The roots of terrorism

It's rare that I quote anything like the following at such length, but I think it's important enough to be seen in full. To understand why, consider the source: the World Bank. The World Bank is hardly a radical organization. For example, the Public Citizen project called World Bank Watch, which monitors the Bank's loan programs on Water and sanitation, says the institution

continues to promote privatization and cost recovery policies despite evidence that increased cost recovery and privatization reduce access, raise the price of water for the poor, exacerbate inequities, and reduce local control.

In fact, just today This Day of Lagos, Nigeria, reports that the World Bank is giving the government "low marks" because it's not privatizing its water resources, telecommunication industry, and electric power generation fast enough. The Bank stated its goals as

support[ing] transparent and effective implementation of the Federal Government of Nigeria privatisation programme, as a basis for fostering accelerated economic growth, through expanded private investment and improved efficiency in the productive sectors and in infrastructure; and create an enabling environment for private sector participation and competition in infrastructure services....

In other words, privatization is the answer. Never mind what the question is. The Bank's devotion to the economic dominance of banks and transnational corporations is so institutionalized that some groups, such as the Mobilization for Global Justice, argue that the poor of the world would often be better off if the World Bank (along with the International Monetary Fund, the IMF) was simply dismantled. (Global Exchange, which calls the Bank and the IMF "the world's biggest loan sharks" is another good source on this.)

The point, obviously, is that the Bank is not a source expected to be overly sympathetic to the plight of the poor or the political implications of their condition. That's what makes this worth reading. It's the summary of a World Bank report on the Palestinian economy and the issue of settlements in Gaza and the West Bank as published in the Daily Star of Lebanon on Tuesday.

The deep economic crisis in the West Bank and Gaza threatens to impoverish and alienate a generation of young Palestinians. It is undermining the credibility of the Palestinian Authority (PA), increasing the popular appeal of militant factions, and threatening Israel's security.

Unless today's impasse is broken soon, the PA could melt away, leaving Israel with a poor, embittered neighbor with whom dialogue could be much more difficult.

The Palestinian recession is among the worst in modern history. Average personal incomes have declined by more than a third since September 2000, and nearly a half of Palestinians now live below the poverty line.

Today's economic crisis has been caused by restrictions on the movement of Palestinian people and goods, or "closures," which the government of Israel regards as essential to protecting Israeli citizens from attacks by militants. Without a major reform of the closure regime, however, the Palestinian economy will not revive and Israel's security gains may not be sustainable.

Of itself, Israel's Disengagement Plan of June 6 will have very little impact on the Palestinian economy and Palestinian livelihoods, since it only proposes a limited easing of closure. A focus on this over-arching issue is essential if disengagement is to deliver long-term benefits.

Indeed, were it accompanied by the sealing of Gaza's borders to labor and trade or by terminating supplies of water and electricity to Gaza, disengagement would create worse hardship than is seen today.

This could forfeit the international goodwill that Israel's initiative has created. Under such circumstances, the Plan's assertion that Israel is no longer responsible for the population of Gaza will not resonate. Nor would donors appreciate the implication that they must bear the humanitarian consequences of this style of disengagement.

Disengagement will remove internal movement restrictions in Gaza and in part of the northern West Bank, but Palestinian economic recovery depends on a radical easing of internal closures throughout the West Bank, the opening of Palestinian external borders to commodity trade, and sustaining a reasonable flow of Palestinian labor into Israel.

Easing internal closures throughout the West Bank must be accompanied by a credible Palestinian security effort; as long as Palestinian violence persists, the case for dismantling closures will always be contestable. Over the coming year, though, the turmoil likely to attend the completion of the separation barrier will complicate efforts to free up movement within the West Bank.

Removing restrictions on the movement of cargo across borders is relatively simpler - technologies and administrative methods exist that permit the orderly flow of cargo and the maintenance of security.

Introducing a new, efficient border cargo regime would make a major difference to Palestinian welfare and commercial prospects. The international community should focus on this key economic issue in its diplomatic dialogue with the government of Israel.

An easing of closures alone, though, will not attract investors back to the Palestinian economy. A reinvigorated program of Palestinian reform, designed around measures that will create an investor-friendly business environment, is essential. There is no reason for the PA to delay implementation of such a program.

It is important to understand that additional donor money alone can not solve today's economic problems. Donor disbursements of $1 billion per annum (or $310 per person) are already very high.

Additional aid in today's economy would help alleviate day-to-day hardship, but would have little lasting impact. As long as the web of Palestinian economic transactions remains shredded by closures, investors will stay away, and short-term gains will not be sustainable.

