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• • • PALESTINE: The Palestinian Capitalists That Have Gone Too Far • • •


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The Palestinian Capitalists That Have Gone Too Far
By Tariq Dana
Date: 14th January 2014
Source: Al-Shabaka

While most Palestinians living under Israeli occupation are struggling to survive, a powerful group of Palestinian capitalists is thriving and growing in political, economic and social influence. The cost, all too often, is their engagement in economic normalization projects. In other words, they deal with the Israelis as though they were a "normal" business partner rather than an occupying power that has ruthlessly violated Palestinian rights for over 65 years.

In this policy brief, Al-Shabaka Policy Member Tariq Dana sheds light on the ways in which these Palestinian capitalists exercise political influence and social control and gives examples of the economic normalization projects in which they have engaged.

A Snapshot of Palestinian Capital
The presence of Palestinian businessmen in the political sphere predates the establishment of the Palestine Liberation Organization (PLO). After the PLO's foundation, Palestinian capitalists played a variety of roles in the national liberation movement. Some PLO factions, particularly Fatah, saw the Palestinian capitalist class as a "national bourgeoisie" and as such an indispensable part of the anti-colonial struggle and dealt with it accordingly.

At the time, Palestinian capitalists' engagement with the PLO included funding, occupying leading PLO positions, and political mediation. For example, Palestinian businessmen mediated between the PLO leadership and the Jordanian regime during Black September and between the PLO leadership and the American administration during the 1980s. Many were also philanthropists who supported charitable, educational and socio-economic projects. A landmark in this regard was the establishment of the Welfare Association in 1983, a much-needed boost to the Palestinian national project in the educational and socio-economic spheres after the bulk of Palestinian guerrillas were expelled from their base in Lebanon during the 1982 Israeli invasion launched by the late prime minister Ariel Sharon.

Since Oslo, and particularly in recent years, the influence of Palestinian capitalists in the occupied territory has been rising in an unprecedented manner. They can be divided into three main groups:

  • "Returnee" capitalists, comprised of a Palestinian bourgeoisie that had emerged in the Arab countries, particularly the Gulf states, as well as in North America and Europe. Many of these businessmen had strong ties to the nascent Palestinian Authority.
  • Local capitalists, comprised of two main subgroups: large landowners who historically enjoyed considerable political and social influence over traditional social structures; and local interlocutors who accumulated wealth as subcontractors for Israeli companies after the 1967 occupation.
  • The nouveau riche, who acquired wealth in more recent times and who particularly benefited from the Oslo process in various ways as will be discussed further down.

 

Influencing the Policy Process
Like other Palestinians, businessmen have struggled with statelessness and sought the security that a state would provide, where their companies and profits would be better protected from regional instability and threats. Thus, many of them supported the Oslo accords as a key step towards establishing a Palestinian state, some even imagining that Oslo's "peace dividends" would transform the West Bank and Gaza into the Singapore of the Middle East.

Early signs of capitalist influence on the nascent Palestinian Authority (PA) can be seen in Article 21 of the Palestinian basic law, which specifies that "the economic system in Palestine shall be based on the principles of a free market economy" (author's italics.) Paradoxically, even the United States, the global driver of free market capitalism, has a constitution that is flexible enough to allow for different responses to specific economic circumstances. The open espousal of neoliberalism by the PA has helped to create an institutional framework that enables economic interest groups to manipulate policies in the service of private ends.

Neoliberalism combined with political authoritarianism and corruption reinforced and consolidated what can be described as the PA's crony capitalism. From the earliest days, the PA's cronyism was expressed in special relations between powerful businesspeople and the PA political and security elite. This system naturally had adverse effects on the economy: By favoring privileged political and economic groups it systemically impeded market competitiveness and excluded the majority of the people's access to meaningful economic opportunity.1 Indeed, the ability of capitalists to exert influence over government policies was further strengthened and politicians further enriched...

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