As both on-the-ground pressure in the Gaza Strip and diplomacy inexorably move towards a ceasefire, the eyes of the world have been fixed upon the mounting casualty toll suffered by the territory’s 1.8 million inhabitants. The scale and intensity of the Israeli offensive, now in its fourth week, and the professionalism and resilience of Palestinian fighting forces also have dominated headlines.
The terrible human and economic costs continue to mount by the hour and will be felt by the Palestinian people for years to come. While the thousands of Palestinian casualties caused by this attack are lost or scarred forever, those who survive will again try to rebuild destroyed communities and reweave torn and frayed social fabric. International donors, including some of the same parties which stand today complicit in the extended Israeli campaign, may be expected to again scramble to alleviate the immediate humanitarian crisis, and Arab donors eventually will step up to help rebuild some of that which has been destroyed. According to the United Nations, the Gaza Strip’s growth fell to 4.5 percent in 2013 and its real GDP per capita in 2013 was twenty per cent below the 1994 level. The PA Minister of National Economy has estimated the cost to the Strip’s economy of the first two weeks of the war alone, in terms of destroyed homes, infrastructure, utilities and lost economic output, at around three billion US dollars—equivalent to around one year of GDP. For a population whose living conditions were already critical prior to this war, the task will begin from below zero, and will call for massive, coordinated Palestinian efforts to identify sources of untied financial aid.
Unlike the previous Israeli campaigns against the Gaza Strip which took place amidst an internecine Palestinian struggle, the demands of the Gaza-based resistance have already obliged a different PLO approach to relief and reconstruction. Regardless of Israel’s political and military aims in its latest assault, or the ultimate outcome of this specific round of the asymmetric struggle, the Palestinian position is that there can be no return to the status quo ante. Despite relentless Israeli efforts to demonize the resistance by labeling it as an extension of global Islamist extremism, it has demonstrated maturity and confidence and enjoyed widening Palestinian popular support. By the third week of the attack, popular protests within the West Bank and pro-resistance pressures from the mass base of the ruling party, Fatah, had obliged a reversal in the stance of the PLO leadership. Until then, the latter had acted as a third party intermediary, in tune with regional and international demands. But with Fatah between a rock and a hard place it has now moved to keep up with the pace of West Bank popular protest—that erupted even more violently in Ramallah on 23 July—and the emerging Palestinian national consensus. As the Fatah bases align themselves with the resistance in the Gaza Strip, their leaders appear to be maneuvering rhetorically for a place in the outcome, while still keeping the movement’s political and military weight out of the balance.
Were the current confrontation to end in line with the terms demanded by the resistance movement in the Strip, and since then endorsed by the PLO and even channeled by the US Secretary of State, regarding lifting the siege and opening the borders, this could set the scene for a new phase. That could inaugurate an alternative national development strategy and institutional restructuring that would reflect the new dynamics and internal situation. The ability to deploy sovereign economic functions in a Gaza Strip liberated from total Israeli siege and with unfettered access to regional and international markets would be a substantive achievement. But the struggle over who is to control border crossings and to act as interlocutor with the new Egyptian regime will be part of the outcome of any ceasefire negotiations. The formation of a unified PLO/Resistance delegation to Cairo may be a first step in avoiding an internal Palestinian conflict on this key issue.
So at best, this could be the beginning of a reorientation in Palestinian politics that will take some time to manifest concretely. Notable shifts were underway in the Palestinian political and social system well before the first Israeli airstrikes hit Palestinian targets in the Strip, leading to the current full scale escalation. In fact, the sparks that ignited this war clearly came from a West Bank at economic peace with Israel, heavily policed by the PA, and largely pacified by its neoliberal policies. While not yet tectonic, to the extent that new dynamics within Palestine challenge the ruling political system, they could provide a popular protective umbrella for a different Palestinian economic development policy framework that might emerge from the ashes of the Gaza War, departing from the fiscally bankrupt, politically detached, and largely commercial and non-productive model exemplified by Ramallah.
