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After Kerry visit, Israeli and Palestinian leaders quietly re-open economic negotiations

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U.S. Secretary of State John Kerry (center), Israeli President Shimon Peres (left), and Palestinian President Mahmoud Abbas all shake hands during the World Economic Forum in Jordan, Sunday May 26, 2013. (Photo: Jim Young/AP)

Perhaps the greatest achievement in neutralizing the Palestinian cause from its starting point, a liberation plight, was nudging it into a humanitarian project. Over the past two decades political talks have been exchanged for economic ones.

The subtle change is also reflected in U.S. policy, which became clear after Israeli and Palestinian leaders met in Jerusalem on Sunday to reopen economic collaboration that was unilaterally suspended by Israel last fall following the Palestinian bid for non-member observer status at the United Nations. This was the first official discussion between finance ministers Yair Lapid and Shukri Bishara, who took office last month under the also-newly-appointed Palestinian Prime Minister Rami Hamdallah–and seemingly it occurred at the behest of a U.S. balloon aid payment.

The meeting tailed Secretary of State John Kerry’s announcement that the self-appointed broker for peace would infuse $4 billion into the Palestinian economy. Unlike past endeavors, this aid did not accompany a drive for political talks; there was no demand for a Camp David, not even an Annapolis-style negotiation– talks about having talks. The aid was timed with Israeli and Palestinian leaders entering non-conditional direct economic negotiations in exchange for the funds. Or more cynically: land for money.

In all practical sense, the meeting marked the U.S. abandoning political goals through diplomacy for regular meetings between Israelis, Palestinians and foreign lenders on how to best develop the West Bank. The finance ministers concluded their Sunday talk by reconvening the Joint Economic Committee (JEC), an Oslo Accords-mandated arbitration body and its sub-groups. It previously functioned as an intersection for Israeli and Palestinian leaders on industrial development programs outlined also in the Oslo-era. These include all of the big infrastructure projects in the West Bank, from manufacturing zones, to roads, to sanitation facilities (a new dump is being built now by the PA with the help of Israel, the World Bank, and the German Development Bank on land confiscated from Palestinian villagers. Like every other major project it was planned through the JEC).

Additionally, Palestinian labor in Israel and VAT taxes are under the purview of the JEC. In short, it is a body for economic collaboration not political contention, ordained by peace talks but not under the same timetable.

On a micro level, one problem with using the JEC political outcomes is that it is a non-biding body. At most it can mediate infractions. When breaches of the Paris Protocols of the Oslo Accords take place, this group can hear complaints, but it can’t force one party to live up to its commitments. For example there is no means to address the Palestinian complaint on the reduced number of workers with permits to enter Israel, which have decreased to one-sixth of the pre-Oslo number–even though the Protocols specifically state that Israel is to ensure Palestinians have reasonable access to work inside of Israel.

When the JEC was founded back in the 1990s, Israel agreed in theory to foster the Palestinian economy. But in practice those protocols were abandoned as quickly as they were drafted. For example, six points under Article IX on industry state in various ways that each party cannot “damage” or “endanger” the development projects from “the other side.” At face value it means Israel should not actively compromise businesses courted by the Palestinians. But settlement industrial zones with lax regulations on labor and tax breaks render impossible a competitive Palestinian counterpart– not to mention the pollution created by illegal dumping of toxic waste. And new state-building measures, like the Palestinian minimum wage, are undermined by the unregulated Palestinian labor practices inside of the settlement zones.

Stark visuals of the JEC and the Protocols’ failure are the Palestinian industrial zones outside of Jericho, Jenin and Hebron. The Jericho business park resembles a dirt parking lot rather than a state of the art facility with 24-hour access to Jordanian borders for exports—as the park was advertised, when it was courting investments. Its barren plots grimly foreshadow what can reasonably be expected from future collaborative economic projects. The Palestinian sites will sit vacant as  settlements bring in more international factories.

And what of the future, after the aid arrives?

