Look Who's Benefiting From The Global Economic Slump: Israel--And The West Bank (Updated)

I remember for years how the Israeli economy was a joke--how the currency was constantly being devalued, how converting your dollars into shekels provided you what seemed like a small fortune.

Things are different now.
Very different--today, the Israeli economy is no longer a joke.

As for the US economy, The Wall Street Journal reports:

After years of a brain drain from the region, and despite the lack of a peace settlement, by the end of this month about 4,000 North American Jews will have immigrated to Israel this year, an increase of 33% over 2008 and the most in one year since 1973, according to Nefesh B'Nefesh, an organization that oversees and assists with immigration to Israel from North America.

Immigrants to Israel often have a longstanding desire to move, but the economic crisis has pushed them to make the jump this year, said Danny Oberman, executive vice president of Israel operations for Nefesh B'Nefesh. "The economy has a lot to do with it," Mr. Oberman said.

...Israel's economy, fueled mainly by the software, biomedical, weapons-manufacturing and diamond sectors, has grown at least 4% a year from 2004 to 2008. And Israel has a lower unemployment rate than the U.S., at 7.8%, according to the Central Bureau of Statistics, next to 10.2% in October in the U.S. The Bank of Israel has raised interest rates twice since August, to its current level of 1%, at a time when banks around the world are cutting rates or leaving them low.

...In Israel, North American immigrants are making significant contributions to the economy, according to a recent study by consulting firm Deloitte Information Technologies Israel Ltd. U.S. immigrants who came between 2002 and 2008 have contributed directly 989 million shekels ($262 million) to the Israeli economy, the study said.

This is of course great news, that at a time that the world economy is suffering, Israel is available as a source of employment and financial security.

According to the article, Israel is not the only one to offer a financial refuge:

The crisis is also having an impact on the West Bank, which is seeing the return of hundreds of Palestinians, mostly from the Persian Gulf, looking for work as the economy there sours. The West Bank economy -- separate from Israel's -- is expected to grow 5% in 2009.

No official figures are available yet for how many Palestinians have made the move, but the International Monetary Fund is planning to study the issue over the next month.

"The economic crisis worked to our advantage," said Bashar al-Masry, a Palestinian real-estate developer overseeing an $800 million project to build a new Palestinian city north of Ramallah. "We're seeing more and more people willing to come back."

This is also good news, indicating that Netanyahu's idea of boosting the Palestinian economy and building an infrastructure before talk of a second Palestinian state is both practical and doable.

This development is not surprising--I noted this in previous posts:

• "Bombs in Gaza, Parties in Ramallah" (July 30, 2008)
• Ramallah And Jenin: Formerly Terrorist Strongholds--Now Developing Economic And Cultural Centers (June 23, 2009)
• Netanyahu's Stress On Economic Peace Plan Being Validated In West Bank (July 17, 2009)
• Palestinian Arabs in the West Bank Do Their Best Work When Abbas Sits and Does Nothing (August 27, 2009)

One significant difference between the Israeli and West Bank economies is that Israel has benefited from the Arab boycott--being forcibly excluded from Dubai has been a blessing that has shielded Israel from the economic disaster there. The same cannot be said about the West Bank:

Palestinian Minister of National Economy Hassan Abu-Libdeh cautions that the Palestinian economy might ultimately suffer from the downturn in Dubai, because many Palestinian families rely on remittances sent from relatives working there. Oussama Kanaan, IMF representative in the West Bank and Gaza, said Palestinian remittances made up 10% of Palestinian gross domestic product in 2008. Income from Palestinians working in Israel makes up an additional 12% of Palestinian GDP.

Any impact of lower remittances would most likely be softened if those workers find work in the West Bank. With a building boom under way in Ramallah and other Palestinian cities, fueled partly by international aid money totaling $1.7 billion in 2008, many returning from Dubai are finding jobs.

