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TIME DISCOVERS IT’S NOT ALL POVERTY IN THE WEST BANK

A national economy – without the nation
By Stacy Perman in Ramallah
Time magazine
October 11, 2010

www.time.com/time/magazine/article/0,9171,2022572-1,00.html

This city’s historic landscape of rolling hills and groves of knotty olive trees is undergoing something of a transformation. Multistory villas fronted by ornamental porticos and columns are rising on Ramallah’s hilltops along with glass and marble office buildings. There are newly paved roads. The city’s first five-star hotel, a Mövenpick, is opening this month.

Across the West Bank, similar scenes are unfolding. Building cranes pierce the sky. Outside Nablus, new car dealerships sell everything from BMWs to Hyundais. Inside the ancient city, the first movie house to open in 20 years, Cinema City, is hugely popular. Last year the Hirbawi Home Center, a five-story shopping mall selling luxury items like plasma TVs, opened just outside Jenin.

Consumer goods are only part of the story. Industries from finance to housing to a high-tech sector are developing too. Such activity marks a fundamental political-economic shift among the ruling Palestinian Authority (PA) apparatchiks and the Palestinian business community, upending former PA President Yasser Arafat’s long-entrenched policy of nation first, institution-building later. The current leadership believes that creating a sustainable economy is essential to creating an independent Palestine. “We need to work on the economic front,” says World Bank veteran Mohammad Mustafa, CEO of the Palestine Investment Fund (PIF), a quasi-governmental financial institution. “It is part and parcel of the overall struggle toward statehood.”

Indeed, the IMF has reported that the Palestinian economy is on track to grow 8% in 2010. Israeli and Palestinian negotiators may equivocate over peace, but an economy is breaking out in the West Bank. Under Prime Minister Salam Fayyad, an American-educated economist and former Finance Minister, the PA has spearheaded an ambitious strategy to move away from subsisting on foreign-donor aid and toward attracting foreign direct investment to spur private-sector growth.

Just as important, Fayyad has vastly improved security, sweeping the streets of rogue militants, which has eased the movement of people and goods. Israel has responded by dismantling numerous checkpoints that also inhibited commerce. There’s also an effort to streamline the legal system – a quilt of Ottoman, Jordanian, Israeli and British mandate laws. It has all served to boost confidence in Fayyadism, as the host of initiatives in play is commonly referred to.

Mahmoud Ahmad al-Takruri, regional manager of the Housing Bank for Trade and Finance in Ramallah, says that one of the positive indicators in evidence is the lending climate. “The situation is more stable nowadays, and banks have more of an appetite to make loans,” he says – meaning, specifically, loans to the small and medium-size enterprises (SMEs) that are the backbone of the Palestinian economy. They make up roughly 95% of enterprises, 84% of the private sector and 55% of the GDP.

FEEDING THE ENTREPRENEURS

Mazen Shkukani’s oxygen gym on the fifth floor of a Ramallah office center is state of the art: it boasts the latest equipment, classes in spinning, kickboxing and Pilates, a sauna and even a smoothie bar. “We do very good business,” Shkukani says proudly. “We are a very famous gym. We have customers that come all the way from Jerusalem and other villages.” Oxygen is the third of five businesses Shkukani owns that were made possible by a series of loans he was able to obtain.

Born in Kuwait to a Palestinian family, Shkukani returned in 1987 to Ramallah, where he opened a children’s boutique and later worked for his family’s car-rental business. In 2004, a volatile year, the part-time bodybuilder saw an opportunity to import American-made nutritional supplements. Making use of his family’s business reputation and connections, Shkukani, along with a partner, secured a loan of $200,000 to launch his Sportline supplements line. A few years later, having closed out his initial loans, Shkukani opened Oxygen Gym with two partners. Each put in $143,000 and took out a $400,000 small-business loan. It was Shkukani’s largest to date.

