With one factually wrong, decidedly insensitive, and patently biased comment, Republican presidential aspirant, Mitt Romney, did more to focus U.S. media attention on the impact of the Israeli occupation on the Palestinian economy than any other development in the past two decades.
Romney’s observation that "culture makes all the difference", which he offered as his explanation for the disparities between the Israeli and Palestinian economies, was so remarkably out of touch with reality that it set off an unprecedented explosion of press commentary in the U.S. and Europe. In the two days that followed these remarks, the "Palestinian economy" received more than 6,700 mentions in the media. Most of the U.S.’s major daily newspapers featured articles, commentary, and even editorials taking issue with the Romney quote – highlighting repressive Israeli policies, and not an "inferior culture" as the reason for the poor performance of the Palestinian economy. Most made this point by including citations from the World Bank ("the government of Israel’s security restrictions continue to stymie investment") and the C.I.A. World Factbook ("Israeli closure policies continue to disrupt labor and trade flows, industrial capacity, and basic commerce…[and] have resulted in high unemployment, elevated poverty rates, and the near collapse of the private sector"). What is striking is that while these assessments were not new, it took Romney’s remarks to bring them into the public discourse. In fact, when the most recent World Bank report was published just a few days earlier, it received scant attention. The only take away for many reporters was the Bank’s comment that the Palestinian’s were too dependent on foreign aid and that their "economy is currently not strong enough to support…a state" – a line latched onto by opponents of the Palestinians’ bid for statehood.
There is no doubt that there are huge disparities between the Israeli and Palestinian economies. In fact, they are significantly greater than Romney stated them to be. While he cited per capita GDP numbers giving Israel a two to one edge over the Palestinians, the World Bank says the gap is more like 10 to one (and according to other sources, it may even be double that).
But it didn’t have to be this way.
Back in 1993 around the time that Israelis and Palestinians were signing the Oslo Accords, the World Bank released a multi-volume study on the Palestinian economy. The study noted the impact of sustained occupation on the West Bank and Gaza, and the resultant deformity and de-development of sectors of the economy. Nevertheless, the World Bank was bullish on the entrepreneurial spirit of the Palestinians and opined that with investment in infrastructure and freedom, the territories could experience rapid growth.
That never happened.
Instead of experiencing the freedom to grow and develop, new hardships were imposed on the Palestinians. In fact, in 1994 the Palestinian economy received a devastating hit resulting from the Israeli closure of the territories. The "closure," which cut Palestinians off from greater Jerusalem and severely limited interaction between Palestinians and Israel, was initially imposed as a temporary "preventive measure" in the wake of the massacre of Palestinians committed by an Israeli settler in Hebron. The "temporary closure" never ended.
During the occupation, the Palestinian lands had been reduced by the Israelis to a dependent economy – with two of the largest sources of wealth being low paying day-labor jobs in Israel and small manufacturing enterprises producing items which Israeli companies then exported with a "Made in Israel" label. With "closure", over 100,000 Palestinians lost their jobs in Israel and hundreds of small businesses were forced to close because trade with Israel was severely restricted. With the Oslo peace process underway, Israel prospered, with dramatic increases in foreign investment. Meanwhile, cut off from Jerusalem, their economic hub, and denied the freedom to import raw materials or export finished products, the Palestinian economy languished – with little understanding from U.S. officials or media.
Back then, I was involved with a project, founded by then Vice President Gore, to promote investment in the Palestinian economy. When I informed the President and Vice President of the Israeli impediments to investment and the deteriorating economic realities in the still occupied territories, they were concerned, but these matters were given short shrift, since their staff countered that raising these issues with the Israelis would only make them defensive and would, therefore, not contribute to advancing peace negotiations. This, not Palestinian prosperity, was seen as the more important goal.
In 1995, I testified before a Senate Foreign Relations Committee hearing on the Palestinian economy and was asked why Arafat couldn’t be more like South Africa’s Mandela or Russia’s Yeltsin and oversee the creation of a vibrant free market economy in the Palestinian lands. I pointed out, in response, that Mandela and Yeltsin took control of established sovereign states, with developed infrastructures, control of resources and borders – hence, the ability to produce, to trade, and to freely grow their economies. The "Palestine" of Arafat, on the other hand, had none of these attributes. The Authority he headed had no control of its land, resources, or access and egress. They, therefore, were unable to produce, trade, or grow. While Israelis were experiencing the fruits of peace, Palestinians were becoming poorer, more dependent on foreign aid, and more cynical about "peace." The situation was not only not sustainable, it was a recipe for disaster. Since my answer did not fit Washington’s dominant "Arafat is at fault" narrative, it was ignored.
And this state of affairs has continued to be ignored until the present day – with horrific consequences for ordinary Palestinians. Since the days of Oslo, Israeli settlements in the West Bank and East Jerusalem have more than doubled creating new hardships and humiliation and anger. For nearly two decades now, Gaza, blockaded and strangled, has had a youth unemployment rate of nearly 80% – meaning that most young men in that "prison camp" have no jobs, no prospects of a job, no ability to even think of marrying and raising a family, and are living in deep despair.
In the face of all this, the best Congress could do in recent weeks was to propose, yet again, to move the U.S. Embassy to Jerusalem, hold hearings on Palestinian corruption, and threaten to cut U.S. assistance should the Palestinians continue with their feeble threat to seek United Nations recognition.
Then Mitt Romney went to Jerusalem and helped shift the focus of the discussion, at least for a few days. And so I say, thank you, Mitt!