Kerry’s billions: US economic plans for Palestine place investment over freedom

Israel/PalestineUS Politics
on 68 Comments
Mahmoud Abbas,  John Kerry and Shimon Peres shake hands at the World Economic Forum on the Middle East and North Africa 2013, in Amman, Jordan. May 26, 2013. (Photo: FLASH90)

Mahmoud Abbas, John Kerry and Shimon Peres shake hands at the World Economic Forum on the Middle East and North Africa 2013, in Amman, Jordan. May 26, 2013. (Photo: FLASH90)

Since May 2013, there has been intense debate about US Secretary of State John Kerry’s economic plan for the occupied Palestinian territories. The plan – known as the Palestine Economic Initiative (PEI) – aims to develop the economy of the West Bank and Gaza over the next three years, as a prerequisite for a political settlement to end the Palestinian-Israeli conflict. However, very few of those welcoming or criticizing the plan know anything concrete about it. Hence I call it the ‘invisible plan’. On a trip to the West Bank in December 2013, I met Palestinian and international officials and diplomats who are involved directly or indirectly in the PEI. Their message was that there will not be, as many expect, a third intifada (uprising), but something very different: an ‘investment intifada’.

The PEI is invisible not only because it was prepared by a team of ‘international experts’, but also because the Palestinian people, whose economic development is at stake, are the last to know about it. This is not new. Development planning since the establishment of the Palestinian Authority (PA) in 1993 has followed a non-participatory, top-down approach that conforms to the policy perceptions of the international financial institutions, and marginalizes the very people it is supposed to benefit. The invisibility of the plan is particularly problematic this time because the PEI promises an unattainable outcome (a 50% increase in Palestinian Gross Domestic Product (GDP) over three years, a cut of two-thirds in unemployment rates and a virtual doubling of the Palestinian median wage). The disappointment this is likely to generate could produce unpleasant consequences. Many ordinary citizens I met in the West Bank fear that the PEI could be the biggest sell-out since the Oslo accords of the 1990s.

As for the ‘investment intifada’, the interviews I conducted revealed how desperate local and international officials are to create tangible benefits on the ground. Over the next year and half, officials expect that Palestinians in the West Bank and Gaza will ‘enjoy major economic benefits to facilitate and accelerate the political settlement’. The rationale is clear: offer the Palestinians better economic conditions, keep them quiet, and after three years they will make further political compromises. This approach has failed over the last two decades, but it seems no one is learning from past mistakes. However, major transformations have taken place since 2005 which will affect the peace-dividend rationale – namely, the security collaboration between the PA and Israel, and the PA’s increasing authoritarianism. The Palestinian security forces are now better prepared to protect any political agreement. However, authoritarianism and oppression will always be contested, as many young Palestinian activists affirmed in my conversations with them. They insist that a ‘peace dividend’ can’t buy freedom or justice.

The PEI will reportedly solicit around $4 billion in aid and investment, and allocate the money to such sectors as construction and housing, agriculture, tourism, information technology, building materials, power and energy, water, and light manufacturing. However, a senior Palestinian official told me, ‘We expect the figure to reach $11 billion, instead of $4 billion. We are not asking for favours, we are offering our market, economic resources and cheap labour for international investment.’ Clearly, $11 billion of investment is a far cry from $4 billion. The absorptive capacity of the Palestinian economy would need to be changed dramatically before the injection of these sums. Otherwise, this will be a perfect recipe for yet more wasted billions that will entrench the complex network of corruption between Palestinians and Israelis, and the PEI ‘will be nothing but a palliative for a dangerous disease: the continuation of the occupation’, as a former Palestinian planning minister wrote recently in the New York Times.

Radical and innovative change will require a dramatic shift in the overall framework for aid and economic development. It also requires moving beyond the territorial classification of the Oslo accords (Areas A, B and C). Palestinians should not be pleading with the Israeli authorities to allow the donor community and international investors to invest in Area C, which comprises 61% of the West Bank. Instead their efforts should be geared towards resisting the territorial fragmentation that Oslo created and the Israeli military occupation has further entrenched. The need is to confront the occupying power rather than obligingly following its rules: to change not merely the rules of the game, but the game itself.