Last year, Shkukani obtained three more loans totaling $500,000 to expand his supplements business and to launch a snack-food distributorship, selling items like imported potato chips. More recently he opened Liberty, a used-car dealership. “Loans are for responsible people,” he says. “We help the economy for our country by making a successful business. This is how it is around the world.”

Emblematic of the current commitment to entrepreneurialism, the PIF, along with Abraaj Capital, a Dubai-based private-equity firm, announced a $50 million fund that will focus on SMEs. “We believe that the PIF investment program can have a huge transformative effect on the economy,” says Mustafa. “Moreover, the SME fund is great because the benefits exceed the funding to include the know-how that comes with it from the fund management.” The PIF plans to invest $500,000 to $7.5 million in companies with less than $50 million in revenue or fewer than 250 employees or both.

It’s an acceleration for the PIF, which for five years has very quietly partnered with the Middle East Investment Initiative (MEII), a Washington-based nonprofit formed specifically to stimulate the region’s fragile economies. MEII has been fueling ventures in the West Bank with a loan-guarantee program in excess of $200 million. The process of vetting the loans is heavily monitored not only for a business’s viability but to ensure that the money is not going to finance terrorist groups, money laundering or weapons purchases. In the past 21⁄2 years, MEII has approved more than 322 loan applications totaling more than $63 million in guarantees. While the average loan is about $120,000, the largest, one of $16 million, went to the first competitive cell-phone system in the West Bank.

This being the Middle East, there is always a wrinkle. Because of enduring distrust of the U.S. and cynicism regarding aid, the process is managed so that applicants have no idea their loans are being supported by a third party – namely an American organization.

THE IT PLAN

Behind glass on the third floor of the Burj office tower, 30 people are pressed into a small conference room. They are attending a seminar on open sourcing conducted by a representative from Intel and sponsored by the Palestinian Information Technology Association, better known as PITA. On the same floor, six start-ups share space as part of the Palestine Information and Communications Technology Incubator, or PICTI. There, Emad Ahmad, a filmmaker from Rafah, Gaza, is developing a program to digitize film archives. Emad Ammouri, who earned a master’s in computer science from Texas A&M University and later worked at IBM and Timex, is creating an Internet toolbox to make, as he says, “microchip-embedded systems more friendly.” Ammouri has also begun teaching innovation courses to high school students and launched an innovation camp for fifth-graders. “We can do it,” he says. “Why can’t a Palestinian company innovate for the world?”

With 4,000 engineering graduates each year and a trickle of returning expats, many are looking at tech as a potential economic engine. According to a recent study, the Palestinian IT sector grew from roughly $130 million in 2008 to $231 million in 2009. Significantly, because tech is not dependent on physical movement, it is somewhat insulated from checkpoints, closures and political unrest.

After earning degrees from the New Jersey Institute of Technology, Ala Aladdin returned to the West Bank in 1996 and started a company, Bailasan (which means flower in Arabic), a Web-development and graphic-design firm. In 1999, Aladdin helped found PITA with a group of 24 companies to lobby for the fledgling sector. Today there are more than 100 companies in PITA, and one of its major accomplishments has been to bring the world’s biggest tech companies to the region. “It was important to transfer know-how and build infrastructure,” says Aladdin. Representatives from companies like Microsoft began to arrive, cautiously, offering workshops. Eventually, those workshops expanded into weeklong conferences. But tech leaders wanted more than seminars; they wanted real investment.

Two years ago, their lobbying paid off. Cisco, the $40 billion U.S. networks company, gave a $10 million grant for seed-funding tech start-ups in the West Bank and Gaza. Initially part of Cisco’s corporate-social-responsibility initiative, the investment turned out so well, the company is converting it from a CSR investment into businesses. Cisco plans to work with Palestinian IT companies to bolster their ability to handle large outsourcing contracts from the U.S. and other countries. Recently Microsoft, HP and others have begun investing too.

The West Bank’s IT sector is also attracting pure venture capital. One fund that has come calling is the aptly named Middle East Venture Capital Fund. The fund, which has a reported $50 million target and some heavy-hitting backers, was started by a pair of high-tech veterans – Yadin Kaufmann, an Israeli, and Saed Nashef, a Palestinian.

