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Al-Ahram Weekly On-line 26 Oct. - 1 Nov. 2000 Issue No. 505 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly On-line 26 Oct. - 1 Nov. 2000 Issue No. 505
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Palestine International Economy Opinion Culture Focus Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Trading in inequality
By Aziza Sami
Recent events have underlined the fact that the region's economies remain hostage to its politics. Predictably, the Egyptian, Lebanese and Gulf stock markets have been sent into a tail spin by the violence in the Palestinian territories as foreigners scrambled to exit the market, share prices plummeted, and, in Egypt, the long awaited privatisation of the national telecommunications company was postponed. Tel Aviv also saw stocks take a plunge, with the Financial Times reporting a six per cent drop in the TA 100 index. The hard won "emerging market" status attained by some of the region's economies is unlikely to escape compromise as international investors are once again being reminded of the continuing nature of the Middle East conflict and the explosive situation it can create in the region. And it is this one issue, rather than the internal problems faced by individual Arab countries -- that has resulted in the paltry levels of foreign direct investment in these same countries. The same, of course, does not apply to Israel: negative assessments of the political risk involved in investment in Israel are far outweighed by the massive support it receives from the US, which in addition to preferential investments also includes the diplomatic drive to make partnership with Israel the only means by which Arab producers can access American markets. And at the heart of this dysfunctioning "system" -- promoted by US policies -- is the economic plight of the Palestinians -- Israel's erstwhile partner in the "peace process".
The continuing impoverishment of the Palestinians threatens, if anything, to escalate. For Israel's blatant military superiority, underwritten by the US, has its counterpart in an economy, just as underwritten, and compared to the Palestinians, impossibly strong. And it has always been a strategy, adopted by successive Israeli governments, to apply economic pressures on the Palestinians when they appear likely to resist Israeli demands. And once again, the Israelis appear to be pulling the same tactic, threatening to suffocate the nascent Palestinian economy by withdrawing the umbilical link with Israel's own economy. As serious and explosive as the consequences of this will be they are not being addressed by anyone -- the vicious double bind being that a solution to the current conflict must first be reached. And so, the economic impasse in which the Palestinians find themselves will deteriorate, adding yet another reason for conflict.
How long can Israel remain immune from the political conditions that it has created around it, and inside its own territories?.
"If the situation does not blow over," one Israeli analyst told the FT, there will be a "longer term impact which (will) upset the criteria by which investors have to date assessed (the Israeli economy) and which have been based on economic and business fundamentals."
Former Israeli prime minister Shimon Perez's vision of a "new Middle East" where political peace can be brought about through economic integration must be finally laid to rest.
US officials and investors, in addressing their Egyptian counterparts, cannot go on endlessly repeating that investments will come to the region provided "progress is made along the peace front." Because in doing so the US has created an increasingly impossible situation, persistently seeking to force trade agreements between Israel and its neighbours against all the political odds.
If more integration is needed, it is not necessarily between the economies of the region but in the workings of US foreign policy which in the Middle East cannot even approximate towards balance, cannot quite acknowldge that there is more than one party to the conflict, let alone treat them equally.
Lopsided approaches adopted by the US -- in politics and in trade -- act merely to distort the picture, puffing Israel at the expense of Arab countries -- and oppressing those who are key to any resolution of the Middle East conflict, the Palestinians. As the battle rages on those US decision makers who have retained a modicum of objectivity and who can see beyond the pressures of Jewish lobbying, must be finding plenty of cause for headaches.
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