Posted on July 17, 1995 in Washington Watch

It has been 22 months since the signing on the White House lawn and 14 months since the signing of the Cairo Accords – and Gaza and Jericho are still waiting for the new prosperity and economic development which everyone agreed must accompany peace.

Not only has the international community not come through with billions of dollars in promised economic assistance, but the anticipated private investment is also lacking. In Gaza, for example, while a mini-construction boom is now underway, real economic indicators show that today Gaza residents are actually worse off economically than they were in 1993.

Israel’s closure of its borders with the West Bank and Gaza has played a significant role in stifling any economic growth in Palestine, but the failure of international organizations and governments to come forward with their promised assistance has also hurt efforts to solve the security-economic development conundrum.

Consistent with the international community’s failure to insure that the benefits of peace reach the Palestinians, Senator Hank Brown (R-CO), who chairs the subcommittee of the Senate Foreign Relations Committee concerned with the Middle East, convened extraordinary hearings last week to assess U.S. assistance efforts to Palestinians and the impact of those efforts on economic development in the West Bank and Gaza.

Because so much of the recent discussion in the U.S. has centered on Palestinian-bashing, it was noteworthy that the hearings were held in an atmosphere of compassionate concern for Palestinians living under wretched conditions, and anxious concern for the fate of the peace process. The title of the hearings, “Economic Development and U.S. Assistance in Gaza/Jericho,” did much to set a thoughtful tone for the hearings themselves.

Brown, who traveled to the region in April, and the ranking member of the subcommittee, Dianne Feinstein (D-CA) have displayed genuine commitment to the peace process, and it is important to acknowledge their accomplishments.

On May 25 of this year Senator Brown wrote a letter to President Clinton, warning against any further delays in supporting Palestinian economic development. His letter, which was co-signed by Feinstein and 20 other Senators, called on the President to:

· “appoint immediately a Special Coordinator to coordinate the rapid development of an industrial park in Gaza or the West Bank…
· “assist in speeding the exchange of goods and services [within and from the ] two areas.”

The letter concluded with a strong recommendation:

“Sending a clear, tangible signal of our strong support for improved lives for Palestinians in Gaza and Jericho should be one of our top priorities. If we delay, this test case for the Middle East peace process is certain to negatively effect our ability to move ahead and bring peaceful stability to the region.”

Last month Brown introduced and passed two amendments to the general Foreign Aid Bill. One calls on the Administration to extend complete free trade status to all Palestinian products, noting that such a move would send “an unambiguous signal of United States support for peace in the Middle East,” and also calls for economic support for the Palestinian Authority.

The second amendment translates Brown’s concern for advancing a U.S.-supported industrial park into a Sense of the Congress Resolution, stating that ” the United States should take prompt, visible action before the coming elections in Gaza and Jericho that promises hopes and jobs to Palestinians.”

In their remarks opening the hearings, both Chairman Brown and Senator Feinstein expressed the belief that Palestinian economic development must be a high priority.

Two different panels were invited to present testimony before the subcommittee. The first panel was represented the Administration, while the second included a variety of private sector representatives. Mel Levine, a former Congressman from California who with me is co-President of Builders for Peace, and I were invited to testify with the second group.

While the purpose of the hearing was an overall evaluation of U.S. programs, attention was paid to specific impediments to investment which could be overcome with greater U.S. support. One important issue that emerged from our discussion was the failure of the Overseas Private Investment Corporation (OPIC) to finalize approval of the long-awaited Gaza-Marriott Business Center.

Levine was most eloquent in his defense of the Marriott project and his concern for the impact of OPIC’s delay in approving the project would have in Palestinian confidence in U.S. commitments.

Levine recalled that OPIC first announced the Marriott project on September 12, 1994. Since then, he and other witnesses charged, OPIC has continually changed conditions required of the project, which has made matters both difficult and costly for the investor group.

Levine charged that those who continue to see Gaza as “too risky” an investment are those who have no vision. “For too many,” Levine noted, “it is impossible to see beyond Gaza now, the West Bank now, the border closings now, the infrastructure shortcomings now….” He added that it is necessary to see what Gaza and the West Bank can become, and work to make that a reality. Levine recalled PNA President Yasir Arafat’s often-repeated phrase, “Gaza can become Singapore, or it can become Somalia,” and added himself that “if we wish to align ourselves with the former of those two models, there can be no better way to send that signal than with the Marriott project.”

