East Jerusalem economy struggling

An estimated 5,000 businesses in East Jerusalem have closed or moved to the West Bank since 1999 as report shows poverty rate at 78 percent.

A demolished Palestinian home in east Jerusalem 370 (R) (photo credit: Ammar Awad/Reuters)
A demolished Palestinian home in east Jerusalem 370 (R)
(photo credit: Ammar Awad/Reuters)
Nidal Ghaith was making a lot of money in Dubai working in business development.
Tall, wearing a striped purple shirt and fancy suit, and armed with a graduate business degree from England, he was on his way to a cushy expatriate life.
But two years ago, he moved back to east Jerusalem with his wife and two young children and established the Al-Quds Holding Company, a private-sector initiative that aims to revitalize east Jerusalem’s economy.
“Jerusalem has no industrial capabilities today so we are investing in different sectors including real estate, hospitality, tourism and education,” he told The Media Line in his temporary office, located in a hotel currently under renovation.
He said information technology is one field in which there could be significant growth. Israeli technology could be paired with the hundreds of unemployed Palestinian computer scientists to drive the sector, he said. Yet, despite his and others’ efforts, the economy in east Jerusalem is declining. A 2012 report by the Association of Civil Rights in Israel found that the 360,000 Palestinians in east Jerusalem (38 percent of Jerusalem’s total population) have a poverty rate of 78 percent. Some 40% of the men are unemployed.
An estimated 5,000 businesses there have closed or moved to the West Bank since 1999.
The security barrier that Israel built to stop suicide bombers from infiltrating from the West Bank stretches for over 160 km. around Jerusalem. In Eizariya, which is just outside the Jerusalem municipal limits, the Jerusalem Cigarette Company factory is located a mere 200 meters from the barrier.
Deputy director Omar Alami says the barrier has made it much more difficult to get their product to stores in Jerusalem. In addition, east Jerusalem has been eclipsed by Ramallah and Bethlehem as the Palestinians’ financial centers.
Alami says residential rental prices are rising sharply, driven upward by a growing shortage of homes, a gap now estimated at 40,000 units citywide, which he attributes to a deliberate Israeli policy.
“How can you build apartments for young couples without land?” he asked The Media Line. “Land is a key obstacle to the betterment of Palestinians in east Jerusalem. It is a deliberate policy and a time bomb. Someday it will explode.”
The Jerusalem municipality apparently refused repeated requests to meet with officials who are working on east Jerusalem. But in a statement, it insisted that the situation is improving.
“Under the current administration, the Jerusalem Municipality is focusing considerable efforts to upgrade the quality of life of the city’s Arab residents, the objective being to close the gap that has deepened as a result of dozens of years of [neglect],” the statement says.
The municipality says it has spent $150m. on building new roads and repaving old ones in the eastern part of the city, as well as $85m. to build new classrooms.
But east Jerusalem-based businessmen argue that although they are required to pay the same high municipal tax rate that is paid in west Jerusalem, the streets are full of potholes, are rarely cleaned, and garbage pickup is erratic.
“Go on Trip Advisor and you’ll see that people love our service and our hotel but complain that the streets around the hotel are dirty,” Osama Salah, the owner of the recently reopened National Hotel told The Media Line. “They take a lot of tax money from us but don’t give us much in return.”
Businesses also face challenges in obtaining government licenses, which require a certificate of “good conduct” from the police. Since many Palestinians have been arrested at some time or other for throwing stones or involvement in various kinds of protest against Israel, they are unable to obtain this certificate. Therefore, an estimated 60% of businesses in east Jerusalem operate illegally and have to pay hefty fines of thousands of dollars if and when they are caught.
“The legal situation in east Jerusalem is very complicated,” Naer Rashid, an local lawyer, told The Media Line. “The municipal taxes are among the highest in all of Israel. A small shop of 50 square meters can pay $300 per month in municipal taxes, and they simply can’t afford it.
You see that the main shopping streets close early because there is no economic activity.”
While Israel has offered citizenship to east Jerusalem residents, most choose not to become Israeli citizens for both political and economic reasons. Politically, they say that do to so would be recognizing Israel’s annexation of east Jerusalem, which they say must be the future capital of a Palestinian state. In addition, Israeli citizens are not permitted to travel to parts of the West Bank, including Ramallah, which could restrict their markets.
Yet, despite all of the difficulties, most businessmen say they are committed to staying in the city.
“I love this city – I was born here and this is the place where I want to live and die,” Nidal Gheith of Al-Quds Holding Company said. “I have a passion for the streets, for the stones of this city. You feel history touching your skin here.” •