Such a new start for the Gaza Strip was already needed in light of its prolonged “de-development” and especially after the past seven years of economic and military blockade and the shocks of two previous Israeli campaigns. Today’s circumstances only make a break with the past all the more imperative, but any such possibilities are wholly dependent on both the outcome of the fighting on the ground, and of the political and diplomatic efforts of a unified and expanded Palestinian leadership to engage a still hostile Egyptian government in opening the Strip’s border with Egypt.
In the short term, the urgent humanitarian relief effort will entail many hundreds of million dollars of emergency aid. UNRWA alone has already announced an appeal for 115 million US dollars. Treating the tens of thousands of wounded and traumatized, the homeless and penniless, the unemployed and already desperately poor will itself be a tremendous task. The destruction of essential public utilities, most recently the power plant, water provision, and sewage treatment, will further burden an already badly deteriorated infrastructure, with the full cost probably running into the billions. A sustained cessation of hostilities alone might be enough to allow the political and temporal space for this first phase of absorbing the post-war shock, though if new Israeli conditions are accepted on provision of financial aid and construction supplies to the Strip this could complicate relief and reconstruction efforts.
The actual reconstruction of the Gaza Strip is less certain a matter, and highly dependent on ceasefire arrangements for border crossings, the speed with which donors are mobilized and the PA’s own capacities to design and manage an effective reconstruction program of such a scale. At the time of writing, as many as 30,000 dwellings had been reportedly destroyed or seriously damaged, which implies a homeless population of at least 180,000 people and indeed a wholly new category of relief, reconstruction and even resettlement. The three kilometer wide “no-go zone” established by the Israeli forces within the Strip’s border with Israel during the hostilities has shrunk the territory by forty-four percent and accordingly squeezed the population into an even more dense area than before. Even in an economy that is allowed to breathe and rebuild through trade channels to Egypt, Israel and the West Bank, the PA will have to shoulder enormous fiscal responsibilities in effectively deploying and employing some 90,000 public sector workers, including those employees and security personnel appointed by Hamas since 2007.
But simply getting the economy back to where it was last month is no longer an acceptable outcome, neither for the Palestinian resistance in the Strip nor for the Palestinian people who have paid such a heavy price already. If the outcome of this battle imposes a national unity agenda that Fatah is obliged to join—and which it cannot highjack—a big push will be needed if what has been destroyed is to be rebuilt. In addition to political unity, a new economic and fiscal policy and public institutional framework will be needed to bring the economy of the Gaza Strip within the orbit of the still-limited Palestinian national economic space in a way that expands it and fosters an independent capacity to trade and interact with the rest of the world. As the war has unfolded and the resistance endures, new Palestinian demands are emerging such as establishing a physical link between the Strip and the West Bank.
However imperative Palestinian geographic and economic unity may be, the current balance of power with the Israeli occupation will mitigate strongly against efforts to break the still-predominant matrix of control in which the PA continues to acquiesce, and indeed to implement its security and economic components. Meanwhile, recent events have put brakes on Israeli-Palestinian economic interaction. Any spread of sustained civil, not to mention even sporadic military, resistance in the West Bank could lead to increased economic isolation there under intensified Israeli subjugation.
A weakened West Bank economy is bad news for a besieged economy in the Strip, and has significant consequences not only for the challenge of reuniting with the Gaza economy, but also for sustaining an increasingly isolated Palestinian economy in Jerusalem and a marginalized Arab economy in Israel. These different regions of Palestinian population concentration have recently demonstrated potential for greater economic complementarity and mutual reliance than commonly assumed; any long term economic strategy of resilience needs to draw on such untapped assets. The expected anti-Arab backlash from an increasingly hostile Jewish Israeli population in the wake of the attack will create new pressures, and hence new imperatives and opportunities, for Arab-Arab economic cooperation across the Green Line, the Separation barrier and the Gaza blockade. Palestinian Arab regional integrative policies could counter-balance the overwhelming pressure of Israeli Jewish economic domination and settlement expansion “from the River to the Sea.”
