In Jerusalem I heard an extremely interesting talk by a young Israeli political economist, Shir Hever, who works on the economy of occupation. The information which follows owes in large part to him.

During the first ten years of the occupation (after 1967) the Palestinian economy was actually booming. Palestinians could move between the Occupied Territories and Israel with relative ease and find work with Israeli employers. But they could only invest in education and houses; Israel prevented them from developing local industries. With the oil price rise in 1973, the Gulf states began to import labour, and educated Palestinians became electricians, teachers and engineers. In the ’80s however, with the oil price falling, things came to a halt. Further, given the Israeli economic crisis and inflation, Israelis could no longer afford to hire Palestinian labourers. The settlements expanded, cutting-off access for Palestinians to their farmlands. In Jerusalem the Israeli authority started to change its policy, revoking the residency status of Palestinians. So Palestinians, needing to prove their residency status (Permits/IDs) were afraid to go to Jordan to receive education. Among the causes of the outbreak of the first intifada (broke out 1987), the economic situation was not of minor significance.

With the intifada the occupation was no longer profitable to Israel. A massive amount of money was needed as they arrested thousands, quelled unrest and barricaded the settlements. The alternative was to relinquish control. Then came the Oslo process. Israel found ways to maintain its control through the establishment of the Palestinian Authority. International aid arrived for the Palestinians. The Israelis insisted that customs were to be paid, the aid only being allowed to be brought in on Israeli trucks, through Israeli ports and using Israeli currency, the goods often being bought from Israeli companies. The economy of Palestine deteriorated as that of Israel improved. The international community believed Israel when it said it wanted peace. During the ’90s the Arab states started to dismantle their boycott of Israel. Then international companies came into Israel, bringing foreign currency. The economic situation of the Israeli elite improved yet further. However the Palestinian economy deteriorated. International aid doesn’t establish industries.

The Israeli attitude becomes: ‘Let’s try to get them to leave’. Cutting welfare for Palestinians in Jerusalem, Jewish Israelis say: ‘Why should we pay welfare for these people who then vote for Hamas?’. The so-called ‘Wisconsin plan’ was instituted. Thousands of Palestinians were sent a letter telling them to report on their progress in getting a job, or lose welfare. The Palestinians were humiliated: they must accept any job, whatever religious or health problems might stand in the way. Women were called to do manual labour, being expected to work, or the whole family would lose income. If the Palestinian doesn’t speak Hebrew and a private company is to employ him or her, someone in the company needs to speak some Arabic. Further: how is it possible for a Palestinian who accepts welfare to say that they are not collaborating with the occupation? (West Bank welfare comes from UNRA, or from Islamic institutions as part of the effort to fight for freedom.)

Finally there is the wall. The wall divides West Bank Palestinians from East Jerusalem Palestinians, thereby undermining East Jerusalem as the cornerstone of the Palestinian economy. The East Jerusalemites had previously been in a unique position, working in West Jerusalem (Israeli) and shopping in less expensive East Jerusalem. With the wall, this is no longer possible for many. House prices in the West Bank went up, while in East Jerusalem they went down. The average Palestinian household lost 4% of their income as compared with the situation before the wall was built. It is reckoned that the East Jerusalem Palestinian economy loses $200 million every year the wall is in place. The wall is illegal! But it doesn’t follow that Israel pays compensation for the damage! Equally the wall has of course devastating consequences for the West Bank economy.

From elsewhere I heard the comment that much American aid is thought to be useless. A ‘Let’s make Palestine Green in August’ campaign is considerably pointless when people don’t have enough water to drink. People are without sufficient food and children without vitamins, while aid comes for ‘security’. Part of US ‘aid’ to the Palestinians was to provide scanning machines to Israel for checkpoints, the rational being that scanners would make security checks faster and so the queues shorter. In effect they gave military equipment to control the Palestinians.

From the Jewish Israeli perspective the Palestinians are ‘surplus’ population, undesired by Israel. Israel has in any case some of the weakest labour laws in the developed world and they do not apply to employing Palestinians. Indeed, in employing them, there is a tax to be paid, which is taken out of whatever a Palestinian is paid. Increasingly this labour is no longer wanted: Israel prefering to bring in immigrant labour from East Asia and Africa. The result is that Palestinian men aged 15-45 hang around in West Bank towns and villages with no work. Israel turns a blind eye to the use and sale of drugs among Palestinians, the dependence on which further disrupts Palestinian community and leads to internal violence.

Hever has shown convincingly that not only is the occupation catastrophic for the Palestinians but economically disadvantageous to Israel. Thus the economy is being geared and distorted in order that the greater priory of acquiring land may be advanced.

See Further on this Site:

Maps and the Land; ‘The Israeli Economy and the Occupation’.

Specialist Literature:

  1. -Downloadable papers by Shir Hever on the Alternative Information Center website.

  2. -Hever, Shir, The Political Economy of Israel’s Occupation: Repression Beyond Exploitation (Pluto Press, 2010).

Shir Hever