Five Takeaways from Trump’s ‘Peace to Prosperity’ Palestinian Plan

June 28, 2019

8 min read

The long-awaited rollout of the Trump administration’s new approach to the Palestinians began this week with the release of the “Peace to Prosperity” economic plan.

The White House website called the document “a new vision for the Palestinian people and broader Middle East.”

US Special Envoy Jason Greenblatt said the plan has the “potential to achieve incredible results” with more than $50 billion in investment over 10 years, which would double the GDP of the Palestinian areas and create one million jobs.

The plan itself is laid out in a 38-page document that can be downloaded online. A US delegation is currently discussing it in Bahrain with countries from the Middle East, at a two-day conference that began on Tuesday.

Among US officials present are Treasury Secretary Steven Mnuchin, assistants to the president Jared Kushner and Greenblatt, and US Special Representative for Iran Brian Hook, who is also a senior policy adviser to Secretary of State Mike Pompeo.

1. Generalizations

The plan is divided into three parts: unleashing economic potential, empowering the Palestinian people, and enhancing Palestinian governance.

Each section is around 10 pages long, which makes them appear equal in importance. The three sections are divided into sub-sections, where a total of 50 different topics are covered, from educational access to property rights and roads and rail connections. In this, the plan appears exhaustive.

What is immediately striking is that much of the plan, which looks more like a brochure or a snazzy business concept, consists of generalizations. Key phrases, such as “unleash, empower and enhance” are used to spotlight different parts of the concept. The plan is supposed to open a new chapter in Palestinian history, “one defined, not by adversity and loss, but by freedom and dignity.”

2. Grants: Reinventing the Wheel and Trump Branding

The plan envisions that capital raised in support of the concept will be placed into a new fund “administered by an established multilateral development bank.”

Basically, it sounds like replacing existing models of funding for the Palestinians, such as UNRWA, with a new fund whose leadership will come from the “beneficiary countries,” which will implement projects and give grants.

The plan appears to have two main goals in 10 years: double the GDP of the Palestinians, and create one million jobs. The World Bank says the GDP of the West Bank and Gaza is $14.5 billion. It actually doubled since 2009, when it was estimated at $7.2 billion, according to the World Bank. So, in fact, it has already doubled in the last 10 years.

The Palestinian GDP is larger than that of Somalia and South Sudan but smaller than Afghanistan’s. GDP per capita is around $2,200 in Ramallah, while it is more than $35,000 in Israel and $4,000 in Jordan.

“Fifty years of occupation have driven the Palestinian economy into de-development and poverty,” said a report in 2017 from the UN Conference on Trade and Development. Agricultural output shrank by 11%, while unemployment was almost 30%. Gaza’s real per capita GDP shrank by 23% since 1994. Studies show that debt as a percentage of GDP is growing in the Palestinian Authority, and that private spending will decrease.

A European External Action Service strategy document on supporting the Palestinians that looked at goals for 2017-2020 said the Palestinian economic situation is bleak and declining.

International aid to Palestinians already provides the economy with some help, even though the US has cut aid under the Trump administration. According to a report at Middle East Eye, the Palestinians received around $2.2 billion a year between 2006 and 2016, or $560 per capita, making them some of the “top recipients of non-military per capita aid in the world.”

From 2012 to 2016, the Palestinian Authority received a total of more than $4 billion in aid. This is the situation the US walks into with this report. Trying to increase employment is a major challenge considering unemployment rates are thought to be as high as 50% in Gaza.

The International Labor Organization claims that the unemployment rate for Palestinians in the West Bank is among the world’s highest.

A Palestinian Central Bureau of Statistics report in August 2018 said the number of Palestinians in the work force was 1.3 million, with 820,000 of those in the West Bank. There are an estimated 4.5 million Palestinians in the West Bank and Gaza, with 1.7 million of them in Gaza. It seems that creating a million jobs over 10 years is what would be necessary anyway as younger Palestinians reach their 20s.

Around 45% of Palestinians are under the age of 18, and UNICEF said that 51% of Gazans were under 18 in 2012. The rapidly expanding demographic needs jobs.

The plan envisions $4.3 billion in grants for a plethora of projects.

These include grants for start-ups, new cargo terminals and roads at border crossings, and upgrading the Gaza power plant. The grants in the program appear to cover a wide range of necessary items for the Palestinians.

Among them are infrastructure, such as a Palestinian university and hospitals. The grants also relate to governance, such as a land registry and using new online tools for e-governance. Tourism receives around $700 million in grants, with another $2.25 billion in concessional financing. These grants and financing are termed “breakout ventures” in the report, and each one has an overview.

For instance, in the tourism section the plan notes: “To fully develop the Palestinian tourism industry, new investments are needed to improve accommodations and attractions close to popular tourist sites.”

Another section foresees $30 million in career counseling grants: “As part of promoting the adoption of a comprehensive strategy to advance economic opportunities for women, this project will support the development of a central institution to facilitate career counseling.”

What is interesting about the plan is that in some of these cases, there were already existing models for supporting Palestinian civil society or careers for women.

The US in this respect is reinventing the wheel with some of the proposed grants. It is unclear, for instance, why a new system needs to be put in place to re-discover that the “Palestinian healthcare system requires better medical facilities to enhance treatment capabilities.”

One might ask why, after decades and billions plowed into the Palestinian sector from countries around the world, that basic infrastructure such as the power plant, universities, healthcare and a land registry were ossified and in need of so much assistance.