If the factors which have in the past few weeks unified much of the Palestinian people survive this war and forge a new leadership, this could serve a deeper and broader national unity. Only then might a more ambitious development agenda be envisaged. Back in 2011, I wrote that “insistence on recognition of the Palestinian state in the West Bank and Gaza implies, for the PLO, living up to that claim through starting to act as a sovereign entity where possible.” I argued that in a scenario of reconciliation that enabled a return of the PLO to the Gaza Strip, as recently proposed by the imprisoned Fatah leader Marwan Barghouti, a resurgent Gaza could provide a new start towards building a “developmental state” of Palestine, economically integrated with its Arab hinterland and enjoying a certain measure of real sovereignty. Indeed, the Palestinian demand today for full opening of the borders with Egypt underscores the strategic economic significance of the issue and the necessity of pursuing such a strategic goal.
In setting the tone for the next era of Palestinian economic policy in a context of ongoing resistance, it is useful to recall the political build up to today’s conflagration in order to better perceive the trajectory on which the Palestinian national liberation agenda increasingly seems reoriented. Ushered in by the collapse of peace negotiations in April amidst increasing Palestinian public disaffection with the Fatah/PLO leadership, a process of reconciliation with Hamas was announced and a technocratic “government of national consensus” was approved. This was accompanied by a parallel mass mobilization in the West Bank in support of a sixty-eight-day hunger strike by some 160 Palestinian “administrative detainees.” Reconciliation efforts halted when salaries of public sector employees in Gaza were withheld, under threat of Israeli financial sanctions against the PA and of diplomatic retaliation against the UN Special Coordinator for having dared to propose channeling salaries to PA employees appointed by Hamas. Possible international banking measures against the Arab Bank for offering to dispense salaries were also reported. It was only after the June 12 abduction of three Israelis in the West Bank and the ensuing Israeli army campaign—ostensibly searching for them alive when in fact they were known to have been killed—that mass arrests, house demolitions, confiscation and looting reached tens of villages, camps and cities from Jenin to Hebron including areas nominally under PA security jurisdiction.
More than any other factor, Israeli escalation of the anti-Hamas campaign in the West Bank, followed by the racist feeding-frenzy within everyday Israeli public and media discourse, created ripe conditions for the roaming gangs of Israeli settler thugs beating Palestinians in West Jerusalem on the first day of Ramadan and for the brutal, tragic murder of a sixteen-year old Palestinian in Jerusalem the next day. So if the fuse hadn’t already been ignited by then, ensuing street battles with Israeli police throughout Palestinian Jerusalem which soon spread into Arab towns and cities inside Israel were enough to set the scene for today’s confrontation in the Gaza Strip. Suddenly, the occupation had returned to the everyday lives of all Palestinians, even in the safe-zone of cosmopolitan Ramallah, and it was no longer the exclusive bane of those Palestinians isolated far away in the Strip’s open-air prison.
A nation-wide uprising today appears to many Palestinians to be beckoning on the horizon, a perfect storm of mass protests and clashes with Israeli forces where possible in the West Bank, Jerusalem and even inside Israel, accompanying the more violent and fateful military resistance in the Gaza Strip. The Palestinian people are today powered by a newly found spirit of popular unity forged in the battlefield of Gaza and streets of the West Bank, even under the threat of sanctions, military superiority, continuing PA security-coordination with Israel, PLO diplomatic weakness and Arab official complicity. If a reconstituted, and united PLO leadership emerges from this challenge, it will have a number of economic policy decisions to make alongside the numerous political, security and financial tasks that beset it.
Even in an optimistic perspective, the post-war balance of power with Israel, as well as within the Palestinian “national consensus” space, might not be adequate for political and institutional coherence to emerge from the current “unity of arms.” At best, lifting the naval blockade and full opening of the Rafah border crossing with Egypt could help to establish a vital lifeline for the economy. But this will only work if the reconciliation goes beyond the PA government and extends to the PLO political system and its core, the Fatah ruling elite which continues to scramble to find its footing in the new political climate and regional inter-State conflicts which cannot but sweep through the fragile Palestinian arena. In any case, Egyptian cooperation will not be easy to secure, while assumption by the PA Presidential Guard of control over the passages, and the fiscal burdens associated with a unified administration could keep the post-war economic agenda hostage to inter-Palestinian rivalries.
Ultimately, if Palestinian reconciliation does no more than replace an Israeli monitored siege with a PA-policed and EU-monitored security buffer between Gaza and Egypt, then the blood, sweat and tears of millions of Palestinians caught up or transfixed by this terrible struggle will have been in vain.