Kaufmann went to Princeton and earned a law degree from Harvard before emigrating in 1985 to Israel, where he clerked for the Supreme Court. At the cusp of the country’s high-tech revolution, Kaufmann joined Athena, Israel’s first venture fund. Surveying the Palestinian high-tech landscape, Kaufmann says, “I saw how Israel’s venture business impacted economic development. I started to think about doing something else to help in the region.” Kaufmann decided to launch a fund to invest in Palestinian high tech, but he needed a partner on the other side.

That would be Nashef. Born in Jerusalem, Nashef studied computer science in the U.S. and spent 19 years there, including a six-year stint at Microsoft. In 2006 he returned to Jerusalem and decided to take a year off with his family. That visit stretched into four years and counting. “I saw the beginnings of a technology and telecommunications sector,” he says. “I wanted to build something to contribute.” His tech consulting firm, Equiom, had been outsourcing software engineering to China, India and Ukraine, and Nashef says he thought, “Why not give a piece of that business to Palestinians?” He started with a three-person team in Hebron. The trio eventually replaced a five-person team from India. The math was basic: “They were higher quality and lower salaries.” That led Nashef to make it a permanent move and establish his Ramallah-based spin-off of Equiom, called Nena. “We’re not advancing an economic or political peace agenda,” says Kaufmann. “We are leveraging real opportunities.” Says Nashef: “At the end of the day, we are creating high-value jobs. We are giving people hope.”

THE LIMITS OF DEVELOPMENT

While there are promising signs of growth, economic development is no substitute for a political solution. The borders, airspace, water rights and communications are still under Israeli control; so is 60% of the West Bank. “We are not waiting for a political solution to move forward with economic development,” says one Palestinian banking specialist. “But the impact of these efforts is diluted when there is no parallel political movement. It is like a bird flying with one wing.”

The fragile state of affairs is not just contingent on Israel. There is a sharp divide between the Fatah government, led by Mahmoud Abbas and Fayyad, that rules the West Bank and the fiercely Islamist Hamas, which took control in Gaza in 2007. And Carnegie scholar Nathan J. Brown noted in a recent report that economic development has actually impeded some democratic and human-rights reforms. While Fayyadism is roundly praised among many Palestinians and in the U.S. and Europe – and even Israeli Prime Minister Benjamin Netanyahu has expressed his support – its progress stands on a very shaky footing. Says Said Abu Hijleh, managing director of DAI Palestine, a consulting firm: “There are still limits to how far you can go. I wouldn’t call this an emerging economy but a promising economy.” As tenuous as the current state-building is, it rests on the creation of institutions critical to any sustainable economy. And that just might be the start of a genuine Palestinian revolution.

 

LATTES AND BEACH BARBECUES IN THE WORLD’S BIGGEST PRISON CAMP

Lattes, beach barbecues (and dodging missiles) in the world’s biggest prison camp
By Peter Hitchens
October 11, 2010
The Mail on Sunday

www.dailymail.co.uk/news/article-1319157/PETER-HITCHENS-Lattes-beach-barbecues-dodging-missiles-worlds-biggest-prison-camp.html

It is lunchtime in the world’s biggest prison camp, and I am enjoying a rather good caffe latte in an elegant beachfront cafe. Later I will visit the sparkling new Gaza Mall, and then eat an excellent beef stroganoff in an elegant restaurant.

Perhaps it is callous of me to be so self-indulgent, but I think I at least deserve the coffee. I would be having a stiff drink instead, if only the ultra-Islamic regime hadn’t banned alcohol with a harsh and heavy hand.

Just an hour ago I was examining a 90ft-deep smuggling tunnel, leading out of the Gaza Strip and into Egypt. This excavation, within sight of Egyptian border troops who are supposed to stop such things, is – unbelievably – officially licensed by the local authority as a ‘trading project’ (registration fee £1,600).

