Israel's Petrostate Problem


Yesterday, the Palestinian Authority’s President Abbas seemed to put an end to hope of a negotiated peace agreement between Palestine and Israel. His talk of Israel’s ‘genocidal and colonialist’ actions in Gaza is bewildering considering fellows Arabs are committing true humanitarian horrors not too far away in Iraq. Its mind boggling when you think of Abbas’ silence over conflicts such as Libya where the death toll since the start of the civil war has far exceeded the recent bout of conflict in Gaza; or for that matter the war in Syria, where the death toll and displacement figures in a few years stretch well beyond the entire cumulative numbers of dead and displaced since the beginning of the Israel-Arab conflict.


In reality, the real reason for Abbas’ bombast at the UN and drive to begin joining international bodies is because the elections loom large in Palestine. Polls show Hamas is soaring and on course to win an overall majority from Fatah that would see Abbas’ position become untenable. In his quest to quench his thirst for power, Abbas has probably sped up the slow demise and rot already taking hold in the peace negotiations.

With armed groups still operating in Gaza and riots simmering in East Jerusalem and the West Bank, the hope of a peace settlement looks far away. Israel has been right in their staunch stance of refusing to agree to concessions while anti-Semitic militias not just operate but rule the neighboring territory of Gaza whose bargaining position is weaker. Israel has little to gain in the short term from lifting the blockade and ending restrictions on areas such as the Gazan air space; Israel’s successful and innovative capitalist economy means countries all over the world are lining up to do business with the shining beacon of hope in the Middle East. On top of this, the threat of Islamic State that has now extended up to Israeli territory has made Israel quite literally a front line and first defense for Western values; the Western world is beginning to realize once again the value of Israel’s existence and shared world view in a part of the world becoming acutely worse and hopeless, despite a vocal minority decrying Western support for Israel.

Yet, for all Israel’s military might and political power it will need to seek a long-term solution to Palestine and, in particular, Gaza. The war this summer took a toll on Israel’s economy. Business leaders expect reduced production from bomb threats in Southern Israel near to where fighting took place in Gaza to take a year to recoup. According to reports by Bloomberg, a survey by the Israeli branch of Dun & Bradstreet (DNB) found about 20 percent of businesses in the south whose situation was aggravated by the Gaza conflict are now in danger of closure. In addition, the Ministry of Tourism has estimated the conflict cost the tourist industry at least $566 million, an unsustainable occurrence considering tourism encompasses 7% of Israel’s GDP. Israel’s economy may be growing faster than the USA and the Eurozone, but it is slowing and losing momentum, a war such as the one this Summer can be enough to tip the economy into recession.

If war between Israel and Gaza militias becomes an all too frequent occurrence, investment in Southern Israel as well as tourism is not likely to hold. The rehabilitation scheme for the south will cost NIS 2.7 billion (USD $750) over five years, a costly fiscal programme especially when the economy is slowing. However, some are arguing that given recent history and the fact Hamas have not been fully eradicated, the next installment of the war will occur in 2 or 3 years, well before full restoration of Southern Israel is complete. Businesses are already being damaged and people who migrated to other parts of Israel are not necessarily returning home, only exasperating the economic hardship of the area from war and potentially causing a large rump of Israel to be an economic wasteland.

It means breaking the cycle of violence in the long term. At the moment, smashing Hamas in a military campaign will not reap the fruits Israel hopes to have sown. This is because while Hamas still receive funds from Qatar and Hamas leaders are able to use the petrostate as a safe haven from Israel targeted attacks, the organisation can rebuild and be directed for future wars, which will damage Israel’s economy. The Qatari Emir has paid official visits to the tiny enclave, on top of a donation of $400 million. Although officially for civilian projects it has been funneled into smuggling and buying weapons, as well as for digging terror tunnels into Israel. If you have any doubts to whether Qatar is supporting Hamas, look no further than Doha being granted as a sanctuary for the Hamas leadership, including Khaled Mashal. Our globalized world revolves around money and that is where Israel needs to begin to end the military threat that is knocking on its door and produce a sustainable peace.

In order for any peace process to begin once more, Israel needs to start looking towards this regional powerhouse and cut off the vital oxygen line keeping Hamas alive. The onus is not just on Israel though; the Qatari Investment Authority, the Qatari sovereign wealth fund, holds over $170 billion worth of assets, many of which are located in Western countries such as the United Kingdom. Israel needs to work with Western nations to end investment from a fund that transfers wealth to terrorist organisations. It will be hard, especially as money talks; but when that has been broken, Hamas can be defeated once and for all and only then can negotiations be reopened.