A new narrative is emerging which presents Kerry’s billions as an investment, not as aid. Those who have devised the PEI want to market it to governments, donors, multinational corporations, Israel and the public as an innovative plan. Indeed Tony Blair, the Quartet’s representative, stated naively that ‘this is the first time in history that such a fresh, comprehensive, innovative and broad approach has been taken’.

All this is problematic for several reasons. First, it is astonishing that the PA leadership are still dependent on the US and keen to maintain its exclusive sponsorship of the peace process. PA leaders even believe in the myth that the US is interested in pressuring Israel as a way to fulfill Palestinian demands. Second, the PA’s prioritization of the needs of the international community, as opposed to the needs of the Palestinian people, has not only eroded the PA’s legitimacy at home, but brought about the failure of the PA on all fronts. Twenty years on from the Oslo accords, it is failing to bring Palestinians closer to their national goals; in fact, just the opposite. Also, despite the $24.6 billion of international aid received over the last two decades, aid has not brought peace, development or security – let alone justice – for the Palestinian people.

Third, the PEI is not designed to address the imbalances of power between the colonizer and colonized, but instead relies on the goodwill and co-operation of Israel. Thus it is Israel that will decide whether or not to give the green light to the PEI. The historical evidence suggests it will ease some restrictions and allow additional major economic activities in the occupied territories, but will never jeopardize its ‘strategic goals’. What remains clear is that dependency on the colonial occupying power to develop an independent, viable, and prosperous Palestinian economy is surreal.

Finally, while the US dominates the peace industry and its economic dimension, the European Union (EU) is also keen to play a part. However, the EU’s potential contribution is fraught with contradictions. It has failed to become a major peace broker, despite the leverage of its aid to the Palestinians and its preferential trade relations with Israel. On one hand, it has issued guidelines banning funding for projects in Israeli settlements in the occupied territories, but on the other hand it has upgraded its trade relations with Israel. It announced recently that a generous aid package would be offered to both Palestinians and Israelis if they reach a peace agreement. It would also upgrade both parties to privileged-partner status. The sticks-and-carrots game played by the EU reinforces the conventional wisdom in the occupied territories that the ‘the US decides, the World Bank leads, the EU pays, the UN feeds’.

John Kerry has called his plan ‘a new model for development’. Tony Blair has claimed it is unique in history. However, I am afraid that the plan (and the whole development industry in the occupied territories) will remain like teenage sex – everybody claims they are doing it, but most people aren’t, and those that are, are doing it very badly.

This article was originally published in The Middle East in London magazine

68 Responses

  1. dbroncos
    February 1, 2014, 12:09 am

    Throw (American tax-payer) money at it! Make it go away! This is the Wall St. solution to I/P.

  2. Walid
    February 1, 2014, 1:21 am

    Isn’t that offensive photo the same one that was used in MW’s last fund drive?

    • seafoid
      February 1, 2014, 8:30 pm


      Are you still uber sceptical now the FT has shown its hand ?

  3. Tony Logan
    February 1, 2014, 1:28 am

    How can anybody actually begin to believe that there is somehow a ‘ Kerry peace plan’ between Israel plus the US, with the Palestinians currently in the making, when the US is simultaneously currently waging an ideologic, economic, and military war against the Syrian and Iranian governments?

  4. Krauss
    February 1, 2014, 1:48 am

    Slightly unrelated, but important.

    The fallout over Scarlett/Sodastream/Oxfam continues.

    link to

    It starts to seem to me that the pro-Sodastream forces are a key dividing line within “liberal” Zionism. The whole episode serves as a brilliant reminder of how “liberal” these Zionists actually are. I mean, even Beinart said he “wished” Scarlett hadn’t done her endorsement but failed to condemn it.

    This is what “a teachable moment” means at its most effective. The BDS/Sodastream episode has more than most episodes in recent history exposed “liberal” Zionism as the fraud that it is.