Without Israeli guarantees for the free flow of goods through checkpoints, doing business in Palestine will continue to be an unstable venture for foreign companies and lenders. Still the JEC talks will likely ease international supporters who are weary that their investments will fund projects that will never be completed, like the Jericho park. It is no coincidence then that these three major foreign-backed development zones in the West Bank all received Israeli blessings in the past and that the new $4 billion from the U.S. is preceded by re-started economic collaboration. Together they mean the U.S. is doubling-down on a Kantian-style approach to international relations; foreign intervention is employing the prospect of industrialization and liberalization to usher in and end to the conflict.

The Palestinians know what the price of that cash injection is: “A new international effort, led by the US, is taking place in order to resume final status negotiations,” the Palestinian Liberation Organization Negotiations Affairs Department announced right after Kerry committed the funds. But again, if history is a model, Israeli collaboration will do little for the Palestinian economy, even if the PA is desperate to lock in funds. 

Simultaneously, the P.A. cash flow, dependent upon foreign donors, is drying up fast. The P.A. owes $4.2 billion to Israel (not including electrical debts) and just last week Sweden announced that it would cut around $30 million in funds to the PA, for lack of progress in peace negotiations.

The looming pitfall is that Palestinians leaders are making a major political concession that will harm prospects of autonomy in the future. While President Mahmoud Abbas has given in on lands swaps, he is firm that a settlement freeze is a precondition for negotiations. And the Israelis in turn, are against any preconditions. Still, the JEC meeting would amount to re-kindling negotiations, without any political demands on a final status solution. It would seem that the economic talks are mere placeholders, intended to gain international aid to keep the PA afloat. And the cost is the larger political struggle.

Facts on the ground are inching forward, though. In the absence of a real political settlement on the horizon, the new projects to come from the $4 billion will firm up economic borders and institutionalize limited sovereignty in the West Bank. The PA is demonstrating that if they ever do build a state, it will be one with Israeli oversight of their internal affairs. Thus JEC is no place for challenging the occupation (and it never was). But because of international pressure it is the only boxing ring left.

Allison Deger
About Allison Deger

Allison Deger is the Assistant Editor of Follow her on twitter at @allissoncd.

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27 Responses

  1. German Lefty
    German Lefty
    June 18, 2013, 2:43 pm

    BILD newspaper’s exclusive interview with Shimon Peres:
    Title: Unfinished peace is better than complete war
    BILD: Do you still consider nuclear weapons the biggest threat to the region?
    Peres: Nuclear weapons in the hands of the wrong people – yes.
    BILD: How can the enormous differences between Israelis and Palestinians be settled? (Note: The existence of Palestinian Israelis is ignored by the German media!)
    Peres: I don’t believe that there are still big differences. A start was already made with the Palestinian Authority. We agreed on a common solution, which is a two-state solution – an Israeli state and a Palestinian state. Both states will be good neighbours and cooperate with each other. The problems are minimal. The state of uncertainty between a proper beginning and a proper solution still causes divergences of opinion – but these can be bridged. The actual problem is not the different opinion but rather the scepticism. The people simply don’t believe that a solution is possible. And it is so easy to convince people that something is difficult. For whatever reason, you appear more reputable to people if you are pessimistic instead of optimistic. However, history proves that ultimately optimism has always won – not pessimism.
    (own translation)

    • Inanna
      June 18, 2013, 8:36 pm

      The problems are minimal

      If it wasn’t so tragic and deluded I would laugh.

      But let me provide a translation. The problems are minimal if the Palestinians would just agree with us.

  2. ritzl
    June 18, 2013, 2:59 pm

    If the PA wants to negotiate about economic issues, shouldn’t those negotiations be about divorce rather than more congenial cohabitation? Move to separate banking, telecom, water, natural resources, etc. from Israel. They won’t.

    This is another indication that there is no intention on the part of Israel for a sovereign two state outcome (or using their own words, to establish the infrastructure necessary for statehood to be considered). If there was any such intention, Israel too would be moving toward divorce.

    I don’t get why the PA is seeking to pave the way for continued international-funded projects. They would only be built by Israeli firms using Palestinian resources extracted by Israeli firms and sold back to the Palestinians for aid money.

