How neoliberalism undermined Palestinian liberation

Palestine Ltd.:

Neoliberalism and Nationalism in the Occupied Territories

In early December 2017, President Donald Trump took another of his erratic steps in foreign policy with an announcement that the United States would recognize Jerusalem as the capital of Israel. His remarks were pure Trump, using the symbolic political gesture to throw red meat to the Christian Zionist base of the GOP, while deliberately provoking the Arab and Muslim world, and the liberal international community, which maintains formal commitment to an independent Palestinian state.

Also typical for Trump, his speech was peppered with self-serving lies: first he claimed credit for delivering on a campaign promise, and then, apparently unaware he had just deprived Palestinians of roughly 12 percent of the land officially remaining to them, donned his businessman mask to promise them “a great deal.”

No long-term observer of the Israeli-Palestinian conflict and US relations to it should have been surprised by Trump’s announcement. One hates to give credence to any statement by the president, but it is correct that over thirty years ago Congress recognized Jerusalem as Israel’s capital and authorized the relocation of the US embassy there. However, every president since Reagan has exercised an option to not implement this law until the resolution of the peace process. Even Trump’s administration quietly qualified his announcement: then-Secretary of State Rex Tillerson wrote that the embassy would not be moved until 2020, citing planning delays, while the passports of US citizens born in Jerusalem would continue to list the city alone as their place of origin, rather than Israel.

The current moment is highly contradictory. In material terms, Trump’s announcement changed nothing—the Temple Mount, al-Aqsa Mosque, and the rest of the Old City remain under the thumb of the Israeli Defense Forces, while Israel’s settlements continue to expand, whittling away at the little territory remaining to the supposed future Palestinian state.

On the other hand, Trump fully intended to undercut Palestinian aspirations for an independent state, and his decision provoked the largest uptick of resistance to Israeli occupation since the last invasion of Gaza in 2014.

Toufic Haddad, a courageous Palestinian socialist journalist and academic, suggests that examining the peace process and its failure is key to understanding contemporary Occupied Palestine. His latest book zeroes in on the origins of the peace process, its consequences for Palestinians, and the reasons for its failure. Haddad argues that the continuing cycle of repression and dispossession in the Occupied Territories was an entirely logical outcome from the moment the current peace process was launched in the early 1990s. Trump’s empty rhetoric of “a great deal” for Palestinians taps into something deeper than he knows: the specifically neoliberal model of conflict resolution imposed on Palestine, which has failed so dramatically and repeatedly.

From Free Palestine to Palestine Ltd.

The Oslo peace process, ratified in 1993 after secret negotiations between the Palestine Liberation Organization (PLO) and the Israeli state, marked a watershed for the Palestinian freedom movement. Haddad carefully probes the reasons that led the PLO and Israel to sign the agreement.

The PLO’s strategy of armed struggle had failed to impose significant costs on Israel or slow its expansion. Expelled from Lebanon by Israeli intervention in that country’s civil war, the PLO was forced across the Mediterranean to Tunisia in 1982. Five years later, a decentralized, grassroots uprising—the First Intifada—began against Israel in Occupied Palestine, from which the PLO was not only geographically distant but also politically irrelevant.

The PLO found itself trapped under these conditions, while at the same time, Israel and its allies had reason to reach a political arrangement with a neutered PLO (the self-proclaimed “sole legitimate representative of the Palestinian people”) to manage the conflict. In this way, Israel could relieve itself of the burdens of direct military administration of the Occupied Territories and limit its exposure to the violence that results from any colonial situation.

At Oslo, the PLO recognized Israel’s right to exist within its pre-1967 borders. It effectively ceded the right of Palestinians to return to their pre-1948 homes or receive equivalent compensation. Nor would it any longer contest internal apartheid Israel practices in the pre-1967 territory against its Palestinian citizens, assenting to their separation as “Arab Israelis.”

This shift denoted an abrupt change to the idea of Palestine, and therefore to its liberation. It reduced the territory to be liberated—formerly the entirety of pre-1948 Mandate Palestine—to a patchwork of scattered cantons in two territories under Israeli military occupation since 1967, the West Bank and the Gaza Strip. These had previously never been considered separately from the rest of Palestine. Following Haddad, I will refer to them as the Occupied Palestinian Territories (OPT).