    • seafoid
      February 1, 2014, 2:16 am

      I think it’s more than a teachable moment. It is the moment BDS was waiting for. Like when Tyson in the Catskills realised he could channel his potential effectively and change his fate.

      • bilal a
        February 1, 2014, 3:45 am

        I think Feldman should get Tyson to fight zimmerman:

        “Damon Feldman, the promoter organising the bout with the star, has confirmed that the fight will take place on 1 March, and that Zimmerman, who is, according to TMZ ‘open to fighting anyone… Even black people’,
        link to

    • Talkback
      February 1, 2014, 6:23 am

      The whole episode serves as a brilliant reminder of how “liberal” these Zionists actually are.

      “Liberal Zionism” reminds me of “immaculate conception”. You can believe in it, but …

      • just
        February 1, 2014, 8:25 am

        That’s a keeper……..

    • mcohen
      February 1, 2014, 7:43 am

      Krauss says

      Sodastream is a commercial enterprise created solely to enrich its shareholders.they will adapt and move on.
      Oxfam a charity that does important work ,a beacon,was used by both sides of the festering sore called the i/p coflict for political gain
      one has to ask ,as this type of campaign picks up speed ,how many other beacons of society will be trashed by both sides in their pursuit of victory
      this will not play out like the south african sanctions but will cause a lot more collateral damage as both sides begin to dig in

      • seafoid
        February 1, 2014, 12:02 pm

        Sodastream is like an antebellum slave industry. Massah is so kind to his.people and they love him because they are useless economically and have nowhere else to go. And they get whupped by the jews if they get uppity. But they are very placid when Massah is around. I really can’t believe it is 2014 and this org will be on a superbowl ad. It is as if the British East Indies company is back.

    • TheWatcherWatching
      February 3, 2014, 2:53 pm

      Much like all zionists, they have loyalty first and foremost to the tribe, they are zionists first and anything else is an afterthought. The same thing for the neocon communists when the soviets turned against the jews they turned against communism, never losing there love of big government or israel.

  5. Justpassingby
    February 1, 2014, 4:03 am

    Problem is that palestinians are so tied to Israel and the US, basically abbas have no power at all.

    Btw, seems like kerry and and peres giving abbas money in this picture…

  6. eGuard
    February 1, 2014, 7:30 am

    US buying a “peace” treaty between Israel and X.

    How well didn’t that go for Egypt, Saudi Arabia, and US.

  7. shalom
    February 1, 2014, 7:43 am

    It’s easy to hit this proposal with a stick and talk about all the failure that has preceded it and the tragic economic/social/political realities for countless Palestinians surviving in the West Bank, East Jerusalem and in the Refugee Camps. But PEI can be utilized as a lever to lift the Palestinian economy and to make it increasingly independent as new international players join the ranks of investors in a growing Palestinian economy. Why not use $4billion to truly incentivise the Palestinian future?

    • Maximus Decimus Meridius
      February 1, 2014, 11:19 am

      ” PEI can be utilized as a lever to lift the Palestinian economy and to make it increasingly independent”

      I don’t think you understand. The whole goal of PEI is to ensure that the Palestinian economy becomes increasingly DEpendent on Israel. The purpose is to provide a captive market for Israeli goods (which will be more and more neccessary if BDS really takes hold) while dampening down any and all aspirations towards genuine freedom. In the meantime, Gaza will be left as the world’s largest open-air prison, serving as a constant reminder to West Bank Palestinians of what awaits them should they ever consider getting uppity.

      • Citizen
        February 2, 2014, 1:00 am

        I guess Israel will continue to be allowed to shoot at Gaza’s fishermen after Kerry makes the deal? Who gets the energy rights in the water off Gaza shores? Nothing about Gaza in Kerry’s mind? Don’t the Palestinian negotiation team care at all about their brothers and sisters in Gaza?

    • seafoid
      February 1, 2014, 12:04 pm

      Because you owe them at least $50bn you cheapskate.