With a freeing-up of the constraints on economic activity and committed Palestinian reform, an additional major donor effort would make a difference - it would enable the Palestinian economy to turn the corner. An additional $500 million per annum, on top of existing disbursements, could by 2006 spur a growth in real personal incomes of about 12 percent (and percent in nominal terms), and could reduce unemployment to levels only slightly higher than prior to the intifada.

The alternative to this is stark. At the wrong end of the spectrum of possible outcomes is a Palestinian economy with unemployment levels of over 35 percent by 2006, and with poverty afflicting upward of 55 percent and percent in Gaza. With the PA weakened as it is, the time to get things right is running out.

As for the settlement assets that Israel will leave behind, those in Gaza have considerable economic value, and in time can make a significant contribution - provided that Gaza's borders are opened for trade. Prospects for economic recovery will be enhanced if the US and the EU give adequate preference to Palestinian products to help boost exports.

The manner in which the settlement assets will be transferred to the Palestinians remains a core issue. The PA should seize this opportunity to demonstrate transparency, equity and efficiency in receiving and disposing of the assets. The PA is advised to create a special agency for this purpose. The donors, through the Ad Hoc Liaison Committee, should provide the advice and assistance needed to ensure that the asset transfer process goes well and is acceptable to all parties.

The report echoes and draws on earlier findings by the International Labor Organization (ILO) and the UN Relief and Works Agency for Palestine Refugees (UNRWA). The ILO reported that unemployment stood at an overall rate of 35% in the West Bank and Gaza and that it would be even higher if women confined to their homes by necessity, not choice, were included. It also said that

"severe restrictions" on the movement of persons, goods and services was causing "severe losses in production, employment and income." ...

"A valid work permit is no guarantee of actual employment, particularly for those workers who have to enter Israel to work," the report said, adding that restrictions on mobility continue to intensify because of the new West Bank separation wall.

(The full 50-page report is available in .pdf format here.

For its part, UNRWA held at a two-day conference earlier this month. In his message to the conference, UN Secretary-General Kofi Annan noted that

since September 2000, the number of Palestinians in the West Bank and Gaza Strip who rely on UNRWA for food aid has increased almost ten-fold to 1.1 million from 130,000. In that same time period, the percentage of Palestinians living below the poverty line has tripled to 60 per cent from 20 per cent.

It needs to be re-emphasized, as the World Bank summary notes, that Ariel Sharon's "disengagement" plan, which involves a type of "withdrawal" from Gaza, will not ameliorate the economic suffering of the Palestinians; in fact, there's every reason to think it will make it worse. I put "withdrawal" in quotes because while under the plan, Israel (theoretically, if carried out in full) would eventually dismantle some 21 settlements in the area, it in no way intends to give up control.

In fact,

the current Israeli plan would allow continued Israeli control of ports and borders, which [Palestinian leaders in Gaza] said would strangle economic activity and prevent passage of people across the border with Egypt,

noted the Washington Post in May. And that control is not intended to be merely symbolic or even political, but military. In fact, hi-tech military. The Toronto Star for June 19 says that

[t]he Israeli army envisions a "remote control" border with the Gaza Strip after a troop withdrawal, including unmanned patrol cars and computerized observation posts that would automatically spot and kill attackers, a military official said yesterday.

The technology already exists....

Under the new plan, proposed by a military think-tank and reported in the Yedioth Ahronoth newspaper, the army would beef up the security fence that currently surrounds Gaza with special sensors that could see clearly in all types of weather and light conditions, military officials said.

The new observation system, which would be able to identify potential assailants, would let a soldier in a remote operations room aim and shoot at the attacker, with the system deciding which weapon is the most appropriate, Yedioth reported.

The military is also testing unmanned beach buggy-type patrol vehicles that can identify and defuse explosives by remote control. Soldiers would also use tiny drone planes, some weighing less than two kilograms, to monitor the border area, military officials said.

Other, more low-tech options for defending the border include a 25-metre-deep trench to block Palestinian arms smuggling between Egypt and Gaza.

In short, what's being contemplated here is not a "withdrawal," not a ceding of anything, but the creation of a huge prison, the world's largest gulag, one holding 1.3 million people who can neither leave nor return without the permission of their jailers, who can be killed by remote control if they approach the bars of their cell, and, as noted by the World Bank, whose supplies of water and electricity are dependent on how pleasing they are to, how cooperative they are with, Israel.

(Sidebar: All this is without even addressing the fact that the same "separation" plan also calls for Israel to hold on to large portions of the West Bank, with any Palestinian areas sliced into powerless Bantustans by the "separation fence" and "security corridors.")

If this is withdrawal, I'd hate to see occupation. Oh wait, we already have. And they look pretty much the same.

Footnote: Just so we don't forget, John Kerry was as droolingly enthusiastic about the "disengagement" plan as Bush; indeed, once Bush announced his support, Kerry couldn't wait to jump on the bandwagon.