to Area C, which contains a disproportionate share
of the West Bank’s natural resources.
However, there’s another, far less
talked about economic constraint that Israel will have to scale back if the
Quartet’s Economic Initiative is to succeed: the trade barriers that prevent
goods and services from flowing in and out of the Palestinian
The importance of foreign trade to the Palestinian economy
can hardly be overstated.
In the words of the World Bank, “West Bank and
Gaza is a small, resource-poor economy.
Consequently, its growth depends
on maintaining open trade with its neighbors.”
trade flows are significantly hindered.
On a recent Israel Policy Forum
trip to Israel, Jordan and the West Bank, participants heard time and again
about the obstacles to trade the Palestinians face. Some of these obstacles
undoubtedly stem from legitimate security concerns, such as the requirements to
carefully screen goods. And we heard some positive indications that Israel was
working with Quartet officials to find a way to reduce the burden that these
security screenings cause.
Other barriers, though, appear suspect. For
instance, we heard complaints from Jordanian officials about the persistent
closing of the Prince Muhammad Bridge between Jordan and the West Bank, and the
insufficient infrastructure at the King Hussein Bridge, which is the only
commercial route between the West Bank and Jordan aside from the Prince Muhammad
We also heard questions about the legitimacy of certain Israeli
health and safety standards, with which it can be impossible for Palestinian
producers to comply. As an example, we were told that Israeli law requires
pharmaceutical products to be inspected by Israeli officials to receive required
certification; yet Israeli security regulations typically prohibit Israeli
citizens from performing inspections in the Palestinians Territories. In
consequence, the Israeli pharmaceutical market is all but closed to Palestinian
The World Bank expressed similar concerns about Israeli health
and safety standards in a report on the Palestinian economy in the summer of
There’s nothing remotely exceptional about the fact that Israel
would seek to impose protectionist trade restrictions in its dealings with the
Palestinians. In fact, the World Trade Organization’s (WTO) dispute settlement
body has found the US guilty of similar tactics on innumerable
What’s special about the Israeli-Palestinian context though is
that, unlike the overwhelming majority of states in the world, including most
developing states, the PA is not a member of the WTO.
As such, the
Palestinian Authority cannot bring complaints against Israel to the WTO’s
dispute settlement, which means the international legal norms that keep trade
free and fair between other states don’t constrain Israel’s dealings with the
Palestinians. And given the PA’s relative weakness compared to Israel, it has
few extra-legal means of recourse to turn to instead.
Perhaps as a result
of all these power asymmetries, the share of Palestinian exports in their
economy has steadily declined over the past 20 years. If the Quartet plan has
any chance of succeeding, this trend will have to be reversed.
Tony Blair or Kerry will succeed in convincing the Israeli government that the
benefits of liberalizing Palestinian trade routes outweigh the costs.
if not, maybe Liberman will lead the charge.
Danielle Spiegel Feld is
associate director of research & policy at the Israel Policy