It was until recently used for the import of cattle, chocolate and motorcycles (though not, its owner insists, for munitions or people) and at its peak earned more than £30,000 a day in fees.

But business has collapsed because the Israelis have relaxed many of their restrictions on imports, and most such tunnels are going out of business. While I was there I heard the whine of Israeli drones and the thunder of jet bombers far overhead.

Then, worryingly soon after I left, the area was pulverised with high explosive. I don’t know if the Israeli air force waited for me to leave, or just walloped the tunnels anyway.

The Jewish state’s grasp of basic public relations is notoriously bad. But the Israeli authorities certainly know I am here. I am one of only four people who crossed into the world’s most misrepresented location this morning.

Don’t, please, accuse of me of complacency or denying the truth. I do not pretend to know everything about Gaza. I don’t think it is a paradise, or remotely normal. But I do know for certain what I saw and heard.

There are dispiriting slums that should have been cleared decades ago, people living on the edge of subsistence. There is danger. And most of the people cannot get out.

But it is a lot more complicated, and a lot more interesting, than that. In fact, the true state of the Gaza Strip, and of the West Bank of the Jordan, is so full of paradoxes and surprises that most news coverage of the Middle East finds it easier to concentrate on the obvious, and leave out the awkward bits.

Which is why, in my view, politicians and public alike have been herded down a dead end that serves only propagandists and cynics, and leaves the people of this beautiful, important part of the world suffering needlessly.

For instance, our Prime Minister, David Cameron, recently fawned on his Islamist hosts in Turkey by stating Gaza was a ‘prison camp’. This phrase is the official line of the well-funded Arab and Muslim lobby, who want to make sure Israel is seen by the world as a villainous oppressor.

Well, Israeli soldiers can and do act with crude brutality. Israeli settlers can and do steal Arab water and drive Arabs off their land. Israeli politicians are often coarse and insensitive.

The treatment of Israel’s Arab citizens is one of the great missed opportunities of history, needlessly mean and short-sighted. The seizure of the West Bank and Gaza in 1967 were blunders, made worse by later folly.

But if you think Israel is the only problem, or that Israelis are the only oppressors hereabouts, think again. Realise, for a start, that Israel no longer rules Gaza. Its settlements are ruins.

No Israelis can be found inside its borders. And, before you say ‘but Israel controls the Gaza border’, look at a map. The strip’s southern frontier – almost as hard to cross as the Israeli boundary – is with Egypt. And Cairo is as anxious as Israel to seal in the Muslim militants of Hamas.

Gaza was bombed on the day I arrived in retaliation for a series of rocket strikes on Israel, made by Arab militants. Those militants knew this would happen, but they launched their rockets anyway. Many Gazans hate them for this.

One, whom I shall call Ibrahim, told me how he had begged these maniacs to leave his neighbourhood during Israel’s devastating military attack nearly two years ago. His wife was close to giving birth.

He knew the Israelis would quickly seek out the launcher, and that these men would bring death down on his home. But the militants sneered at his pleading, so he shoved his wife into his car and fled.

Moments after he passed the first major crossroads, a huge Israeli bomb burst on the spot where his car had been. The diabolical power of modern munitions is still visible, in the ruins of what was once a government building.

It looks as if a giant has chewed and smashed it, and then come back and stamped on it. If you can imagine trying to protect a pregnant woman from such forces, then you can begin to understand how complex it is living here, where those who claim to defend you bring death to your door.

For the Islamist rocket-firers are also the government here, supported by Iran and others who care more for an abstract cause than they do for real people. They claim that their permanent war with Israel is for the benefit of the Palestinian Arabs. But is it?

Human beings will always strive for some sort of normal life. They do this even when bombs are falling and demagogues raging. Even when, as in Gaza, there is no way out and morality patrols sweep through restaurants in search of illicit beer and women smoking in public or otherwise affronting the 14th Century values of Hamas.

So I won’t give the name of the rather pleasant establishment where young women, Islamic butterflies mocking the fanatics’ strict dress code with bright make-up and colourful silken hijabs, chattered as they inhaled apple-scented smoke from their water-pipes.