    • Citizen
      February 2, 2014, 1:02 am

      @ Shalom
      Yeah, why not sell the Palestinian rights out for four billion, a paltry sum–Israel gets that free with interest from the US every year.

  8. just
    February 1, 2014, 10:14 am

    Responding to seafoid–thanks for the link to that! The joyful music intertwined with the mournful rings so very true.

    I’ve listened to O’Carolan’s genius for a long time now– many play his music. His “Farewell to Music” evokes loss and pain– it’s the song of all those that are hurt, huddled, afraid and in pain.

    Here’s another rendition:

    • seafoid
      February 1, 2014, 10:57 am

      si bheag si mhor

      Is about big fairies and small fairies having an argument , I think

      link to

      link to

      here is the translation of the gaelic version:

      “Oh, great strife came between the kings
      Feuds grew between their Hills
      Because Big Hill folk spoke too well of themselves
      While small hill burned beneath them
      “You can never share rights to our noble lake
      Go into ranks by tribe or town.
      Carry your blemish away from us
      Be happy to keep your hands and feet

      “You cannot always win every fight
      On lake, on land, when we contend
      It would be good if you made peace
      Instead of ordering wars in here
      Time to gather the hosts,
      make a striking force
      From throughout the plains
      they come marching here
      It will never seem right to die for hills
      Beheaded in that slaughter

      THis is why battle pains our hearts:
      With Hill princes on every side,
      And Tuatha De Dannan come in a swarm,
      The slaughter is not surprising
      Then it is that the Hill kings lost
      The thousand killed on every side
      There was no dwelling lnot destoyed
      In all the killing that day

      “Parley, parley, oh friends and kin!
      Our enemy from Cairn Clann Aoidh,
      Comes from Eachlainn Peak, up our dead troops”
      Now everyone fights together

      Now none ever will say twice,
      “War isn’t caused by too much pride”
      Peace is as good as wars were bad
      The towns in both lands are rebuilding
      Envy first, then an eager host,
      Then thousand prisoners in the grave…
      Better eat words almost forever
      Than have angry brothers on their biers”

      Iran and the USA – it never changes, does it?

      • just
        February 1, 2014, 11:36 am

        No, it doesn’t.

        What is so astonishing to me is that Iran is ancient and pretty wise and the US is an upstart and more than a bit stupid.

        Israel appears to be the spark that keeps on taking, never giving– no accountability, linked to US in an ugly dance.

        (many thanks for the poem– it’s an epic)

    • seafoid
      February 1, 2014, 8:04 pm

      Did you see that live? It looks fantastic.

      • seafoid
        February 1, 2014, 8:08 pm

        Derek Bell- Carolan’s receipt
        A stonker from 1975

  9. Stephen Shenfield
    February 1, 2014, 10:52 am

    This is similar to the way the international financial institutions — which really means the governments that dominate those institutions — treat other weak and dependent countries. For instance, there are conferences where American, Canadian, and European officials plan “development” in Haiti — without a single Haitian present.

    • MHughes976
      February 1, 2014, 12:53 pm

      The Kerry Proposal will be screamingly unfair to the Palestinians in so many ways that even we will lose count. I wonder if it will even include an incentive for Palestinians to leave – raised immigration quotas and a fund that pays fares for people with qualifications. It will be rather more like economic servitude than economic peace, which I suppose was the situation in the post-bellum sharecropping deep South, with Seafoid’s Massah still very much the master. And there won’t be much that the likes of us can do to improve its terms, since everyone from Beijing to Honolulu and back again will fall over themselves to support it in fulsome terms, with peace prizes raining down. However, I’ve always thought that a 2ss period, begun on terrible and insulting terms and with a very unstable future, will inevitably be part of the story. It will give the Palestinians one thing, that is the ability to look the Zionists in the eye and say ‘We have a right to be here: even you have admitted it’. That is the negation of Zionism and may be the seed of better things for all concerned after many years in which both sides try every day to subvert the system they’ve set up amid much acclamation and congratulation from every corner of the world.

