[R-G] Palestine in the Middle East: Opposing Neoliberalism and US Power

[Anthony Fenton]

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A Socialist Project e-bulletin .... No. 125 .... July 15, 2008
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Palestine in the Middle East:
Opposing Neoliberalism and US Power
Part 1

Adam Hanieh

Over the last six months, the Palestinian economy has been radically  
transformed under a new plan drawn up by the Palestinian Authority  
(PA) called the Palestinian Reform and Development Plan (PRDP).  
Developed in close collaboration with institutions such as the World  
Bank and the British Department for International Development (DFID),  
the PRDP is currently being implemented in the West Bank where the Abu  
Mazen-led PA has effective control. It embraces the fundamental  
precepts of neoliberalism: a private sector-driven economic strategy  
in which the aim is to attract foreign investment and reduce public  
spending to a minimum.

Understanding the logic of this economic framework is critical to  
assessing the current juncture of the Palestinian struggle. The  
neoliberal vision underpinning these policies is a central corollary  
to the political direction promoted by the Israeli government, the  
Palestinian Authority (PA) and their US and European Union (EU)  
supporters. The aim, as the first part of this article explains, is to  
formalize a truncated network of Palestinian-controlled cantons and  
associated industrial zones, dependent upon the Israeli occupation,  
and through which a pool of cheap Palestinian labour is exploited by  
Israeli, Palestinian and other regional capitalist groups. The  
evolving institutional framework for the Palestinian economy not only  
incorporates the Israeli occupation into the way 'development' is  
conceived, but also acts to foster the culpability of Palestinian  
political and economic elites for how these structures operate.

Such an analysis, however, is only part of the story. The second part  
of this article argues that these changes in the West Bank and Gaza  
Strip cannot be fully understood without an appreciation of the  
regional framework of the Middle East. Over the last two decades, and  
particularly accelerating under the Bush administration, the US has  
pursued a policy of integrating its bases of support in the region  
within a single, neoliberal economic zone tied to the US through a  
series of bilateral trade agreements. This vision is aimed at  
promoting the free flow of capital and goods (but not necessarily  
labour) throughout the Middle East region. The region's markets will  
be dominated by US imports, while cheap labour, concentrated in  
economic 'free' zones owned by regional and international capital,  
will manufacture low-cost exports destined for markets in the US, EU,  
Israel and the Gulf.

A central component of this vision is the normalization and  
integration of Israel into the Middle East. The US envisions a Middle  
East resting upon Israeli capital in the West and Gulf capital in the  
East, underpinning a low wage, neoliberal zone that spans the region.  
What this means is that Israel's historic destruction of Palestinian  
national rights must be accepted and blessed by all states in the  
region. In the place of real Palestinian self-determination (first and  
foremost the right of return of refugees), a nominal artificial state  
will be established in the dependent islands of territory across the  
West Bank and Gaza Strip. This goal is an essential pre-requisite of  
US strategy in the region. Our political activities must be informed  
by this understanding if we are to successfully build effective  
solidarity movements to confront and turn back this project.

Neoliberalism in Palestine:
The Reform and Development Plan
On 17 December 2007, at a one-day conference in Paris, over 90  
international representatives from various countries and donor  
organizations gathered to pledge their support to the Palestinian  
Authority government headed by President Mahmoud Abbas (Abu Mazen) and  
Prime Minister Salam Fayyad. The conference was the largest of its  
kind since 1996, and was chaired by the French and Norwegian  
governments, Tony Blair (as representative of the Middle East  
Quartet), and the European Commission. Following speeches by various  
EU member states, the Palestinian Authority, the International  
Monetary Fund, and the Israeli government, attendees at the conference  
pledged over US$7.7 billion to the PA.

The main impetus for this conference was an attempt to garner  
financial support for a new PA economic strategy called the  
Palestinian Reform and Development Plan for 2008-2010 (PRDP). Based  
upon a detailed series of proposals written by the World Bank and  
other international financial institutions, the broad outlines of the  
PRDP were first presented in November 2007. Since that time it has  
become the guiding framework for economic policy, particularly in the  
West Bank areas where the Abu Mazen-led PA has effective control.

The first thing to note about the PRDP is that the heavy hand of the  
World Bank, the International Monetary Fund and other neoliberal  
institutions such as the British Department for International  
Development (DFID) can be clearly seen in its policy recommendations  
and outlook. The argument behind the PRDP is explicitly neoliberal,  
calling on the PA to undertake a series of fiscal reforms in order to  
foster an "enabling environment for the private sector" as the "engine  
of sustainable economic growth". Palestinian grassroots organizations  
have gone so far as to describe neoliberal financial institutions as  
"a de facto 'shadow government' in the West Bank, dictating the  
development programme of the Salam Fayyad government."

What does the PRDP actually mean for Palestinians on the ground? As  
the name suggests, there are two main policy components to the PRDP:  
'reform' and 'development'. The reform component commits the PA to a  
program of fiscal tightening that exceeds measures imposed by the IMF  
and World Bank on any other state in the region. There are three key  
elements to this program.

First, in probably the harshest attack on any public sector in the  
Middle East in recent history, the PA has committed to cut 21% of jobs  
in the public sector workforce by 2010. Nearly 40,000 people will lose  
their jobs through this mass layoff.

Second, the PA has pledged not to increase any public sector salaries  
over the next three years. In an environment of very high levels of  
inflation (11% in the year to March 2008) and rapidly rising food and  
energy prices, this wage freeze is a recipe for disaster for the  
average person in the West Bank and Gaza Strip.

Finally, a further key component of the PRDP is the requirement that  
citizens present a 'certificate of payment' of utility bills in order  
to receive any municipal or government services. This measure will  
have a dramatic impact on the poor, as the subsidization of  
electricity and water bills (i.e. allowing these services to continue  
despite the non-payment of bills) was a central means of survival for  
millions of people in an environment of rapidly spiraling poverty  
levels. This new measure means that individuals applying for various  
services -- including requests for ID cards, car licenses, building  
permits etc -- will be denied if these debts are outstanding. Public  
sector employees will have utility debts docked from their salaries.

International financial institutions place such a high priority on the  
PRDP that virtually all donor support to the Palestinian Authority --  
including the $7.7 billion earmarked at the Paris Conference -- is  
contingent on its implementation. To ensure this compliance, a new  
bank account called the PRDP Trust Fund has been established through  
which international support to the PA will flow. This account is  
headquartered in Washington D.C. and managed by the World Bank. The  
Bank has explicitly stated that disbursements through this account are  
based upon "assessment of the progress of implementation of the PRDP."

Continue reading
www.socialistproject.ca/bullet/bullet125.html#continue
Adam Hanieh is a doctoral candidate in political science at York  
University, Toronto, whose research looks at the political economy of  
Middle East and the Gulf Cooperation Council. He can be reached at hanieh08 at gmail.com 
.

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