West Bank plan bears fruit, but much more needed
Netanyahu's `economic peace' yields first fruits for Palestinians, but still has a way to go
By Karin Laub, Associated Press Writer
On Sunday July 19, 2009, 1:05 pm EDT
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NABLUS, West Bank (AP) -- Israeli Prime Minister Benjamin Netanyahu says he wants to make "economic peace" with the Palestinians, and the first fruits are already being seen in eased Israeli restrictions that are stoking a retail and entertainment boom in the West Bank.
But where it counts -- industry, exports, investments -- Netanyahu still has a way to go.
Just ask the manager of the West Bank's only aluminum plant which almost went out of business because Israel banned a vital chemical on grounds it could also be used to make bombs. Only last week was the factory told it could resume importing the chemical, but in limited quantities and under close supervision.
Or the Wataniyeh telecommunications company, which plans to invest hundreds of millions of dollars but has waited for more than a year for an Israeli decision to assign signal frequencies.
Still, Netanyahu's policies -- along with improved Palestinian security performance -- have begun to make a dent, prompting the International Monetary Fund to predict last week that the economy could grow by 7 percent this year, its first optimistic forecast in three years.
"There is undoubtedly progress happening," said former British Prime Minister Tony Blair, who as international Mideast envoy for the last two years has been haggling with Israeli leaders over the minutiae of West Bank business projects, from access roads to import permits.
Privately, some Palestinian officials acknowledge that Netanyahu has done more in four months than his recent predecessors to loosen Israel's choke-hold on the West Bank.
But after almost a decade trapped in a web of checkpoints, walls and fences, many Palestinians are suspicious that Netanyahu's "economic peace" is a way of dodging international pressure to recognize Palestinian statehood and stop expanding Jewish settlements in the West Bank.
"Israel wants to do a charm offensive, and they want to try to keep away the pressure that is being put on them," said Economics Minister Bassem Khoury.
"Unless the closure regime is dismantled, nothing will help," he said.
Israel, in turn, puts its security above all else, remembering the trauma of Palestinian bombers from the West Bank blowing themselves up in Israeli cities. There has been no such bombing in 2 1/2 years, but Israel still doesn't feel safe.
"We take huge risks," said Lt. Col. Sharon Biton, an Israeli military official, explaining why Israel feels it has to go slow in easing restrictions.
The distrust on both sides, coupled with bureaucracy and skittish investors, has meant that several large ventures -- two industrial parks, a new West Bank city, the cell phone provider -- move slowly or not at all.
Netanyahu now promises to get these projects moving. Blair said he raised the Wataniyeh deal with Netanyahu last week and hopes to have a final answer by the end of the month.
"Let us make peace, diplomatic and economic peace," Netanyahu said in an appeal to Palestinian President Mahmoud Abbas last week. However, Abbas says he won't sit down with the Israeli leader unless he freezes settlements.
A more prosperous West Bank would seem a boon to Abbas, sharpening the contrast to the misery of Gaza, ruled by his bitter rival, the Islamic militant Hamas. Popular support for Abbas had been at a low ebb because he had nothing to show for a year of peace talks with Netanyahu's predecessor, Ehud Olmert.
While the big investors fret, Baha Barahmeh is capitalizing on the relaxed atmosphere to open a branch of the family clothing store chain in Nablus, a former battleground for Palestinian gunmen and Israeli soldiers. A wholesale outlet is to follow, and more employees are to be hired, said Barahmeh, 25.
The IMF says that for the Palestinian economy to grow steadily, Israel must ease up not just within the West Bank but at the territory's crossings into Israel and Jordan where cumbrous security checks seriously slow the flow of Palestinian exports.
Currently, Israel does not allow Palestinians to ship goods in containers. Instead, they are trucked on pallets to Israeli exit points where they are loaded and unloaded twice for security checks. Trucks can wait several hours, and merchants can never guarantee a buyer that the goods will arrive on schedule.
Irit Ben-Abba, an Israeli Foreign Ministry official dealing with the West Bank economy, said change isn't possible just yet. "We would very much like to be in a door-to-door system," she told reporters, but "security at this particular moment does not allow this."
The European Union, the U.S. and others that send aid to the Palestinians have repeatedly called for unshackling Palestinian trade, for good reason. The economic stagnation contributes to growing Palestinian budget deficits -- $1.8 billion in 2008 and $1.6 billion this year -- and donors have repeatedly had to close those gaps to keep Abbas' government afloat.
At a donor conference in Norway last month, Israel promised to speed up truck movement, particularly through the cargo crossings in the separation barrier Israel built in the West Bank. Israel is trying reduce waiting times for trucks to no more than 45 minutes, Ben-Abba said.
Napco, a West Bank company that makes aluminum frames and employs 180 Palestinians, is among those hit by Israel's restrictions. It lost a major production line in 2001 when the military barred it from using sulfuric acid, a key ingredient for making aluminum, but also a potential component of bombs, said general manager Anan Anabtawi.
Israel recently banned a second chemical mix needed for most of Napco's other products, leaving it with reserves for only three more months of production, the manager said.
However, a reprieve came last week, two days after the meeting between Netanyahu and Blair.
Anabtawi, an industrial engineer, said Israeli authorities had written to inform him he can to import up to half a ton a month of the chemical, provided he arranges for a security escort in the West Bank and follows strict storage rules.
The National Beverage Co., which distributes Coca-Cola and other soft drinks, also has problems. General manager Imad Hindi said it has taken months to get spare parts out of Israeli ports and that Israel has banned a chemical needed to sanitize a production line. Hindi estimated that the company pays three times more for logistics than similar businesses elsewhere.
Israel's border blockade of the Gaza Strip, imposed after the violent Hamas takeover in 2007, has further hurt sales. The company, which employs 350 people, used to sell one-third of its products in Gaza, but has been barred from doing so since August, said Hindi.
Biton, the Israeli military official, said the problem of the spare parts is being solved, but he has not come up with a simple solution for dual-use chemicals.
In an interview, Blair said more change is needed on the ground, and cautioned that economics can't substitute for politics. "But progress is being made, and if we can get the right political negotiations going, then I think this can move along quickly."
Associated Press writer Ben Hubbard contributed to this report from Nablus.
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