The Trump administration appears to approach the Palestinian issue the way Trump approached real estate investment, whether it was the Trump Tower, his casino in Atlantic City, or other projects. Some of this isn’t exactly reinventing the wheel, but putting the Trump brand on it. So here, the plan appears to be the Trump brand for grant-giving, but there is no doubt that these grants target issues of national importance.

Questions might be raised about why these sectors are lagging behind, and if the plan addresses these problems by just throwing additional financing at them.

3. No Elephant in the Room: Israel

The prosperity plan appears to be presented in a vacuum in which Israel’s role is hidden from view. For instance, when the plan speaks about “unleashing” the economic potential of the Palestinians, it says what is needed is to develop contract rights, the rule of law and to reduce trade barriers.

There is an Israeli elephant sitting astride the trade barrier and the rule of law issue. The Palestinian Authority is a series of enclaves in Area A and B.

The plan discusses issues such as the need to “enable Palestinian high-speed data services,” but Israel only lifted a ban on 3G wireless technology for Palestinian mobile services in 2018.

The plan compares the Palestinian model to various countries such as Germany and Sweden, and cities such as Singapore and Dubai. But the struggles that Gaza and Ramallah face are not similar to these areas. Wouldn’t a better comparison be to places like Amman, Erbil or Srinagar?

There’s a kind of Catch-22 inside the prosperity plan. For instance, one section notes that Palestinian businesses tend to be small and medium-sized enterprises. This is partly due to the constraints Palestinians live under.

“The Palestinian people routinely encounter logistical challenges in the West Bank and Gaza,” the plan says, but doesn’t mention what those challenges are. Nonetheless, it says economic growth is being stagnated by this.

“Palestinian goods and people must be able to easily and securely move across borders.” Isn’t the address for this problem in Jerusalem as opposed to Ramallah? It is Israel that controls the movements of goods and people. The project wants to upgrade the border crossings and provide access roads.

This is important, but once again these areas are controlled by Israel. In areas where Palestinians sought to build access roads, such as developing Rawabi in the West Bank, they ran into problems from Israeli bureaucracy. So the hurdle is not just about money, it is about Israel and the need to get Israel on board for this plan.

The plan actually says that Palestinians need to develop 4G and 5G telecommunications technology. But there is no mention of the role that Israel has had in impeding this.

It’s as if the plan was designed for a Palestinian economy that exists in an imaginary universe or on the Moon, without a realistic discussion of how many aspects of the Palestinian economy are linked to Israel, and in many cases that has widespread ramifications for the Palestinians.

Even if the US wants to reinvent the way in which funding for the Palestinians takes place, and even if it wants to escape the preconceptions of the past – including the way some countries and organizations have basically worked against Israel in their efforts – it still requires that Israel supports this plan.

Reading some parts of the outline make it clear that Israel either didn’t have much of a say, was not consulted, or that the authors were not familiar with the role Israel has played at the borders or in telecommunications.

It may be that the plan was created to provide a kind of fait accompli to both Ramallah and Jerusalem, or as an idea. But the devil has always been in the details when it comes to these kinds of issues. Whether it is the Road Map or Oslo or other aspects of the “peace process,” the hurdles have always been in implementation and expectations.

This plan seeks to reduce expectations on the political front, but even on the economic front it appears to ignore the elephant in the room.

4. Challenges Facing Palestinians

The plan’s main insight is in mapping the huge number of hurdles the Palestinians face today. For instance, from agriculture to housing, the brochure spells out each problem that exists in the West Bank and Gaza.

These are major challenges. Some of them also lack clarity. For example, the plan says that Palestinian areas have natural resources, such as “stone, marble, hydrocarbons and other minerals.” This sounds resource-poor actually. Are there hydrocarbons in the West Bank?

The plan also envisions the Palestinian areas linked to regional trade and tourism. This would be ideal, but the road ahead is long.

“Regional integration and cooperation have the potential to create significant new economic opportunities for the Palestinian people,” the report says.

This compares the area to Dubai and Singapore, which it says have benefited from their strategic locations.

The West Bank and Gaza, the plan says, will be encouraged to link construction and roads to “facilitate trade and transportation across the West Bank and Gaza, Jordan, Egypt, Israel and Lebanon.” Airports, seaports and natural gas trading hubs will emerge.

5. Missing the Political Horizon

What’s next?

This plan, like so many before it, contains a lot of generalizations and hopeful words. Its sentiments may be right, but the question will be if this is a realistic model that the US and its allies will actually invest in or if this is just a nice-looking brochure.

Some parts of the plan appear to be more generalization than substance. It is hampered by ignoring the political realities.

This is part of its goal, to focus purely on the economy and prosperity. But the Palestinian leadership has rejected it, understanding that it seeks to go around the leadership and focus only on prosperity without a political endgame.

In some ways it seeks to draw parallels to Singapore, the Baltic states or Dubai as models. But if Singapore was still part of Malaysia, or the Baltic states part of Russia, or Dubai controlled not by the UAE but by some foreign power, would these countries be what they are today?

These countries had a political horizon and then an economic success story, not the other way around. There is an essential problem in proposing a massive economic package without consultation on the ground.

I used to lecture at a Palestinian university, and I wonder what my former students would think of this. They were young professionals, the kind of people that the plan seeks to help.

But if you don’t consult them and ask what they want, then how can you help them? Give a person a fish and you feed them for a day, teach them to fish and you give them food for a lifetime, the saying goes. But what if you don’t even bother to ask the person if he wants to fish or has a pond to fish in? Then all you’ve done is thrown a rod at him and left.

“How will it work without Palestinian leaders?” a former student asked me. Indeed, that’s the question those in Bahrain should also ask.

Reprinted with author’s permission from Middle East Forum

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