Wednesday, February 10, 2010

EI Editorial/ The success of Netanyahu's Economic peace plan - The only policy that works

(Ziyaad Lunat, The Electronic Intifada).The Israeli Prime Minister Benjamin Netanyahu was elected on a platform of "economic peace" with Palestinians in the West Bank. He contended that developing the Palestinian economy, by providing Palestinians with jobs and a better living stands, would render the "problems" between Israelis and Palestinians "more accessible for solutions."

Salam Fayyad, the appointed Palestinian Authority (PA) prime minister in Ramallah and a former International Monetary Fund official, was quick to follow with his own complementary plan last August. His policies recently earned praise from Israeli President Shimon Peres who called Fayyad a Palestinian "Ben Gurionist," in reference to Israel's founding prime minister. Economic peace won broad backing from the UN, European leaders as well as the administration of US President Barack Obama -- representatives of which form the self-appointed "Quartet" that dictates terms for the "peace process.

Tony Blair, the Quartet envoy for the Middle East peace process, characterized Fayyad as "absolutely first class -- professional, courageous, intelligent." Blair did not hold back praise for Netanyahu either, calling him a "peacemaker."

A consensus has developed among the political elite, and even among Arab states, that improving Palestinians' quality of life, even if under military occupation, is the long sought solution for Palestinian misfortunes. Netanyahu assigned Deputy Prime Minister Silvan Shalom to lead the economic peace task force and coordinate with both Blair and the PA.

The Netanyahu-Fayyad plan has been a magnet for foreign capital. The US Congress approved last July a deposit of $200 million into the PA treasury, under Fayyad's direct control. In September donor countries pledged on the sidelines of the General Assembly $400 million to the PA by the end of 2009. Last month, the European Union transferred 21 million Euros to "help the Palestinian Authority pay the January salaries and pensions of 80,551 Palestinian public service providers and pensioners."

This "West Bank First" policy of economic development replaced Bush's failed policy of democracy promotion. In 2006, Palestinians in the West Bank and Gaza Strip elected Hamas but Israel and its western allies boycotted the movement because it did not conform to the demands of the Quartet, much of them at odds with international law.

The Quartet switched strategies towards finding "moderate" partners that can implement their vision of "peace." One such person is PA President Mahmoud Abbas, whose term in office expired for the second time last month (after being questionably extended for an additional year in early 2009).

Western donors also hand-picked Salam Fayyad for the post of prime minister despite his Third Way party obtaining less than three percent of the popular vote in the 2006 legislative elections. His exclusive control of the Palestinian coffers give him immense power to implement policies to his own credit as speculation -- and in some PA circles fear -- grows that he is being groomed by the West to replace Abbas.

"Economic peace," coupled with the "West Bank First" policy of economic development serves too as warning to Palestinians. They either conform to a political program approved by Israel and Western donors or risk sharing the dire fate of Gaza, under a crippling siege since June 2007. Hamas, under intense pressure, is gradually softening its positions, with cautious overtures to Israel and the West with the hope of inclusion in the process and perhaps a slice of the monetary rewards.

The results of the first year of Netanyahu's economic peace are visible. While there has been no progress on the political front, security and economic cooperation with the PA has never been better. The American-trained security forces have kept a tight grip over West Bank towns squashing dissent and keeping "order." When the Israeli army invades during the night, Palestinian security forces swiftly retreat. Intelligence sharing has enabled joint campaigns of arrest against members of the resistance.

A year on, the cost of the Netanyahu-Fayyad plan is becoming clear. Low-income Palestinian families and small business are being encouraged to borrow to fuel a high-risk economy. Israel has proven time again that it won't hesitate to strike a blow against Palestinian infrastructure should they dissent from the current consensus in its favor. Families are risking their possessions as collateral for their debts. Corporations responsible for the global financial collapse are applying their failed models in Palestine. Abraaj Capital, a Dubai-based investment fund that recently sparked fears for debt default, announced a $50 million private equity fund dedicated to "raising standards of living," mirroring the predatory behavior that led to the collapse of the sub-prime mortgage system in the US.