The article was published by the National Post

Israel’s disengagement and opportunity for Palestinian economic development

By Alan Baker*

Israel’s disengagement is now a reality, as we all saw in such graphic and heartrending scenes over the last few days. Israel undertook an historic step, both difficult and costly, with the hope that this will reinvigorate the peace process, and give the Palestinians the chance to take up the challenge and prove to the world that they are ready and capable of building an infrastructure for development and a dialogue for peace.

Clearly, Gaza will not become Singapore overnight. However, if the present psyche of violence and incitement will be turned into pragmatism and education for excellence, it has the potential to become an economic success story.

The Palestinian economy is almost completely integrated together with the Israeli economy, sharing common currency, trade and labour. For example, some 5000 Palestinian workers who were employed in the agricultural sphere in the evacuated settlements have now lost their jobs and livelihood. Additionally, Israel provides electricity to most Palestinian areas, and taxes collected by Israeli authorities through surcharges and income taxes on Palestinian workers’ salaries constitutes a major component of the Palestinian Authority budget.

Therefore, a key element of the Palestinian economy lies in its economic inter-relationship with Israel across the mutual border. The border crossings allow the flow of food, raw materials and the outflow of exports.

To Canadians this might sound similar to the case of the Canada-U.S border and its importance to the economy. What Canadians will find hard to visualize are cross-border mortar shelling, shootings and infiltrations by suicide bombers, emanating from the other side of the border and targeting the very lifeline of the economy. While such violence and terror is highly unlikely and even unthinkable across the Canada-U.S border, the fear is still very real in the relations between Israel and the Gaza strip.

This has been borne out in a number of tragic incidents in recent years.

A principal source of Palestinian employment- the Erez industrial park and crossing between Gaza and Israel, the Karni merchandise crossing and the Rafah terminal between Israel, Egypt and the Palestinian Authority have all been attacked by Palestinian terrorists countless times since 1996. The latest deadly attack took place only last month. Each time the crossings were damaged they were closed and tens of thousands of Palestinians were unable to work. Official unemployment figures for the Palestinian Authority areas is an average of 33%, in the Gaza strip the number is even higher.

In addition to continued attacks, Palestinian terror organizations have relentlessly tried to use the crossing points to smuggle suicide bombers and weapons, including in commercial trucks crossing the border.

In spite of its fatalities and casualties, Israel acknowledges the importance of the flow of goods and people to-and -from the Palestinian authority. Following the attacks on border crossing in Gaza, Israel has upgraded the security screening technology and improved the flow of goods. In the last year new and improved terminals have been constructed by Israel in Gaza and the West Bank.

Israel’s Prime Minister Sharon and Palestinian Authority President Mahmud Abbas, together with their respective experts, have discussed essential steps following Israel’s disengagement including ways to facilitate direct transfer of goods. The Palestinians will be able to start the construction of a new seaport and the planning of a new airport in Gaza, all intended to enable the Palestinians to export their goods to foreign markets.

The extensive and technologically developed hothouses, greenhouses and infrastructure left behind by the settlers in the Gaza strip are a case in point. Only after last-minute efforts the Palestinians were prepared to receive them as ongoing viable businesses and not have them destroyed.

Canada and the international community have a significant role to play in ensuring that the Palestinians not miss this historic opportunity, and take the path of economic development in the areas that are now coming entirely under their control. This cannot be achieved in an atmosphere of terror and violence.

Israel is assisting in the creation of local employment opportunities for the 1.4 million Palestinians in Gaza. Expansion of existing industrial zones and the creation of new industrial parks are being proposed. It is crucial, however, that these new employment opportunities will not be quashed by repeated Palestinian terror attacks.

Other economic issues for the short and longer terms include establishing a permanent ground axis between the West Bank and Gaza. For instance, Canadian companies with expertise in road construction and rail transit have been involved in the construction of the trans-Israel highway and the operation of Israel’s train system.

The international community has pledged 3 billion dollars for the Palestinian Authority. This is potentially a good start for the reconstruction effort. Nevertheless, donors together with the international community as a whole, must ensure that this money be funnelled directly to its intended purpose. Donor countries should not be limited to the Western democracies but should also include the Arab states, especially the oil-rich countries. Canadian and international efforts to build institutions, improve governance and accountable security services will make the task easier. Israel through its international development agency will continue to help foster Palestinian capacity-building in the fields of health, business and social development.

The disengagement plan has a genuine chance to break the irrational pattern of Palestinian terror and economic stagnation. Israel trusts that Canada and the international community will assist Israel and the Palestinians on the path of economic development, for the benefit of all.

* Alan Baker is Israel’s Ambassador to Canada