ECONOMIC AID PLAN FOR THE GAZA STRIP
(Article by Haim Ben-Shahar, "Ha'aretz", 31.3.95, p.B1)
The closure that Israel imposed on the West Bank and Gaza Strip following
the terrorist attacks and the break in talks between Israel and the
Palestinian Authority, is disrupting and endangering the peace process.
The focus of the risk has to do with the worsening economic situation in
Gaza. The residents of Gaza, instead of seeing that the peace process is
improving the quality of their lives, have been dealt a severe economic
blow, and there are families which are barely able to survive.
The closure has hit Gaza especially because 35% of Gazan employees work in
Israel, and received about 35% of Gaza's total income. If the residents of
Gaza who worked in Israel before the beginning of the first closure in
1993 still worked in Israel in 1995, their annual wages would amount to
almost $300 million. It is difficult to exaggerate the severity of the
impact on Gaza, and particularly on the families who depend on employment
in Israel.
Israel has now implemented a policy of "separation," meaning, among other
things, increasing the economic detachment between the territories and
Israel, especially the continuation of the closure, and a drastic
reduction over the long-term, in the level of employment Palestinians in
Israel. One cannot speak about peace when masses of people are suffering
in economic misery. The youths of these families are natural candidates
for acts of desperation, which even today are being expressed in increased
terrorism. This is a dangerous, vicious circle for the peace process.
The fundamental solution for this situation lies in developing industry
and employment in the Gaza Strip for residents whose employment in Israel
has been harmed Several important plans have been raised in this context,
including the building of industrial parks on the separation line between
the Gaza Strip and Israel. World Bank development plans, with funding from
the donor countries, have also been proposed.
However, realizing these plans will take a long time, several years at
least. The peace process cannot wait for the implementation of these basic
solutions, which are incapable of immediately halting the negative dynamic
which endangers its future.
As a result, it is imperative to address this severe problem immediately,
and to ease the economic crisis through a series of actions during the
transition period. The following proposal is being made in order to
satisfy immediate needs, and is also compatible with the processes
required for the fundamental solution.
Israel will immediately announce that it is committing itself, in 1995, to
grant economic assistance to the Gaza Strip in the amount of $250 million,
with the expectation (but not on the condition) that more countries join
this initiative. It would later be made clear that Israel's real economic
burden could be much lower than this figure. The aid would be divided into
three spheres:
* Unemployment insurance modest grants to unemployed people who used to
work in Israel, in the overall amount of about $5 million per month ($60
million per year).
* Loans to build apartment blocks, totaling $100 million. The apartment
blocks would be built by workers who used to work in construction in
Israel, and the loans would be given to families willing to participate in
the building, and in partially funding their own home.
* Loans for entrepreneurs, totaling $90 million, for developing small
businesses in agriculture and in light industry. There are impressive
examples of private initiative in Gaza, which indicate the latent
capability of local entrepreneurs. It can be expected that if they are
given a financial opportunity, they will develop their businesses
themselves. Israel would declare that the products of these businesses
could be sold freely in Israel, as well as reach export markets, initially
through Israeli distribution and marketing systems.
This proposal has several advantages: First, it is likely to instill a
more positive atmosphere into the political talks. Second, it will prevent
an economic crisis in Gaza, compensate for revenues lost due to the
interruption of work in Israel, and dispel the economic pressure in Gaza
that is increasing frustration and terrorism. Implementing the program
will hasten the economic development of Gaza as the basis of a sound
economic establishment. Increasing Gazans' incomes will, in any case, lead
to an increase in Israeli exports to Gaza, since the Gazans need goods
that they are accustomed to buying in Israel. It is also possible to
allocate part of the aid for the purchase of Israeli goods.
This and more, Israel will serve as an example for other countries,
especially the countries of the European Union and the U.S. Israel will
call on these countries to join its initiative and take it upon themselves
to finance $200 million out of the $250 million. If such an aid plan is
not formulated in the wake of the Israeli initiative, Israel will be
obligated to finance this plan in full for 1995. It is possible to hope
that the European Union countries and the U.S. will join the initiative
and thereby ease the burden on the Israeli economy.
An additional aspect has to do with the U.S. practice of deducting the
amount invested in the territories from the $2 billion loan guarantees
given annually to the Israeli Government. In 1993, more than $400 million
was deducted; in 1994, more than $200 million. Israel will be able to
request the United States to reduce from the deducted figure the amount
directed to the aid program in Gaza. The amount to be deducted will serve
the Government as a budgetary resource for financing the program.
Implementing the program requires the following steps:
* Preparing lists of unemployed Gazans whose work in Israel has been
interrupted, and the establishment of effective mechanisms for approving
lists of unemployed who are eligible for unemployment insurance. The
proposal is that the amount of support be $125 a month per family, and
will be provided to approximately 40,000 unemployed people.
* Establishing a banking office consisting of Palestinian bankers and
economists, in cooperation with Israeli professionals and others. The
office could be organized in a few weeks, and would grant housing and
business loans on the basis of specific requests and approved plans. The
checks would be minimal and the decision- making rules more flexible than
those prevalent at the World Bank, because given the severe Palestinian
economic crisis, expedited implementation must take preference over
preventing any waste of resources.
The organization required for implementing the program is no less
complicated than obtaining the financing, and therefore a detailed and
coordinated working plan must be put together urgently.
The Marshall Plan for economic aid to Western Europe, which the U.S.
administered after World War II, facilitated the economic reconstruction
of Europe, but also contributed to the strengthening of the American
economy. A Gaza Plan is a kind of Marshall Plan on a smaller scale. It
will hasten the economic reconstruction of the Gaza Strip, and will also
contribute to Israeli exports. Just as the Marshall Plan was politically
motivated, so is the Gaza Plan changing the the negative dynamic which
characterizes the peace process today, and reining in one of the
incentives for terrorism.
To those who oppose investing in Gaza on the grounds that one's own urban
poor come first, it must be said that easing the economic crisis in Gaza
is not only a humanitarian interest, but a vital Israeli interest.