    This economic “negotiation” has intentional dependency written all over it, not the least of which is the PA leaderships dependency on aid to cover their own salaries.

  3. HarryLaw
    June 18, 2013, 3:05 pm

    I think we can assume the fix is in, Abbas said he would wait to see what the US position was when his deadline expired June 20th [approx] the Israelis are not going to enter economic negotiations and Kerry is not going to promise 4 billion unless Abbas folds on the UN agencies and the ICC, that picture above sums it all up Peres ecstatic, Kerry thinking “I cannot believe Abbas can be bought so cheaply”, Abbas, We are broke, I have no choice.

    • ToivoS
      June 18, 2013, 7:38 pm

      I think Abbas has given up on any kind of acceptable settlement for the Palestinians. He and his buddies in the PA are riding the gravy train. The funneling of many 100s of million dollars to the PA over the past 20 years has produced a large number of wealthy individuals. These guys are the Palestinian’s 1% and their task is to keep the money flow going as long as they can. This is one reason the US has committed so much effort to building the security forces for the PA, we all know their primary task is to suppress the Palestinian street.

      Unfortunately, Palestine will need an internal revolution before they can begin to work effectively against Israeli oppression.

  4. shachalnur
    June 18, 2013, 3:11 pm

    Nice show.

    US trying to set the Middle East on fire,with the help of NATO and Muslim Brotherhood in Turkey and Egypt.

    Kerry peace diplomacy in high gear.

    Bennet form the outside,Danon from the inside, sabotaging any advance.

    Aim; Topple Nethanyahu by blowing up the coalition and new (internal Likud) elections.

    Therefore relative silence from Yesh Atid.

    Like Nethanyhau was trying to impose President on US(Romney),US is trying to topple Nethanyahu.

    Bennet is foreign plant,Danon is covering in order to not lose too many votes for Likud.

    Nethanyahu might force Bennet out and bring religious in.

    But for that Yesh Atid has to collaborate,if not elections.

    Israel Beitenu-Likud might split up in order to get more votes.

    Likud/Israel Beitenu/Religious against warmongering US Zionist stooges Bennet,Livni,Yachimovic.

    Lapid will have to chose what side he picks.

    Israeli-Palestinian peace talks are smokescreen for the real fight over Israel.

    So are bennet and Danon’s declarations.

  5. Citizen
    June 18, 2013, 3:57 pm

    US tosses more taxpayer cash at the I-P Conflict. So what’s new? Seems to be USA’s #1 policy. Look how it results in Afghanistan. This is Mafia politics all the way. Kill or bribe. I guess that’s what they mean by the oxymoronic, recently-made vintage “judeo-christian values.”

  6. annie
    June 18, 2013, 5:26 pm

    just tightening the noose. infuriating beyond belief.

    • asherpat
      June 18, 2013, 6:02 pm

      “injecting $4bn into economy” is “just tightening the noose” according to Annie “Orwell” Robbins.

      And War is Peace of course!

      • Hostage
        June 20, 2013, 5:49 am

        “injecting $4bn into economy” is “just tightening the noose” according to Annie “Orwell” Robbins.

        And War is Peace of course!

        The Zionist elite have hatched another scheme to separate some schnook from his money. That $4 billion is going to end up lining their pockets. The function served by the Palestinians and their economy in all of this is the same one fulfilled by schools of shrimp when a whale scoops them up in its baleen plates and squeezes the life, and whatever else they’ve managed to accumulate, out of their carcasses with its enormous tongue.

    • Inanna
      June 18, 2013, 8:33 pm

      Yep. I’m starting to think the PA is fast becoming the equivalent of the South Lebanese puppets.

      And the US is like all those countries that wanted to implement ‘constructive engagement’ with Apartheid South Africa

  7. Felice Gelman
    Felice Gelman
    June 18, 2013, 5:45 pm

    The game is a simple one: increase the dependence of the urban West Bank population on government and NGO jobs, destroy the ability of the rural population to live on agriculture, herd them into the cities. If the PA holds out for any actual sovereignty, pull the plug on the money and starve the population into submission.