“Final status negotiations” far off in the future were vaguely indicated to ratify an independent state in the territories currently under occupation—though the Israelis were careful to not officially commit to this. Left out at Oslo and its numerous adjustments over the years was any agreement on the continued incursion of Israeli settlements into the territory on which a truncated but independent Palestinian state could conceivably have been built.

In return, the PLO received from the Israeli side formal recognition of the “legitimate demands of the Palestinian people” and itself as their representative and negotiating partner. The temporary settlement would take the form of a semi-state apparatus in the territories occupied in 1967—the Palestinian Authority (PA)—that was deprived of most normal state functions and ultimately dependent on Israeli goodwill to exercise the powers left to it. Thus, the celebrated return of Yasser Arafat at the head of the PLO to begin the process of “nation-building” directed from Ramallah had only been possible with a fundamental shift in perspective that rewrote both the idea of Palestine and the movement centered on its liberation.

Palestine therefore emerged from the ratification of Oslo severely limited not only by geographical but by institutional composition. The project of building the state and economy of the OPT has become akin to a limited liability corporation, with its startup investors (the plethora of Western donors centered around international financial institutions), its shareholders to whom it is responsible (Israel, the United States, the European Union, and the larger international community), a corporate hierarchy (the Palestinian Authority and national bourgeoisie) bought in to the company, with all of these—but rarely, if ever, ordinary Palestinians—reaping some share of the economic as well as political dividends. Haddad writes:

It is almost as though the generations of sacrifice of the national liberation movement which struggled to realize “Palestine”—“from the river to the sea” as a homeland saying goes—has now been realized but in a transmogrified form. Palestine Ltd. becomes neoliberalism’s Janus-faced version of the former Palestine, emptied of any emancipatory content, and replaced with the economic and political structures which enforce and deepen the state of oppression and fragmentation which Palestinians sought to overcome in the first place through their national liberation movement.

The political economy of peace-building in the OPT

Peace-building as it was practiced in the 1990s grasped at harmony between Israel and the Palestinians without ever addressing the underlying issues causing the conflict. For the World Bank, IMF, and USAID, which at the time were engaged in slash-and-burn programs of structural adjustment in Latin America, Africa, and the former Soviet bloc, this presented no problem. Economic growth in the private sector would automatically resolve such conflicts through the extension of capitalist prosperity. The resolution of the conflict was literally modeled by econometricians in World Bank and USAID boardrooms.

The proposition of building a separate Palestinian capitalist economy as a stepping-stone to independence did not at first seem as illusory as it would later become. Along with the promises of development aid, there already was a Palestinian “national bourgeoisie” which, though scattered outside the OPT from Jordan to the Gulf states and acting primarily as agents of capital in these countries, seemed ready to return home and invest in the nation’s future. Thus in 2001 Yasser Arafat proclaimed, “With continuous effort we will make Palestine the Singapore of the Middle East, a proud home of investment and successful businesses.” Subsequent PA administrations led by former IMF agent Salam Fayyad would represent the most concerted attempts to make Palestinian capitalism a reality.

However, the donors knew that there were inbuilt limits on the potential of private-sector growth in an economy under pressure of occupation, instability, and resulting poverty. The question was not whether there would be a strong public sector to facilitate Palestinian growth, but what kind of framework would provide thousands of OPT residents with employment, distribute rents (such as pensions to the families of martyrs), and regulate the growth of a private sector.

The Palestinian Authority has become known since its origins in the 1990s as a particularly corrupt and unaccountable semi-state. Israeli leaders have announced many times their regret that there is no suitable “partner for peace” on the Palestinian side. In fact, Israel is largely responsible for the current form of the PA. The donors went along because their main concern was finding the most efficient means by which to build a neoliberal Palestine, not addressing Palestinian aspirations for freedom and social justice.

It was a deliberate choice to channel revenue streams and rents in the OPT through the patrimonial networks of Fatah, the central political faction within the PLO led by Arafat. As Haddad writes, it was “certainly efficiency-enhancing from the Israeli and international donor perspective,” in that it significantly reduced the costs for Israel of doing the job themselves. Martin Indyk, the US ambassador to Israel during the later Clinton years, would recall how the Israelis came repeatedly with demands for “walking-around money” to help Arafat and his associates “clean up” the OPT by getting “control of all these terrorists.”