In my initial contribution to the hearing I emphasized the importance placed on the Marriott project by all parties involved in development work in Gaza. Reporting on the findings of my most recent visit to the Middle East, I testified that the Marriott project has acquired a critical political and symbolic importance to all in the region. “Frankly,” I told the subcommittee,

This project has become so elevated in its importance, so symbolically significant – that Palestinians, Israelis, U.S. and international aid officials all agree. They view it, as they told us, as giving a major boost to investor confidence in the future economic viability of Gaza. They see it as an important statement of U.S. commitment to private sector development. They understand that it will serve as a catalyst that will create a significant number of jobs, related industries, and its own infrastructure. As the United Nations Under Secretary General, Special Coordinator in Gaza said to us, `Building this hotel will represent a major contribution to efforts to bring foreign investors into Gaza – failure to build this hotel will represent a devastating blow to these efforts.’”

Ziad Karram, President of GRdD, the company which will build the Marriott, noted his frustration in dealing with the U.S. agency, OPIC.

“If we have an economically viable project, designed and constructed by the best people in the industry, managed by one of the best hotel chains in the world, with a major equity investment (more than in a domestic situation); and it has an operational guarantee, has the support from the American Administration, has the support of the Palestinian Authority, and the Israeli Government, then I believe this project should be financed by OPIC.”

Another witness before the subcommittee, Leo Kramer, offered strong recommendations which the U.S. must act upon if it is to support private sector investment activity in the West Bank and Gaza. Kramer’s list of recommendations included:

“A. Palestinian export products must be able to cross borders with certainty.
“B. Markets must be open to Palestinian products.
“C. Funds must be available to the private sector.
“D. Potential investors must be assured that the peace dialogue will continue, that conditions will be increasingly amenable to trade….”

Kramer echoed the concerns of Brown and Feinstein when he noted, “Who has the power to make these critical changes and improvements? Not the Palestinians, not the PLO, not the PNA. The resources, the power, and the controls in these critical areas lie with the West, the donor nations, the United States and Israel.”

And in my concluding remarks, I stated:

“Since the beginning of the peace process, it has become accepted as axiomatic that for the process to succeed, Palestinians must experience the benefit of peace. It was understood that merely expanding economic opportunities for Palestinians would not be sufficient to make peace, but that without such growth, achieving peace would be impossible. Seen in this context today, there is a certain tragedy in witnessing the reality of Gaza and Jericho today.

“The statistics are staggering. Unemployment in Gaza stands at 62% – a dramatic increase since 1993. Virtual reality projections from bureaucrats aside, not one single job-creating infrastructure project has begun. Open sewage remains a serious health hazard. And as a result of the sustained closure of Gaza’s border with Israel and the fact that no regular access or egress is available to Egypt, Jordan or the outside world, commerce has remained at a standstill.

“What was required to assist Palestinian economic development was an energetic approach to reconstruction. What Palestinians got instead were observers, studies, pledges and unfulfilled promises, and blame.

“Young Palestinians of Gaza and the West Bank want nothing more than to have a job, live a meaningful life, raise a family, provide for their children and see their grandchildren prosper. Their anger, all too often seen, is a product of despair – it is born of the fear and frustration that they have no future. If peace is to survive, we must attack this crisis with all the resources and capabilities we have – and without delay or encumbrances – to show the Palestinian people that the promise of peace can be realized.”

I then offered the strong support of Builders for Peace for a U.S.-sponsored industrial park, explaining that rapid development of such parks would go a long way toward solving the Gaza and West Bank problems of staggering unemployment and underdevelopment; lack of infrastructure, incentives, and a coherent legal and commercial code; and political risk.

Senator Brown expressed profound anxiety over the delay in the Marriott project and the treatment its builders have received from the U.S. agency, and renewed his commitment to the development of the industrial park.

Overall, the hearings helped shed light on the continuing problems in advancing Palestinian economic development. They made a significant contribution to a much-needed public debate.

There is a direct relationship between the economic and political tracks to peace. Failure to act on the economic track only increases frustrations and despair in the Palestinian community, which in turn produces the environment that breeds the unrest plaguing the political track.

I recalled in my testimony an image that I used on a number of occasions to describe the Middle East peace process:

“It is important to understand that building a comprehensive regional peace in the Middle East is much like constructing an inverted pyramid. The foundation, the point at which the ultimate stability of the entire enterprise rests, is embedded in the sands of Gaza and in the rocky terrain of the West Bank.

“Unfortunately, no sooner had the process begun, than public attention turned to the more glamorous and potentially lucrative sixth and seventh stories, peace with Israel’s other neighbors, while the foundation remained unfinished and what had been started was in danger of crumbling under the weight of unfulfilled promises. If we do not do more and do it quickly, we are in danger of further eroding confidence in the process and endangering the entire edifice of peace.”

Senator Brown’s hearings made a genuine contribution toward focusing Administration, Congressional and public attention on the urgent need to address the issue of Palestinian economic development. They provided a important reminder that public policy can be moved – but moving it requires vision and persistence and an unwavering commitment toward the goal

For comments or information, contact jzogby@aaiusa.org

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