    Unfortunately, the conditions the US and Israel insist on forcing down the PA’s throat are completely unacceptable to millions of Palestinians — in the West Bank, in Gaza, in the refugee camps, and the in the diaspora. The result almost has to be a conflagration — which must be laid at the doorstep of a US government that has never challenged Israel’s basic commitment to take all the land and immiserate as many of the Palestinian people as possible.

  8. ivri
    June 18, 2013, 6:48 pm

    I am amazed at the negativism expressed here – allowing ideological hostility to trump practical commonsense. Isn`t it clear that economic advancement will make people less antagonistic? That economic cooperation will build trust, that mutual prosperity is a winner (also because the Palestinians have TV sets and can see the alternatives – what goes on in the neighborhood)? That the political dimension can follow the economic one in a phase-wise manner? That an “organic” solution over time, rather than a prematurely imposed one, is much more likely to succeed and endure?

    • German Lefty
      German Lefty
      June 19, 2013, 9:18 am

      That economic cooperation will build trust
      How can there be cooperation when there’s occupation?

      That an “organic” solution over time, rather than a prematurely imposed one, is much more likely to succeed and endure?
      Premature? After 65 years of ethnic cleansing and occupation? You must be kidding. Without an imposed solution, there will be NO solution.

  9. Citizen
    June 18, 2013, 7:02 pm

    Again, Uncle Sam’s tactic is to shove more bags of taxpayer cash into the mix. Shows the US philosphy, for both the Israelis and the Palestinians.

  10. Inanna
    June 18, 2013, 8:39 pm

    The reason Abbas is supported by Israel and the west and this fake elite put into power is to sell-out the Palestinian people. That is their role. We can’t be surprised if they do it. The only hope now is if the Palestinians in the West Bank reject this as another ploy that screws them over without delivering either their economic or political freedom.

    • seafoid
      June 19, 2013, 5:01 am

      I think the West expected the Israelis to give the palestinians something. But the Israelis can’t even do that much. So it doesn’t really matter about the PA. There is just going to be apartheid.

      I think ‘Abbas did his best . He was put into a situation he didn’t create. He was asked to negotiate and show the way to a peaceful resolution. He proved that there is no point in expecting good faith from the bots. He was negotiating with people who are effectively insane.

      The Palestinians in the West Bank are never going to accept what Israel wants for them.

  11. DICKERSON3870
    June 19, 2013, 12:08 am

    RE: “[J]ust last week Sweden announced that it would cut around $30 million in funds to the PA, for lack of progress in peace negotiations.” ~ Allison Deger

    SEE: “‘Yes, we are funding the occupation’, Swedish minister glibly tells Gaza youth”, by Rana Baker Electronic Intifada, 6/15/2013

