Globalization, the Palestinian Economy, and the "Peace Process"

Abstract

ALTHOUGH GLOBALIZATION IS AN INTERNATIONAL PHENOMENON, ITS EFFECTS ARE experienced differently in advanced capitalist countries (the center) and in countries (the periphery). Thus, while Western capitalist countries benefit from the liberalization of trade, access to expanded markets, and free movement of capital and goods (though not labor power), the effects of globalization the periphery lead to the decline of the nation-state's power, restriction of its markets, and further blocking of its development. These effects have been known some time and have been raised in many international fora. At the ninth session of the U.N. Conference on Trade and Development (UNCTAD) in May 1996, example, several leaders from developing countries described how globalization and liberalization had forced their local companies out of business and marginalized their economies (Third World Network, 1996). Tanzania's President Benjamin Mkapa told UNCTAD that countries undergoing liberalization and privatization under World Bank/IMF-style policies have suffered heavy social costs, including job losses, cuts in health care and education, and instability (Third World Economics, 1997). This article examines the effects of globalization on the West Bank and Gaza (WBG), territories occupied by Israel in 1967 and subsequently integrated into its own economy, which is highly integrated into and heavily subsidized by the world capitalist center. Despite the peace process, those parts of the occupied territories that have come under the jurisdiction of the Palestinian Authority (PA) have remained dominated by Israeli economic policies. Moreover, the entire WBG has been subordinated to the prescriptions of international financial institutions, mainly the World Bank and the IMF, the principal vehicles the economic globalization that constitutes this latest phase of capitalist development. Unlike other formerly colonized countries, the PA's economy may be alone in having been designed from its very beginning by the policies and prescriptions of globalizing institutions. In the immediate wake of the Oslo signing, the international community, led by the World Bank, drew up the Emergency Assistance Program Palestinian infrastructure development and institution building. The private sector was given a central role: one of the program's principal aims was to stimulate private investment in sectors such as industry, tourism, housing, telecommunications, and agriculture by channeling long-term finance to local entrepreneurs (World Bank, 1993:4). It was also the World Bank that in essence created the Palestinian Economic Council Development and Reconstruction (PECDAR), whose main function was to disburse the donor funds ($2.4 billion pledged) according to the Bank's directives (al-Labadi, 1999: 382). As the possibility of an independent Palestinian economy, for the World Bank, the econo mic delinking of the self-rule areas from the Israeli economy is a contradiction of the Paris Protocol. It should be noted that assistance to the Palestinians is based on these protocols (Inbari, 1995). The peace process launched in Madrid has unfolded during a period when globalization has dominated international relations. Consequently, as long as the peace process sponsored by the United States (the main controller of globalizing financial institutions) continues, the occupied territories will continue to be deeply affected, economically and socially, by these institutions to the extent that PA policies will be globally, not internally, oriented. Despite the experiences of the many developing countries that have already taken this route, the PA unquestioningly adopts the wave of globalization, with seemingly little awareness of alternatives. The Legacy of Direct Occupation Within days of Israel's conquest of the WBG in June 1967, the Israeli military governor began to issue military orders that would reshape the lives of the territories' residents. …