      • Citizen
        February 2, 2014, 12:54 am

        And yes, one can dream. Perhaps Israel and its supporters around the world will have to start paying Nakba reparations. After all there’s a legal precedent since Germany and its old time Nazi allies have been paying them for scores of decades now. The US is a big-time enforcer of those reparations from the small states. Nearly all big infrastructure in the first couple of decades of Israel came from Germany, often engineered by Germans, you know, to help “the desert bloom”? German reparations even pay for those trips to Auschwitz and such Israel sends its young to, to keep them hot on the idea of joining the IDF. And how about the deep discount Israel gets from Germany on those Dolphin class submarines?

        BTW, anybody hear Kerry talking about who gets control over a Palestine state’s air space? LOL

      • seafoid
        February 2, 2014, 5:30 am

        I read this in 2009 but I can’t find it online. Maybe it was here.
        Anyway it’s very interesting.

        “Zionists tend to get very scared when concrete plans are on the table (see, the Arab Initiative 2002-present). Most simply do not trust Arabs. When I ask them what their endgame is, they have none. I liken it to the dilemma of the slaveholder: “We know we need to free the slaves but if we do, what if they kill us?” This is tactically unsustainable and morally grotesque.
        That said, we have a right as Americans to propose the kind of country we wish Israel to be. If we end our billions of dollars of aid and cease giving them diplomatic cover in the UN, we lose many of our rights to dictate a solution – not our responsibility as humans to fight for justice, but some of our rights as Americans. (We as Jews must also work to not allow Israel to speak for the “world’s Jews” but that is a different issue.)”

        I bet they are really scared that Kerry’s crumbs are not accepted. They ran the show for so long.
        All that abuse at the airport is only credible if the Untermenschen have no access to other people who do not buy the memes.
        I think they know that now.

        I haven’t been to Ben Gurion since 04 but I were going now I’d just pepper them with questions. Where are you from, what schooling did you have, do you know anything about your grandparents’ culture, have you ever been to a neighbouring country, what did you think of Sharon, what do you think of Galut, how do you raise your kids, do you buy the memes, why , do you ever think about what it all means

  10. anthonybellchambers
    February 2, 2014, 3:59 am

    Breaking News:

    Israel could lose 33% of exports as EU contemplates economic boycott

    After many years of offering financial inducements to its citizens to move into illegal settlements in the Occupied Territories of the West Bank, East Jerusalem and the Golan Heights – the Israeli government has been hit with the realisation that its continued violation of international law and its contempt for human and civil rights have finally alienated it from the member states of the European Union.

    It now faces the reality of a boycott of its bilateral trade with the EU and the loss of its main export market which represents one third of its overseas business which will drastically reduce its GDP and cause an economic downturn.

    There is now growing pressure, from within the 28, EU member states, for the current Israel Association Agreement to be revoked on the grounds of the continuing breach of its specific provisions on human and civil rights.

    Unless the Netanyahu government can now reach a peace agreement with the Palestinians, that includes the repatriation of all illegal settlers in the Occupied Territories, then trade with the EU could be lost. In such event, ‘Israel’s economy will retreat’ warned Yair Lapid, the coalition’s finance minister, and every Israeli worker would be hit ‘straight in the pocket’ with ten thousand ‘immediately’ losing their jobs.

    It is now a battle between ideology and economics and given the right-wing intransigence both in the Knesset and ‘on the street’, it seems likely that the ideologues will prevail; trade with Europe will virtually cease and the Israeli state will urgently need to find new markets for its machine guns, pharmaceuticals, information technology, soda-water and Sharon fruit.

    Dateline LONDON February 1, 2014

  11. homingpigeon
    February 3, 2014, 1:34 pm

    To the extent the US has anything to do with attempting to solve this problem, the first step is an unconditional cutoff of all aid funds, bribes, baksheesh, deferred loans, weapons sales, etc to each and every entity, state, kingdom, authority, government, sultanate, and emirate in the region. A plague on all these regimes and our own.

    Vote Libertarian!

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