Their menfolk, nearby, watched football on huge, flat-screen televisions. Nor will I say where I saw the Gazan young gathering for beach barbecues beneath palm-leaf umbrellas.

Of course this way of life isn’t typical. But it exists, and it shows the ‘prison camp’ designation is a brain-dead over-simplification. If it is wrong for the rich to live next door to the desperate – and we often assume this when we criticise Israel – then what about Gaza’s wealthy, and its Hamas rulers?

They tolerate this gap, so they are presumably as blameworthy as the Israelis whose comfortable homes overlook chasms of poverty. Then there is the use of the word ‘siege’.

Can anyone think of a siege in human history, from Syracuse to Leningrad, where the shops of the besieged city have been full of Snickers bars and Chinese motorbikes, and where European Union and other foreign aid projects pour streams of cash (often yours) into the pockets of thousands? Once again, the word conceals more than it reveals.

In Gaza’s trapped, unequal society, a wealthy and influential few live in magnificent villas with sea views and their own generators to escape the endless power cuts.

Gaza also possesses a reasonably well-off middle class, who spend their cash in a shopping mall – sited in Treasure Street in Gaza City, round the corner from another street that is almost entirely given over to shops displaying washing machines and refrigerators.

Siege? Not exactly. What about Gaza’s ‘refugee camps’. The expression is misleading. Most of those who live in them are not refugees, but the children and grandchildren of those who fled Israel in the war of 1948.

All the other refugees from that era – in India and Pakistan, the Germans driven from Poland and the Czech lands, not to mention the Jews expelled from the Arab world – were long ago resettled.

Unbelievably, these people are still stuck in insanitary townships, hostages in a vast struggle kept going by politicians who claim to care about them. These places are not much different from the poorer urban districts of Cairo, about which nobody, in the Arab world or the West, has much to say.

It is not idle to say that these ‘camps’ should have been pulled down years ago, and their inhabitants rehoused. It can be done. The United Arab Emirates, to their lasting credit, have paid for a smart new housing estate with a view of the Mediterranean.

It shows what could happen if the Arab world cared as much as it says it does about Gaza. Everyone in Gaza could live in such places, at a cost that would be no more than small change in the oil-rich Arab world’s pocket.

But the propagandists, who insist that one day the refugees will return to their lost homes, regard such improvements as acceptance that Israel is permanent – and so they prefer the squalor, for other people.

Those who rightly condemn the misery of the camps should ask themselves whose fault it really is. As so often in the Arab world, the rubbish-infested squalor of the streets conceals clean, private quarters, not luxurious and sometimes basic, but out of these places emerge each day huge numbers of scrubbed, neatly-uniformed children, on their way to schools so crammed that they have two shifts.

I wish I was sure these young people were being taught the principles of human brotherhood and co-existence. But I doubt it. On a wall in a street in central Gaza, a mural – clearly displayed with official approval – shows an obscene caricature of an Israeli soldier with a dead child slung from his bayonet.

Next to it is written in Arabic ‘Child Hunter’. Other propaganda, in English, is nearby. My guide is embarrassed by this racialist foulness. I wonder how so many other Western visitors have somehow failed to mention it in their accounts.

I was still wondering about this as I travelled to the short distance to the West Bank, where Israel still partly rules. I was the recipient of hospitality in many Arab homes – a level of generosity that should make Western people ashamed of their cold, neighbour-hating cities.

And once again I saw the outline of a society, slowly forming amid the wreckage, in which a decent person might live, work, raise children and attempt to live a good life. But I also saw and heard distressing things.

One – which I feel all of us should be aware of – is the plight of Christian Arabs under the rule of the Palestinian Authority. More than once I heard them say: ‘Life was better for us under Israeli rule.’

One young man, lamenting the refusal of the Muslim-dominated courts to help him in a property dispute with squatters, burst out: ‘We are so alone! All of us Christians feel so lonely in this country.’