If the West Bank economic turnaround is the real thing, they are going to have to be able to sustain this economic stability without excessive aid--but in the meantime, the West Bank is enjoying an economic miracle that harkens back to the 1970's (see Palestinian Refugees Get A Chile Reception)

As Israel continues its development from a refuge of last resort to a home of first choice, the increased economic stability of the West Bank can only be a benefit--to both Palestinian Arabs and to Israelis alike, as a process towards a real peace becomes possible.

UPDATE: Middle East analyst Tom Gross gives a more personal description of what is going on in the West Bank, based on what he saw there:

I had spent that day in the West Bank's largest city, Nablus. The city is bursting with energy, life and signs of prosperity, in a way I have not previously seen in many years of covering the region.

As I sat in the plush office of Ahmad Aweidah, the suave British-educated banker who heads the Palestinian Securities Exchange, he told me that the Nablus stock market was the second best-performing in the world so far in 2009, after Shanghai. (Aweidah's office looks directly across from the palatial residence of Palestinian billionaire Munib al-Masri, the wealthiest man in the West Bank.)

Later I met Bashir al-Shakah, director of Nablus's gleaming new cinema, where four of the latest Hollywood hits were playing that day. Most movies were sold out, he noted, proudly adding that the venue had already hosted a film festival since it opened in June.

Wandering around downtown Nablus the shops and restaurants I saw were full. There were plenty of expensive cars on the streets. Indeed I counted considerably more BMWs and Mercedes than I've seen, for example, in downtown Jerusalem or Tel Aviv.

And perhaps most importantly of all, we had driven from Jerusalem to Nablus without going through any Israeli checkpoints. The government of Benjamin Netanyahu has removed them all since the Israeli security services (with the encouragement and support of President George W. Bush) were allowed, over recent years, to crush the intifada, restore security to the West Bank and set up the conditions for the economic boom that is now occurring. (There was one border post on the return leg of the journey, on the outskirts of Jerusalem, but the young female guard just waved me and the two Palestinians I was traveling with, through.)

The shops and restaurants were also full when I visited Hebron recently, and I was surprised to see villas comparable in size to those on the Cote d'Azur or Bel Air had sprung up on the hills around the city. Life is even better in Ramallah, where it is difficult to get a table in a good restaurant. New apartment buildings, banks, brokerage firms, luxury car dealerships and health clubs are to be seen. In Qalqilya, another West Bank city that was previously a hotbed of terrorists and bomb-makers, the first ever strawberry crop is being harvested in time to cash in on the lucrative Christmas markets in Europe. Local Palestinian farmers have been trained by Israeli agriculture experts and Israel supplied them with irrigation equipment and pesticides.

A new Palestinian city, Ruwabi, is to be built soon north of Ramallah. Last month, the Jewish National Fund, an Israeli charity, helped plant 3,000 tree seedlings for a forested area the Palestinian planners say they would like to develop on the edge of the new city. Israeli experts are also helping the Palestinians plan public parks and other civic amenities.

Outsiders are beginning to take note of the turnaround too. The official PLO Wafa news agency reported last week that the 3rd quarter of 2009 witnessed near-record tourism in the Palestinian Authority, with 135,939 overnight hotel stays in 89 hotels that are now open. Almost half the guests come from the U.S or Europe.

Palestinian economic growth so far this year—in a year dominated by economic crisis elsewhere—has been an impressive 7% according to the IMF, though Palestinian Prime Minister Salam Fayad, himself a former World Bank and IMF employee, says it is in fact 11%, partly helped along by strong economic performances in neighboring Israel.

He concludes with a point that counters the rush to create a second Palestinian state, no matter what. Gross notes:

Israelis and Palestinians may never agree on borders that will satisfy everyone. But that doesn't mean they won't live in peace. Not all Germans and French agree who should control Alsace Lorraine. Poles and Russians, Slovenes and Croats, Britons and Irish, and peoples all over the world, have border disputes. But that doesn't keep them from coexisting with one another. Nor—so long as partisan journalists and human rights groups don't mislead Western politicians into making bad decisions—will it prevent Israelis and Palestinians from doing so.

Crossposted on Soccer Dad

Technorati Tag: Israel and West Bank.