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Behind the Headlines: Israelis, Palestinians Share Interest in Territories’ Economic Development

August 1, 1991
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Although their motives differ, Israelis and Palestinians share a common interest in the economic development of the administered territories.

The need for an all-out effort to shore up the collapsing economic infrastructure is acknowledged both by hawks and doves in Israel and by Palestinian moderates and militants.

All realize that a lot of money will be needed. The nearly $80 million in start-up funds promised by the Brussels-based European Community for development projects in the West Bank and Gaza Strip is just a drop in the bucket.

More outside investment must be attracted. But the main burden will rest with Israelis and Palestinians.

The Israelis have sufficient reason to act.

They are threatened by increasing unemployment while trying to absorb over a million Soviet Jewish immigrants in the next few years.

Arab terrorist attacks inside Israel are increasing.

Under those circumstances, the fewer Palestinians there are seeking work in Israel proper, the better. But to keep them close to home, jobs must be created in the territories.

The creation of one job in the territories is estimated to require an investment of $20,000, compared to $50,000 per job in Israel proper.

Creating jobs at home for the 90,000 Palestinians currently working in Israel would cost $1.8 billion, an amount Israel has no intention of spending on the territories.

But some Palestinians seem willing to share the burden.

They understand that, political obstacles aside, an independent Palestinian state can never be achieved without the economic development of the territories.

“As long as we are so dependent on Israel economically, there will be no political independence,” said Mohammed Jazji, owner of a 7-Up bottling plant in Gaza and chairman of the local manufacturers association.

But there are immediate, pressing problems.

The Persian Gulf War plunged Palestinians into a depression. One of the main channels of fund transfers into the territories was cut off when hundreds of thousands of Palestinians employed in the Gulf emirates lost their jobs and could no longer support their families living under Israeli rule.


At the same time, the citrus export business, mainstay of Palestinian enterprise in the Gaza Strip, fell on hard times with the collapse of worldwide citrus prices.

In addition, since the Gulf war Israel has, for security reasons, adopted severe measures intended to limit the number of Palestinians entering Israel on a daily basis.

Those with jobs in Israel have to obtain special entry permits, a long, humiliating process.

That situation, along with the growing reluctance of security-conscious Israeli employers to hire Arabs from the territories, has reduced the number of Palestinian day laborers in Israel from 120,000 to 90,000.

The new economic policy in the territories concentrates for the time being on the Gaza Strip, where conditions are worst.

The Israeli civil administration is developing two industrial parks in Gaza to attract manufacturing plants.

The administration recently handed out grants to build greenhouses to grow flowers for export. It is the first such enterprise in the territories.

At the same time, the approval of new plants and foreign investment is being expedited without restrictions, except for a ban on money originating with the Palestine Liberation Organization.

New plants will get a three-year tax exemption, beginning the first day they start earning profits.

The Israeli authorities plan to introduce income tax reforms similar to those prevailing in Israel. The marginal tax rate will be cut from 55 percent to 48 percent.

These new measures have been welcomed by the Palestinians. But they are no less aware than the Israelis that they do not amount to much more than a declaration of good intent.

They will hardly solve most problems, and the situation will not change radically in the near future.

“We’ll need tremendous international aid to create our own economy,” said Gaza businessman Mansur a-Shawa, son of the late mayor of Gaza, Rashid a-Shawa.

“Just as Israel relied heavily on international aid to get on its feet,” so will the Palestinians, he said.

A-Shawa warned that “an immediate, one-sided Israeli withdrawal from the Gaza Strip would amount to an economic disaster for the local population.

“Such a process needs much time and much money.”

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