Analysis from Israel

Yesterday, Palestinian Authority President Mahmoud Abbas told the UN that the Palestinian situation is “unsustainable.” The day before, two ostensibly nonpartisan professional agencies provided data to back this claim – or at least they did if you ignore all the numbers in the World Bank and IMF reports and heed only the rhetoric. The World Bank, for instance, repeatedly used the word “unsustainable” to describe the PA economy. But the actual data paint a very different picture.

What first caught my eye was the poverty rate, which, according to the World Bank, stood at 16 percent in the West Bank last year. That drew my attention because it happens to be significantly lower than the official poverty rate in the West Bank’s wealthy next-door neighbor, Israel. Granted, this comparison is unfair, since Israel’s poverty rate (18.6 percent of families and 21.8 percent of individuals) is artificially inflated by a large community of the voluntarily impoverished; excluding the ultra-Orthodox, among whom the deliberate choice of full-time Torah study over work has produced an eye-popping poverty rate of 73 percent, the rate would be much lower. But it did prompt me to look at poverty levels in other countries, using the World Bank’s own handy chart. And it turns out the West Bank fares quite well by comparison.

EU members Romania, Bulgaria, Croatia, Latvia, Estonia and Poland, for instance, all have higher poverty rates (22.4, 21.0, 19.5, 19.4, 18.6 and 17.3 percent, respectively). In Mexico, an OECD member, the poverty rate is a whopping 52.3 percent. In South America, even many relatively successful countries have higher poverty rates than the West Bank, like Colombia (30.6 percent) and Costa Rica (22.4 percent). And then there are the real global basket cases, like Haiti (58.5 percent), Congo (63.6 percent), Honduras (64.5 percent) or Zimbabwe (72.3 percent). Yet, somehow, you never hear world leaders declaring the situation in any of these countries “unsustainable.”

Or take GDP per capita. According to another handy World Bank chart, GDP per capita stands at $2,966 in the West Bank and Gaza combined; the figure for the West Bank alone would be higher, since it’s the economically stronger territory. This is obviously far below Western levels. But it’s almost double the figure for global powerhouse India ($1,596) and more than double the figure for Kenya, one of Africa’s strongest economies ($1,358). It edges out Vietnam ($2,052) and the Philippines ($2,871); it’s two to four times higher than numerous other African and Asian countries, including Bangladesh ($1,093), Ethiopia ($565), Nepal ($697), Pakistan ($1,334) and Rwanda ($696); and it’s eight to 10 times higher than the lowest earners, like Burundi ($286) and Central African Republic ($371). Yet somehow, you never hear world leaders declaring the situation in those countries “unsustainable.”

As for unemployment, the World Bank report put the West Bank jobless rate at 16 percent. That’s better than quite a few European countries were doing as of 2013, according to yet another World Bank chart; these include Macedonia, Greece, Spain, Croatia and Portugal (with rates of 29, 27.3, 26.6, 17.7 and 16.5 percent, respectively). It’s also markedly better than one of Africa’s strongest economies, South Africa (24.9 percent), not to mention poorer African countries like Swaziland or Lesotho (22.5 and 24.7 percent). Yet somehow, world leaders never declare those countries’ economies “unsustainable.”

I could keep going, but the point is clear: Far from being “unsustainable,” the West Bank’s economic situation is better than that of many countries worldwide. Indeed, it can be termed “unsustainable” only by the same illogic that drives so many world leaders to term the Israeli-Palestinian security situation “unsustainable” despite a death toll that’s downright minuscule compared to numerous other conflicts worldwide.

The economic situation in Hamas-run Gaza is admittedly much worse. Yet even there, the accepted wisdom that economic hardship will inevitably produce an explosion seems questionable.

After all, according to this accepted wisdom, last summer’s Hamas-Israel war erupted because of Israel’s “siege” on Gaza. But as journalist Khaled Abu Toameh pointed out last week, the one really besieging Gaza is Egypt, whose crackdown on cross-border smuggling tunnels, most recently by flooding them, has almost completely sealed the Gaza-Egypt border; in contrast, the Israeli border is Gaza’s lifeline, admitting up to 800 truckloads of goods every day. Yet in the two years since this tunnel crackdown began, Abu Toameh noted, Hamas hasn’t launched a single attack against Egypt.

In other words, Hamas chose to attack not the country that’s trying to strangle Gaza, but the one that’s keeping it from being strangled – which strongly suggests that its motive wasn’t Gaza’s economic distress, but rather its avowed desire to destroy Israel. And since that isn’t likely to change anytime soon, neither will the sustainability of Gaza’s economy: It won’t thrive, since Hamas’s hostility precludes lifting all Israeli restrictions, but neither will it die, because Israel will keep it on life support, just as it has throughout the eight years since Hamas seized power.

Thus the only thing truly unsustainable about the Palestinian situation is the overheated rhetoric of unsustainability – because as the World Bank’s own data shows, it simply doesn’t fit the facts.

Originally published in Commentary on October 1, 2015

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How the Embassy Move Signals Big Changes to the Iran Deal

When Israeli Prime Minister Benjamin Netanyahu met with President Donald Trump last week, he had two main items on his agenda: thanking Trump for his decision to move the U.S. Embassy to Jerusalem and urging U.S. action on Iran. At first glance, these items seem unrelated. In fact, they’re closely intertwined. The decision to relocate the U.S. embassy has turned out to be a strategic building block in Trump’s effort to renegotiate the nuclear deal with Iran.

To understand why, consider the dilemma facing his administration when it first took office. Without a serious American threat to scrap the nuclear deal, there was no chance that even America’s European allies–much less Russia, China and Iran–would agree to negotiate a fix for some of the deal’s biggest flaws. Yet conventional wisdom held that the administration would never dare flout the whole rest of the world, along with virtually the entire U.S. policy community, by withdrawing from the deal. So how was it possible to make the threat seem credible short of actually walking away from the deal?

Enter the embassy issue. Here, too, conventional wisdom held that the administration would never dare flout the whole rest of the world, along with virtually the entire U.S. policy community, by moving the embassy. Moreover, the embassy issue shared an important structural similarity with the Iran deal: Just as the president must sign periodic waivers to keep the Iran deal alive, he must sign periodic waivers to keep the embassy in Tel Aviv.

Consequently, this turned out to be the perfect issue to show that Trump really would defy the world and nix the Iran deal if it isn’t revised to his satisfaction. In fact, the process he followed with the embassy almost perfectly mimics the process he has so far followed on the Iran deal.

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