Tracing the Roots of Gaza's Economic Challenges

Last week, in a lengthy New York Times article, Tom Friedman claimed that Hamas could have turned Gaza into Dubai if only they’d made the right choices in 2005.

I hold no brief for Hamas. Their suicidal policies have brought terrible pain to Palestinians, but Friedman’s argument, also made by others, is so fanciful and ahistorical that it must be rebutted. The reasons for the Palestinian Territories’ lack of development go back 10 years before the fateful elections of 2005 that brought Hamas to power. I watched this disaster unfolding in real time.

While Palestinians were not without fault, it’s cruel to blame them for Israeli policies that deliberately strangled the Palestinian economy. From 1993 to 1996, I co-chaired Builders for Peace, a project launched by Vice President Gore to promote U.S. investment in the Occupied Territories.

I chaired the 1994 Casablanca Economic Summit session on the Palestinian economy, traveled to the region with Secretary of Commerce Ron Brown, and led delegations of U.S. business leaders to the West Bank and Gaza to promote business partnerships.

As a World Bank study observed, the Palestinian private sector could be the growth engine if they could secure investment and freely engage in trade with the outside world. While expanding economic opportunities alone wouldn’t bring peace, without them peace would be impossible.

Our initial delegation visits were hopeful. Prominent US businesses were impressed with the Palestinian businessmen they met, and some deals were struck. In the months that followed, Israeli unwillingness to allow Palestinians or their US partners to import raw materials or export finished products without Israeli control or an Israeli middleman became clear. As a result, the deals collapsed.

One day I received a call from a U.S. Department of Agriculture official. A U.S. shipment of 50,000 flower bulbs to Gaza had sat awaiting Israeli clearance for so long the bulbs rotted. Israel didn’ want competition for its own flower exports. The Agriculture Department had enough funds for another shipment but wouldn’t risk the expenditure for the same result.

In 1995, I sent President Clinton a lengthy memo and testified with BfP colleagues before the Senate Foreign Relations Committee, detailing Israeli impediments to investment and economic growth in Palestinian lands.

I noted that the situation—less than two years after Oslo—had become dire. Israel’s closure of Palestinian lands and imposition of internal checkpoints across the West Bank following Baruch Goldstein’s massacre of Muslims in the mosque in Hebron had damaged Palestinian support for peace. Settlements were growing, as was Palestinian unemployment, from over one-third of the workforce in the West Bank to a staggering 62% in Gaza.

Specifically citing Gaza, I noted:

"Despite promises from the international community, not a single job-creating infrastructure project has begun ... Instead of real progress, Palestinians got observers, studies, pledges, and unfulfilled promises, and blame.

Young Palestinians want nothing more than to have a job, live a meaningful life, raise a family and see them prosper. Their anger is the product of despair—born of fear and frustration that they have no future. If peace is to survive, we must attack this crisis with all the resources and capabilities we have to show Palestinians that the promise of peace can be realized.”

We asked that the Palestinian private sector be able to secure investments; Israel be pressured to allow Palestinian businesses to import and export; and international donor funds be directed to job-creating projects. A BfP Jewish colleague noted: the onus was on the US and Israel, not the Palestinians, to make these happen.

Despite President Clinton and the Senators’ support, our recommendation of pressuring Israel was rejected by the administration’s “peace team,” who argued it would impede their negotiations.

All this happened in the 1990s, not 2005. In a real sense, Hamas didn’t create the mess; they inherited and preyed on despair created by Israel’s suffocating control and US neglect and acquiescence.

Hamas handled it badly, but Gaza’s failure to become Singapore—what Yasser Arafat had set as his North Star—or Dubai, had less to do with Hamas’ choices and more with those who failed Palestinians and peace.

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