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The long road from Paris to Palestine

Here is a piece I have in today's Guardian online.

An international donors' conference that was convened in order to secure pledges of financial support for the Palestinian Authority closed in Paris yesterday. Eighty-seven countries and international organisations were in attendance, including the host, French president Nicolas Sarkozy, US secretary of state Condoleezza Rice, Palestinian president Mahmoud Abbas and prime minister Salam Fayyad, Israeli foreign minister Tzipi Livni, Quartet special envoy Tony Blair and representatives of many Arab states. According to initial reports, pledges of $7.4bn were secured, exceeding the target set for the conference. On the face of it, this is impressive stuff and builds on the momentum of the peace summit held in Annapolis three weeks ago. This is the first pledging conference for the Palestinians of its kind since 1996. And the Palestinian economy is certainly in dire need of help, with per capita GDP falling 40% since 1999, unemployment standing at 23% and the PA expecting a fiscal gap for current and capital expenditures of around $1.8bn in 2008 according to the World Bank. This is also an international vote of confidence in prime minister Fayyad, his Palestinian reform and development plan and the sincere efforts he is making to produce a workable program to improve Palestinians' economic prospects. But the journey from Paris to Palestine is a long one, the obstacle course is daunting and the lessons from previous failed and similar journeys are in danger of not being learned.

Put aside for a moment the often expectation-crushing nature of such pledging conferences - that contributions promised do not always translate into monies disbursed, that multi-year commitments often can be back-loaded and that existing programs simply get repackaged. The outcome of this conference risks suffering from Palestine-specific and possibly devastating flaws.

The story of Palestine's economic collapse over the last several years is one of donor assistance being unable to paper over the gaping cracks in a failed political peace process. The rebuttal on display in Paris was that this time it's different, we have Annapolis, peace is back on the agenda. Except that Annapolis is anything but the kind of robust process that is required - witness already the Israeli announcement of the expansion of Har Homa in Palestinian East Jerusalem, the escalating conflict between Israel and Gaza, the lack of a visible change in the closure system and, most importantly, the continued American and international impotence in the face of these negative trends.

Palestinian economic prospects will not improve under conditions of a continuing intrusive occupation even if the donor community is full of festive season generosity. A World Bank report, specially prepared for the Paris conference, put it in the following stark terms: "Even with full funding but no relaxation in the closure regime, growth [of the Palestinian economy] will be slightly negative at around minus 2% per year." Another far-reaching study released by the Crown Centre at Brandeis University and written by Dr Mohammed Samhouri, a Palestinian economist and former official, questions the assumptions behind the current donor strategy and finds them to be hopelessly out of sync with the situation on the ground and past experience. Economic assistance should not continue being a fig leaf for the lack of political will to address the core questions that, in turn, vitally impact the economic reality in the Palestinian territories - agreeing on a permanent border, ending the occupation, dividing Jerusalem. To assume that this time it will be different, while avoiding the real heavy diplomatic lifting that would make it so, is another victory for hope over experience.

To these considerations must be added another unsustainable burden that economic planners are being asked to shoulder, namely that well-targeted assistance will definitively reshape the internal Palestinian political reality. Much of the talk in Paris was about explicitly designing economic assistance in order to return the moderates to power and squeeze out the radicals. If one can demonstrate to Palestinians that Fatah governance can deliver the economic goodies, so the theory goes, then they will turn against Hamas. Part of the plan, therefore, is predicated on exacerbating Palestinian division. But calibrating economic reward and punishment to affect changes in political affiliation, especially of a people under occupation, is far from being an exact science. Such policies often carry unintended consequences, and in this case the irreversible damage being inflicted on the Gazan economy is not only inhumane and painfully shortsighted but is also likely to fuel a greater anger and sense of abandonment among Gazans. The World Bank study points out that economic restrictions have already led to the suspension of 95% of Gaza's industrial operations.

In fact, as Dr Samhouri argues in his study, the donor assistance strategy should promote "a different and more realistic approach that would help foster Palestinian reconciliation, bring Gaza back into the Palestinian main political and economic fabric and stabilise the fragile conditions on the ground". The donor nations gathered in Paris are actually divided as regards to the West Bank v Gaza, Fatah v Hamas, framing of current policy. The Paris conference's co-chair, Norway, along with several EU and Arab states all favour renewed efforts at Palestinian internal reconciliation and dialogue, considering this to be the most propitious route to stability, security, economic growth and a meaningful peace process. The US, Israel and other key European states rigidly adhere to a divide and rule approach that is very likely to bring both economic and political prospects crashing down together.

For Europeans in particular the post-Annapolis reality contains a further twist of the knife. In Paris the EU and its member states confirmed their historical role as by far the largest donors to the Palestinians; in Annapolis the Europeans were effectively excluded from the political process with the creation of US rather than Quartet follow-up and monitoring mechanisms. We are back to Europe as payer not player. Europeans (and others) are being asked to place their faith and taxpayer dollars in a political process from which they are not only excluded, but not even given the face-saving semblance of having a role via the Quartet. A peace process that was designed to deliver would likely strengthen the Quartet partnership, not emaciate it.

If these flaws are not addressed, then the results of the Paris conference will become the economic accompaniment to the Palestinian state-building process recently described here in Comment is Free by Ahmad Khalidi as one that "does nothing to address basic [Palestinian] needs" and is "largely a punitive construct devised ... to constrain Palestinian aspirations". And that is a recipe for dissatisfaction all around - of course among Palestinians but also for an already fatigued donor community, and even for an Israel whose insatiable appetite for hollow victories is so clogging up its arteries that it threatens self-destruction.

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Daniel Levy

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This page contains a single entry from the blog posted on December 18, 2007 9:24 AM.

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