The period from 1993–2000 was hoped to be the beginning stages of a process that would bring lasting peace to Israel, the OPT, and the surrounding region. During this time, capitalists moved into the OPT and began the process by which it could industrialize as a dependent of the Israeli and Gulf economies. With the collaboration of Israel and the United States, Arafat and Fatah succeeded in constructing a semi-state built through patronage and increasingly authoritarian methods.

These and other failures can be traced to Israel’s design and the flaws in a utopian project of peace building through neoliberal development. It would have eventually broken down on its own had not Israeli leaders decided to effectively cancel it.

State-building and de-development amid terror

In September 2000, Israeli Prime Minister Ariel Sharon, with a delegation from his right wing Likud Party, visited the Temple Mount under armed guard to announce that the complex, which contains both the holiest site of Judaism (the Wailing Wall) and the third-holiest site of Islam (the al-Aqsa Mosque), would remain under Israeli sovereignty “in perpetuity.” This effectively meant an annexation of Occupied East Jerusalem where the complex is located. Sharon’s visit was calculated to provoke Palestinian fury and succeeded remarkably, sparking off the Second, or al-Aqsa, Intifada.

Having provoked a new wave of Palestinian resistance, the Israeli state proceeded to launch a prolonged and deadly series of attacks on the OPT, meant not only to forestall resistance but also to substantially reverse the halting construction of a Palestinian capitalist economy and its supporting state institutions. Haddad, following Naomi Klein, describes the period of war that began in 2000 as an Israeli “shock doctrine” designed to fragment the OPT, put its residents in a permanent state of fear, and break future or potential resistance to the Israeli settler-colonial project.

First on the agenda was the “reform,” at gunpoint, of the PA. The severely limited space given for independent Palestinian society to grow was now seen by Israeli leaders as being entirely too much for their purposes. Arafat had always premised his cooperation with Israel on this essential negotiating space. Having indulged Arafat as the essential man to manage the OPT on their behalf during the 1990s, the Israelis now sought to discredit and discard him. He was imprisoned in the PA compound in Ramallah, dying in 2004 from a sudden illness many still believe was the result of Israeli intervention. His successor, Mahmoud Abbas, inherited control over the semi-state apparatus Arafat had built with Israeli assistance. As time went on, Abbas showed himself better adapted than his predecessor to the closure of any institutional space for an independent Palestine.

Concurrent with the assault on severely delimited Palestinian state institutions was an assault on the economy of the OPT. Sara Roy, looking at Gaza’s economy under repeated vicious assault by the IDF since 2000, has termed this “de-development.” In contrast to the dependent and hence uneven development that most colonies have undergone, in de-development, “economic relations and linkage systems become, and then remain, unassembled,” negating “any organic, congruous, or logical arrangement of the economy.”

The Israeli assault starting in 2000 foreclosed the possibility of the Palestinian economy gaining a productive industrial base, even a deeply dependent one. Surprisingly, this did not end hopes of a Palestinian capitalism, but it did redirect them.

Haddad shows how financial investors, relying on their links to foreign capital and the PA semi-state, turned quickly to trading on debt. A mortgage market founded in 1996 ended up worsening the housing crisis in the OPT, already under severe strain from the incursion of settlements. This desperate situation found its capitalist response in the construction of luxury apartments in Ramallah, accessible only to the leaders of the PA and their associates, along with Palestinian capitalists who spend most of their time in Jordan or the Gulf. Essentially, Palestinian national capital has flourished by cannibalizing what economic resources existed in the OPT before its entry, while producing nothing of value itself.

On their end, the donors chose to imagine Israel’s assault on the OPT not as the death of the Oslo process, but as a new stage of it. If the prospect of building peace on the shaky Oslo settlement had been uncertain and improbable, the new stage of “state building to prepare the Palestinian territories for self-government” was a delusion, pure and simple.

