Five takeaways from Trump’s ‘peace to prosperity’ Palestinian plan

The long-awaited roll-out of the Trump administration’s new approach to the Palestinians began this week with the release of the ‘Peace to Prosperity’ economic plan.

The document, on the White House website, is a “new vision for the Palestinian people and broader Middle East.”

US Special Envoy Jason Greenblatt said that it has the “potential to achieve incredible results” with more than $50 billion in investment over ten years which would double the GDP of the Palestinian areas and create 1 million jobs.

The plan itself is laid out in a 38-page document that can be downloaded online. On June 25 and 26 a US delegation is discussing it in Bahrain with countries from the Middle East.

Among US officials present will be Treasury Secretary Steven Mnuchin, Assistants to the president Jared Kushner and Greenblatt, and Brian Hook who is an advisor on Iran and other policies.

Structure of the plan and the current situation

The plan is divided into three parts; unleashing economic potential, empowering the Palestinian people and enhancing Palestinian governance.

Each section is around ten pages long, which makes them appear equal in importance. Overall the three sections and divided into sub-sections where a total of fifty different topics are covered, from educational access to property rights and roads and rail connections. In this, the plan appears exhaustive.

Immediately what is striking is that much of the plan, which looks more like a brochure or a snazzy business concept, is generalizations. Key words, such as “unleash, empower and enhance” are used to spotlight different parts of the concept. The plan is supposed to open a new chapter in Palestinian history “one defined, not by adversity and loss, but by freedom and dignity.”

The plan envisions that capital raised in support of the concept will be placed into a new fund “administered by an established multilateral development bank.”

Basically it sounds like replacing existing models of funding for the Palestinians, such as UNRWA, with a new fund whose leadership will be from the “beneficiary countries” which will implement projects and give grants.

The plan appears to have two main goals in ten years: Double the GDP of the Palestinians and create 1 million jobs. The World Bank says that GDP of the West Bank and Gaza is $14.5 billion. It actually doubled since 2009 when it was estimated at $7.2 billion, according to the World Bank. So it already doubled in the last ten years.

The Palestinian GDP is larger than Somalia and South Sudan but smaller than Afghanistan. GDP per capita is around $2,200 in Ramallah while it is more than $35,000 in Israel and $4,000 in Jordan.

A UN report in 2017 from the conference on Trade and Development said that “fifty years of occupation have driven the Palestinian economy into de-development and poverty.” Agricultural output shrank by 11 percent and unemployment was almost 30 percent. Gaza’s real per capita GDP shrank by 23 percent since 1994. Studies show that debt as a percent of GDP is growing in the PA and private spending will decrease.

A European External Action Service strategy document on supporting the Palestinians, which looked at goals for 2017-2020, said that the Palestinian economic situation is bleak and declining.

International aid to Palestinians already helps provide the economy some help, even though the US has cut aid under the Trump administration. According to a report at Middle East Eye the Palestinians received around $2.2 billion a year or $560 per capita, making them some of the “top recipients of non-military per capita aid in the world.”

From 2012 to 2016 the Palestinian Authority sponged up more than $4 billion in aid. This is the situation the US walks into with this report. Trying to increase employment is a major challenge considering unemployment rates are thought to be around 30% and up to 50% in Gaza.

The International Labour Organization claimed the Palestinians in the West Bank and Gaza had among the world’s highest unemployment.

A Palestinian Central Bureau of Statistics report in August 2018 said that the number of Palestinians in the work force was 1.3 million, with 820,000 of those in the West Bank. There are an estimated 4.5 million Palestinians in the West Bank and Gaza, with 1.7 million of them in Gaza. It seems that creating a million jobs over ten years is what would be necessary anyway as younger Palestinians reach their twenties.

Around 45% of Palestinians are under age 18 and UNICEF said that 51% of Gazans were under age 18 in 2012. The rapidly expanding demographic needs jobs.

Grants: Reinventing the wheel or putting a Trump brand on Palestinian issues

The plan envisions $3.75 billion in grants for a plethora of projects.

This includes grants for startups and grants for new cargo terminals and roads at border crossings, as well as upgrading the Gaza power plant. The grants in the program appear to cover a wide range of necessary items for the Palestinians.

There is funding for a Palestinian university and hospitals. It also relates to governance, such as a land registry and using new online tools for e-governance. Tourism receives around $700 million in grants with another $2.25 billion in concessional financing. These grants and financing are termed “breakout ventures” in the report and each have an overview.

For instance in the tourism section the plan notes: “To fully develop the Palestinian tourism industry, new investments are needed to improve accommodations and attractions close to popular tourist sites.” Another section foresees $30 million in career counseling grants.

“As part of promoting the adoption of a comprehensive strategy to advance economic opportunities for women, this project will support the development of a central institution to facilitate career counseling.”

What is interesting about the plan is that in some of these cases there were existing models of supporting Palestinian civil society or women careers.

The US is reinventing the wheel in this respect with several targeted grants. It is unclear, for instance, why a new system needs to be put in place to re-discover the fact that the “Palestinian health care system requires better medical facilities to enhance treatment capabilities.”

One might ask why, after decades and billions plowed into the Palestinian sector from countries around the world, that basic infrastructure such as the power plant, universities, health care and a land registry were ossified and in need of so much assistance.