    [EXCERPTS] . . . Carlsson [the Swedish minister], clad in a traditional Palestinian embroidery dress, began by suggesting that Palestinians in Gaza and the West Bank should be “brought together” noting, with a smirk, that people in the West Bank refer to themselves as “West Bankers,” just as people in Gaza often refer to themselves as “Gazans.” However, she made no mention of Israel’s policy of dividing Palestinians and forcing them into separate bantustans, with municipal powers at best. We told her that bringing Palestinians “together” in the physical sense is impossible due to the Israeli-controlled Erez checkpoint that perches between us.
    Carlsson nodded – nodding was the mantra – then went on to blame Hamas for cracking down on cultural activities and youth gatherings, implying that had it not been for the Hamas government and its security apparatus, Gaza would have flourished culturally.
    I explained to Carlsson that Israel is the primary actor in the deterioration of the social and cultural life in the Gaza Strip, and that Israel’s missiles neither spare students nor universities. I also gave the example of the recent Palestine Festival of Literature in Gaza, during which members of the Hamas youth, and even some of the group’s high-profile officials, attended a few of the events and participated just like anyone in the audience.
    This notion was reiterated more than once by many of us who were in the discussion. Seeing that no one agreed with her complete evasion of Israel’s responsibility for dwindling cultural and social conditions, Carlsson asked: “So you think we should talk to Hamas?” But before anyone could answer she said: “But you know our contact policy in the EU. We are waiting for the Palestinian elections to be held.”
    At this point everyone at the table, save the Swedish officials of course, burst out laughing. “Good luck waiting,”
    commented Yasmeen El-Khoudary, a blogger and co-founder of the Diwan Ghazza cultural forum. I could barely keep silent, and literally had to bite my lip to avoid cracking up.
    Carlsson was not impressed. The reaction was perhaps not what she expected. “So how do you think we [in the EU] can help?”
    Here the conversation started to sting. Carlsson was obviously expecting us to ask her to supervise an initiative that calls for fighting misogyny under the “Islamist rule” of Hamas or against the “Islamization” of the Gaza Strip.
    “You can do a lot,” I answered, “the EU has influence over Israel but it is simply not interested.” Here Carlsson turned her face, talked to the waiter, then an official, as if I was not speaking to her. “For example,” I continued raising my voice a little bit, “the EU decided that settlement products will be labeled as thus but this is taking longer than needed, the EU also upgraded its trade relations with Israel last year.”
    Carlsson did not address any of my points. In between her chat with the waiter and official, she nodded and nodded, but being so focused on what the official was telling her, in a low voice of course, I do not think she heard much of what I was saying.
    Sameeha Elwan, a blogger and human rights worker, also criticized EU’s policy and double standards. “Yes, we are funding the occupation, you can blame us,” Carlsson finally confessed. . .


  12. kalithea
    June 19, 2013, 1:38 am

    Abbas has been shaking hands with the devil for years and lining his pockets with U.S. dollars while Palestinians who truly love Palestine suffer.

    I hope a very hot seat is being reserved for him down under the day he checks out in payment of the ultimate collaboration.

  13. Hostage
    June 19, 2013, 5:27 am

    Kerry and Obama made it clear that they have no American peace proposal of their own to offer the region. This development simply reflects the fact that they’ve adopted Netanyahu’s existing political platform of distracting attention away from the on-going land grab and human rights abuses and turning Palestine into a dependent territory of the State of Israel as some sort a palliative measure:

    Haaretz Nov. 20, 2008 Netanyahu: Economics, not politics, is the key to peace

    Likud chairman Benjamin Netanyahu told the closing plenary of the United Jewish Communities General Assembly Wednesday that the peace process needs to focus on economic issues and not political disagreements.

    Instead of talking about contentious issues such as the status of Jerusalem, the first step to a lasting peace needs to be the fostering of the Palestinians’ economic situation, he said.

    “Right now, the peace talks are based only one thing, only on peace talks,” he said. “It makes no sense at this point to talk about the most contractible issue. It’s Jerusalem or bust, or right of return or bust. That has led to failure and is likely to lead to failure again.”

    If improving the economic situation is the answer, why does Netanyahu spend the bulk of his budget on the Israeli defense sector? He obviously isn’t offering to allow Palestine to do the same or offer the residents of Gaza any high paying defense sector jobs in their own country as part of their economic future. He’s proposing a full blown colonial economy that will allow Israeli investors to skirt the few banking and finance controls that still exist in the rest of the civilized world and chase after some more windfall profits under yet another Zionist scheme.

    • seafoid
      June 19, 2013, 9:54 am

      “Likud chairman Benjamin Netanyahu told the closing plenary of the United Jewish Communities General Assembly Wednesday that the peace process needs to focus on economic issues…”

      So true. If Israel doesn’t give the palestinians statehood its economy will collapse.
      This should be a rabbinical issue

      “Is there a big debate among Israeli rabbis over human rights issues?” I ask him.
      He looks at me sadly. The question deflates his energy.
      “The vast majority of rabbis don’t get involved in such issues,” he says. “Certainly not in defense of Palestinians. They don’t regard them as rabbinical issues. Most of the rabbis who are activists are rabbis on the right. They tend to be part of the settler movement.”