After six years of prolonged and vicious assault by the full might of the Israeli military, Palestinians were finally allowed a vote on their situation. They registered their disgust by electing Hamas (the Islamic Resistance Movement), which ran on a platform of confronting Israel directly and cleaning up the administration. The donors then showed what they really thought of building a democratic state in the OPT: they cut off all aid. Abbas refused to accept the results of the election, and the OPT divided between the Fatah-ruled West Bank and Hamas-ruled Gaza Strip. Israel and the United States thus contributed to the process of fragmentation of Palestinian society that was already well underway.

Though the machinery of the PA established by Arafat rolls on, collecting its percentage and registering the occasional meek word of protest, it has become largely irrelevant. The perspective of the donors who initiated its formation reverted from peace- or state-building to managing the long, slow process of “sociocide,” with fiscal contributions that keep OPT society functioning at its barest minimum.

Palestine unlimited?

Haddad helps us to understand the failure of the Oslo political process, for which Israel is primarily responsible. His account also assists us tremendously in assessing the failure of the PLO, the PA semi-state, and Palestinian capitalists in their attempts to establish even a severely delimited independent Palestine.

The resistance sparked by Trump’s announcement has led some in the solidarity movement to predict or declare a third Intifada. Though Haddad does not take an explicit position on the future of Palestinian resistance, his book may serve as a caution against any premature declarations of the advent of a new and dynamic liberation movement. Israel’s continuous assault on the OPT has not only resulted in economic de-development, but the fragmenting of Palestinian politics far beyond the Hamas–Fatah split in 2006. At all levels of OPT society we see fatigue, a failure of political initiative, and recently despair over the loss of Jerusalem as the center of international attempts to put a halt to Israeli expansion.

We understand how, but why? Haddad makes only the occasional remark that helps us understand the shift in Israeli policy from its official sanction of Palestinian institutions that could relieve it of the burdens of occupation, to its turnaround in 2000 that terminated the peace process and began again the long, slow genocide and dispossession of Palestinians in the OPT. We must await a corresponding project on Israel during the same period that relates these policies to the country’s transformation from labor-union-managed state capitalism to the neoliberal opening of the Israeli economy and its emergence as a hub of the global military, high-tech and medical industries.

My own inclination is to frame Oslo and its demise within the long and essentially uninterrupted process of Zionist settler-colonialism. Haddad makes similar suggestions at several points. Israel’s goal, partially executed in 1948 and extended after 1967, has always been the complete dispossession of the Palestinian people. Within this framework of essential continuity, Oslo looks more like a tempered interlude, as Israeli leaders experimented with the possibilities of relatively independent Palestinian institutions that could help manage the long-term problem, while never renouncing the occupation nor stopping the dispossession that continues through the construction of settlements.

Israel is currently unable to accomplish this desired solution. It would probably take a cataclysm of proportions several times larger than the current counterrevolution in the Middle East to allow Israel to finish the job it started in 1948. In the meantime, it continues military action that breaks the OPT, Palestinians, and their institutions into hundreds of isolated fragments to be eventually swept away.

What does the future hold? Haddad only makes a few speculations. The experiment with Palestinian self-government is all but over. Still, Israel can neither withdraw from the OPT nor swallow it up. In the meantime, it seems to be welcoming the return of Jordanian involvement in the West Bank. This may be ultimately backed by the Trump administration. Steve Bannon, when he still held sway at 1600 Pennsylvania Avenue, apparently said, “Let Jordan take the West Bank, let Egypt take Gaza. Let them deal with it. Or sink trying.” If implemented, this could be the return of the 1967 status quo ante or “three-state solution.”

Existence is, at a certain register, resistance. Despite seventy years of dispossession and violence, Palestinians have refused to disappear. But the day of Palestinian freedom now seems much further away than during the Oslo years. More than ever, it seems the Palestinian question cannot be resolved within Palestine alone. The Arab Spring briefly gestured at the hope anti-Zionist socialists have always held, that Israeli apartheid may be swept away on a wave of revolution engulfing the entire Arab world.

Haddad’s text does not provide us with any answers on this score. But that would be expecting far too much. What he has done is to produce an analysis of the material situation in Occupied Palestine that is not only concrete and thorough, but completely free of any trace of moralism or romanticization of the struggle. And the latter is something we find ourselves needing more and more.

Issue #103

Winter 2016-17

"A sense of hope and the possibility for solidarity"

Interview with Roxanne Dunbar-Ortiz
Issue contents

Top story