The Trump administration appears to approach the Palestinian issue the way Trump approached real estate investment, whether it was Trump Tower or Atlantic city, or other projects. Some of this isn’t exactly reinventing the wheel, but putting the Trump brand on it. So here appears to be a Trump brand for grand giving. There is no doubt that these grants target issues of national importance.

A question might be raised about why these sectors are lagging behind and the problems they face may not just be about throwing financing at them.

Elephant in the room: Israel

The prosperity plan appears to be presented in a vacuum in which Israel’s role is hidden from view. For instance when the plan speaks about “unleashing” the economic potential of the Palestinians, it says that what is needed is to develop contract rights, the rule of law and reduce trade barriers.

There is an Israeli elephant sitting astride the trade barrier and the rule of law issue. The Palestinian Authority is a series of enclaves in Area A and B.

The plan discusses issues such as “enable Palestinian high-speed data services,” but Israel only lifted a ban on 3G for Palestinian mobile services in 2018.

The plan compares the Palestinian model to various countries such as Germany and Sweden, and cities to Singapore and Dubai. But the struggles that Gaza and Ramallah face are not similar to these areas. Wouldn’t a better comparison be to places like Amman, Erbil or Srinagar?

There’s a kind of catch-22 inside the prosperity plan. For instance one section notes that Palestinian businesses tend to be small and medium sized enterprises.

This is partly due to the constraints Palestinians live under. The plan mentions that “the Palestinian people routinely encounter logistical challenges in the West Bank and Gaza,” but doesn’t mention what that challenge is. It says economic growth is being stagnated by this.

“Palestinian goods and people must be able to easily and securely move across borders.” Isn’t the address for this problem in Jerusalem as opposed to Ramallah? It is Israel that controls the movements of goods and people. The project wants to upgrade the border crossings and provide access roads.

This is important, but once again these areas are controlled by Israel. In areas where Palestinians sought to build access roads, such as developing Rawabi in the West Bank, they ran into problems from Israeli bureaucracy. So the hurdle is not just about money, it is about Israel and the need to get Israel on board for this plan.

The plan actually says that Palestinians need to develop 4G and 5G telecommunications. But there is no mention of the role that Israel has had in impeding this.

It’s as if the plan was designed for a Palestinian economy that exists in an imaginary universe or on the moon, without a realistic discussion of the fact that many aspects of the Palestinian economy are linked to Israel, and in many cases that has widespread ramifications for the Palestinians.

Even if the US wants to reinvent the way in which the funding for the Palestinians takes place, and even if it wants to escape the preconceptions of the past, including the way some countries and organizations have basically worked against Israel in their efforts, it still requires that Israel support this plan.

Reading some parts of the plan make it clear that Israel either didn’t have much of a say, was not consulted, or that the authors were not familiar with some of the role Israel has played in places like borders or telecommunications.

It may be that the plan was created to provide a kind of fait accompli to both Ramallah and Jerusalem, or as an idea, but the devil has always been in the details when it comes to these kinds of issues. Whether it is the Road Map or Oslo or other aspects of the “peace process,” the hurdle has always been in implementation and expectations.

This plan seeks to reduce expectations on the political front, but even on the economic front it appears to ignore the elephant in the room.

Plan reveals challenges facing Palestinians

The plan’s main insight is in mapping the huge number of hurdles the Palestinians face today. For instance, from agriculture to housing, the brochure spells out each problem that exists in the West Bank and Gaza.

These are major challenges. Some of them also lack clarity. For instance the plan says that Palestinian areas have natural resources, such as “stone, marble, hydrocarbons and other minerals.” This sounds resource-poor actually. Are there hydrocarbons in the West Bank?

The plan also envisions the Palestinian areas linked to regional trade and tourism. This would be ideal but the road ahead is long.

“Regional integration and cooperation have the potential to create significant new economic opportunities for the Palestinian people,” the report says.

This compares the area too. Dubai and Singapore which it says have benefited from their strategic locations.

The West Bank and Gaza, the plan says, will be encouraged to link construction and roads to “facilitate trade and transportation across the West Bank and Gaza, Jordan, Egypt, Israel and Lebanon.” Airports, seaports and natural gas trading hubs will emerge.

What’s next?

This plan, like so many before it, has a lot of generalizations and hopeful words. Its sentiments may be right, but the question will be if this is a realistic model that the US and its allies will actually invest in or if this is just a nice-looking brochure.

Some parts of the plan appear more generalization than substance. It is hampered by ignoring the political realities.

This is part of its goal, to focus purely on the economy and prosperity. But the Palestinian leadership has rejected it, understanding that it seeks to go around the leadership and focus only on prosperity without a political end game.

In some ways it seeks to draw parallels to Singapore or the Baltic states or Dubai as models. But if Singapore was still part of Malaysia or the Baltic states part of Russia or Dubai controlled not by the UAE but by some foreign power, would these countries be what they are today?

These countries had a political horizon and then an economic success story, not the other way around. There is an essential problem in proposing a massive economic package without consultation on the ground.

I used to lecture at a Palestinian university and I wonder what my former students would think of this. They were young professionals, the kind of people pictures in the plan who the plan seeks to help.

But if you don’t consult them and ask what they want, then how can you help them? Give a person a fish and you feed them for a day, teach them to fish and you give them food for a lifetime, the saying goes. But what if you don’t even bother to ask him if he wants to fish or has a pond to fish in? Then all you’ve done is thrown a rod at him and left.

“How will it work without Palestinian leaders,” a former student asked me. Indeed, that’s the question those in Bahrain should also ask.

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