This conversation took place about a mile from the Church of the Nativity in Bethlehem, where tourists are given the impression that the Christian religion is respected. Not really.

I was told, in whispers, of the unprintable desecration of this shrine by Palestinian gunmen when they seized the church in 2002 – ‘world opinion’ was exclusively directed against Israel. I will not name the people who told me these things.

I have also decided not to name another leading Christian Arab who told me of how his efforts to maintain Christian culture in the West Bank had met with official thuggery and intimidation.

My guide and host reckons there are 30,000 Christians in the three neighbouring municipalities of Bethlehem, Beit-Sahour and Beit- Jala. Soon there will be far fewer.

He has found out that 2,000 emigrated between 2001 and 2004, a process which has not stopped. What is most infuriating about this is that many Christians in Britain are fed propaganda blaming this on the Israelis.

Arabs can oppress each other, without any help from outside. Because the Palestinian cause is a favourite among Western Leftists, they prefer not to notice that it is largely an aggressive Islamic cause.

And in this part of the world, political correctness does not exist. Picture yourself on a comfortable sofa in an apartment in a West Bank town. Nearby runs the infamous, absurd, barrier dividing the Arab world from Israel.

Think about this wall. I acknowledge that it is hateful and oppressive – dividing men from their land, and (in one case) cutting across the playground of a high school. But I have concluded that it is a civilised response to the suicide bombing that led to its being built.

My host, a thoughtful family man who has spent years in Israeli prisons but is now sick of war, has been talking politics and history. His wife, though present, remains unseen.

Suddenly he begins to speak about the Jews. He utters thoughts that would not have been out of place in Hitler’s Germany. This is what he has been brought up to believe and what his children’s schools will pass on to them.

The heart sinks at this evidence of individual sense mixed up with evil and stupidity. It makes talk of a ‘New Middle East’ seem like twaddle. So, are we to despair? I am not so sure.

Not far from this spot there is an unmarked turning at a roundabout on the route back into Jerusalem. It’s an unnumbered road running south from Route 437. About a hundred yards along, it is barred by concrete blocks. It is a ghost road.

If it ever opens, it will be part of a network of secure roads and tunnels that would link Nablus and Ramallah in the northern West Bank to Bethlehem and Hebron in the south.

It would enable people to do the normal things they want to do – visit relatives, go to work, go shopping. It would not make Arab Palestine a state. It has nothing to do with the issue of Jewish settlements in the West Bank – a problem made worse by Barack Obama’s call for a moratorium, a demand even the Palestinian leadership had never made.

But it might help create a society in which a happy life was possible for many people. I suspect it is nearly finished. It is not the only sign that the human yearning for normality is strong. In Ramallah, unofficial capital of Arab Palestine, it is a pleasure to visit the busy streets around Manara Square at twilight, with the cafes and the shops invitingly bright.

A few years ago, the bullet-torn corpses of ‘collaborators’ were displayed here. Now the displays are of smart clothes – but not as smart as those in Ramallah’s opulent shopping mall, stocked with designer goods, and with camel rides for the children outside.

Even in notorious Hebron in the south, famous for its massacres and its aggressive Israeli enclave, the mall culture is in evidence three miles from this seat of tension. And on the road from Hebron to Jerusalem stands a cut-price supermarket so cheap that Israeli settlers and Palestinians mingle happily at the cash tills.

I might add that an Arab intellectual, sitting in a Gaza cafe, recalled for me the happy days when Gazan women used to wear short skirts (now they all wear shrouds and veils) and you could get a beer by the beach.

But perhaps best of all was the comment of the Arab Israeli who mourned for ‘the good old days before we had peace’. It may well be that no solution to the problem of Israel is possible, and that it will all end, perhaps decades from now, in a nuclear fireball.

But if outside politicians, more interested in their reputations than in the lives of Arabs and Israelis, would only stop their search for a final settlement, might it be that people – left to their own devices – might find a way of living together, a way that was imperfect, but which no longer involved human beings being dissolved into hunks of flying flesh by high explosive?