5 November 2015

A free market response to the Israel Palestine conflict


The economy of Israel is a capitalist success story. Known as ‘Silicon Wadi’ it has the highest density of tech start-ups in the world, attracts more venture capital dollars per person than any other country and has more companies listed on the Nasdaq than India, Germany, France, Italy, Spain and Switzerland combined. It survived the global recession almost unscathed. As the Economist described it in 2010 “over the past two decades Israel has been transformed from a semi-socialist backwater into a high-tech superpower”.

If any country understands the benefits that the market and international trade can bring it is Israel. One community that could really benefit from the same transforming power of the market, a community in grinding poverty yet bursting with would-be business owners and entrepreneurs, is the Palestinians. What is sad is that Israeli policies and practices are the source of most of the roadblocks for Palestinian commerce.

Of course, after the Palestinians, Israel would be one of the main beneficiaries of a more prosperous Palestinian territory.  Hopeless poverty is a breeding ground for a minority to spread extremist ideology.  But if people can exercise their right to trade, build businesses and own their own property they have something worth living for.

The Jordan Valley, with its fertile soils and water supply has been a site of agriculture for thousands of years. Known as the ‘Palestinian breadbasket’ it should be at the heart of a thriving Palestinian economy, yet its impoverished farmers barely scrape a living such is their difficulty keeping their land and accessing markets.

Despite being deep inside occupied Palestinian territory (oPt) the fertile plains of the Jordan Valley often fail to benefit Palestinian farmers.  The growth of Israeli settlements in the West Bank, in contravention of international law, has been a cause of tension drawing criticism from even Israel’s supporters.  There are more than 100 illegal Israeli settlements in the oPt and dozens of additional, “illegal outposts” (settlements built without official Israeli Government authorisation) housing approximately 500,000 Jewish Israelis. These illegal settlements occupy much of the best land and natural resources.  As well as being on some of the most fertile ground, settlements also have unparalleled access to water, whereas 70 per cent of Palestinian communities in Area C (Palestinian land under full Israeli responsibility) aren’t connected to the water network and have to rely on tankered water at greater cost.

One Palestinian farmer, Jamil Shawahneh, explained: “Over the years Israel has diverted much of the water to the settlements, so there’s not enough for us. I have to transfer water from one part of my land to another in a tank, because the Israeli Defence Force won’t let me build a well on my land.”

As well as losing out on the best of the natural resources Palestinian land is often confiscated for ‘security purposes’.  Mr Shawahneh was faced with this when the Israeli separation barrier was extended close to his home. “When it was constructed they took six dunams of our land which we had already cultivated and planted on,” he said. “Then they took another six and another after that. This was land that we had already invested in, so we lost money as well as land.”

But even if the toiling Palestinian farmer can get enough water to tease a crop out of whatever land he’s able to keep hold of, he is often foiled by the final obstacle preventing effective commerce in the West Bank; transportation and checkpoints. For Palestinians hoping to trade between the West Bank and other parts of the Palestinian territory; Gaza and East Jerusalem or beyond, the physical obstacles can make this close to impossible. Within the West Bank these include manned checkpoints, road blocks, road gates, earth mounds and trenches. The barrier that Israel has constructed loops inside Palestinian territory and has created a number of enclaves between the barrier and the internationally agreed 1967 border, that are difficult to access. There are also unpredictable ‘flying’ checkpoints – averaging more than 160 a week – throughout the West Bank that create closure and often extensive delays for Palestinian movement. In the baking heat of the Jordan Valley many a Palestinian farmer’s produce spoils while being held at a checkpoint for hours, often without explanation.

Despite the relatively short distances it’s often not possible to visit a nearby city and return the same day due to checkpoints, which puts off many from travelling. Producers in the West Bank can no longer reach markets in Gaza and are severely hampered accessing customers in Jerusalem.

The power of the market can be a force for good, but only if you can reach it.

Along with trade and competition, another plank of most capitalist regimes is the promotion of private property ownership. Margaret Thatcher created a revolution in home ownership in the UK with her right to buy initiatives in the 1980s.  But rather than encouraging people to own their own homes, the Israeli military bulldozes Palestinian houses on a regular basis.  According to the Israeli Committee Against House Demolitions 450 structures have been demolished so far this year, a total of 48,000 since 1967. The IDF claims it demolishes homes which are built illegally without the appropriate building permits. But getting a permit as a Palestinian in Area C is nigh impossible. Israeli civil rights organisation B’Tselem reports that Civil Administration figures show that in the 12 years between 2000 and 2012 Palestinians in Area C were issued with just 211 permits out of 3,750 applications – 5.6%. Between 2009 and 2012 the percentage was just 2.3%; 37 permits from 1,640 applications.

Rather than hampering trade, suppressing competition and destroying property Israel should be allowing Palestinians to build their economy, in turn reducing the need for overseas aid. Promoting business creation and private home ownership will not only give hope to an impoverished and frustrated people it will also improve conditions for a genuine peace.  The market models the inherent qualities of democracy, allowing people to vote with their feet and their wallets. Trade may not be a solution to all the ills of the conflict but the mutually beneficial act of commerce has been recognised to create conditions for accord. Back in 1748, Baron de Montesquieu observed that “peace is the natural effect of trade. Two nations who differ with each other become reciprocally dependent.”  In their 2006 paper on this subject the economists Solomon Polachek and Carlos Seiglie of Rutgers University concluded “the overwhelming evidence indicates that trade reduces conflict.”

As a world leading champion of market principles, Israel should allow them to work for all, including Palestinians.  With current policies producing such little progress, it’s surely worth a try.

Joe Ware is Church & Campaigns Journalist at Christian Aid