      “In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.” F. Nietzsche

    • Kathleen
      June 19, 2013, 11:13 am

      Thanks for your insightful comment

  14. American
    June 19, 2013, 9:27 am

    It never ends.

    Military Aid for More Weapons
    Either Way Israel Won’t Be Paying for the Weapons
    by Jason Ditz, June 18, 2013

    The Israeli Defense Ministry is calling it a “bridge loan,” but in reality it is tantamount to when a child wants a couple of weeks advance on their allowance to buy something.

    The Defense Ministry is seeking to buy $5 billion worth of weapons and wants the US government to “guarantee” the amount so that US commercial banks will front them the additional cash on the assumption it will eventually be covered by future US aid.

    The Obama Administration has been shoveling $3.1 billion of military aid at Israel annually, but when you’re buying $5 billion worth of arms in one shot, it’s going to take more than a full year’s aid.

    The Obama Administration had already announced the “sales” to Israel previously and is almost certain to approve anything to get the transaction completed. Make no mistake, though, there is no “sale” here: it is the US giving Israel those weapons and Israel is paying for it with promised future US aid.”

  15. American
    June 19, 2013, 11:50 am

    Kerry is a stupid stupid man. ..what a circus of elite clowns we have.

    Pentagon shoots down Kerry

    ”At a principals meeting in the White House situation room, Secretary of State John Kerry began arguing, vociferously, for immediate U.S. airstrikes against airfields under the control of Bashar al-Assad’s Syrian regime — specifically, those fields it has used to launch chemical weapons raids against rebel forces.

    It was at this point that the current chairman of the Joint Chiefs of Staff, the usually mild-mannered Army General Martin Dempsey, spoke up, loudly. According to several sources, Dempsey threw a series of brushback pitches at Kerry, demanding to know just exactly what the post-strike plan would be and pointing out that the State Department didn’t fully grasp the complexity of such an operation.

    Dempsey informed Kerry that the Air Force could not simply drop a few bombs, or fire a few missiles, at targets inside Syria: To be safe, the U.S. would have to neutralize Syria’s integrated air-defense system, an operation that would require 700 or more sorties. At a time when the U.S. military is exhausted, and when sequestration is ripping into the Pentagon budget, Dempsey is said to have argued that a demand by the State Department for precipitous military action in a murky civil war wasn’t welcome.”

  16. AlGhorear
    June 19, 2013, 11:54 am

    Kerry’s $4 billion isn’t going to do anything for the Palestinian economy, unless it’s used to destroy the wall and dismantle the system of permits, checkpoints and settler-only roads that stifle movement in the West Bank. There can be no meaningful commerce when neither people or goods can be moved freely throughout the area.

    when I was in the West Bank 10 years ago, the only motor vehicles allowed through the checkpoints were ambulances and UN vehicles. Goods had to be to be unloaded and carried or pushed in carts through the checkpoints. People had to get out of buses and taxis, carry their luggage through the checkpoints, and then pick up a new taxi or bus on the other side. Or you could walk around the checkpoints through the fields. And the fact that walking around the checkpoint could fairly easily be done is proof that the checkpoints are not about security.

    Nowhere was this more evident than in Qalqilya, where the city is completely surrounded by the Wall and the entrance guarded by an Israeli checkpoint. I’ll never forget the sight of a young man pushing chicken quarters on a wheelbarrow through the checkpoint. The chicken meat was glistening in the hot summer sun. The whole system is designed to make it more difficult for Palestinians to live in the West Bank. That’s all part of Israel’s plan too. They’re hoping that by crushing the economy and making life so difficult, that Palestinians will give up and leave. Our ISM group was denied entry into Qalqilya by the soldiers at the entrance, but we were able to make into the city by by trekking through an orchard and farmers’ fields and entering through one of the farmer’s gates. Again proof that it’s not about security.

    I’m sure Kerry’s money will not buy any meaningful easement in Israel’s restrictions. But what it likely will buy is the cooperation of the Palestinian quislings.

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