Report / Palestine
While their politicians dither, Palestinians are developing a vibrant economy and creating a brand for their yet-to-be-created nation. Monocle meets the new generation of optimists.
The artist’s projection of the Ersal development shows a $275m (€190m) high-rise fantasy of office blocks, roof gardens and impeccably planned housing. Four commercial towers have already been snapped up, with more investors jostling to establish a presence here. But this isn’t Dubai or Guangzhou. This is Palestine, and Ersal – slated for Ramallah in the occupied West Bank – is not only yet to be built, it’s in a nation yet to be created.
Something curious is happening in Palestine. While Gaza is isolated by an Israeli blockade, the West Bank economy – despite the Israeli occupation – is growing by more than 8 per cent a year as Prime Minister Salam Fayyad pushes forward his plan to build the infrastructure of a state.
The boom is most striking in Ramallah, the West Bank’s administrative and commercial heart, where just a few years ago Israeli tanks rolled regularly down the streets. Now, the skyline is dominated by cranes, Palestine’s first sushi restaurant has opened – surely a sign of progress – and it’s said that there are three Porsches being driven around town.
But business leaders and politicians face a fresh challenge. It’s not just the politics that is holding back investment. It’s the image of Palestine as endlessly oppressed, built on a dysfunctional system mired in corruption and subject to outbreaks of armed resistance. “We absolutely need to rebrand ourselves,” says Mohammad Mustafa, CEO of the Palestine Investment Fund (PIF), the company that is leading a $4bn (€2.8bn) investment programme, including Ersal. “We are struggling with conflicting images – peace and prosperity, occupation and violence.”And there are tangible investment possibilities here. Tourism could become Palestine’s oil, with assets such as Bethlehem and Jericho. Property comprises up to 60 per cent of total investment and there are flourishing telecommunications, energy and financial sectors. The Palestine Securities Exchange (PSE), founded in 1996 and trading in Jordanian dinars, Israeli shekels and dollars, lists such blue-chip ventures as telecom company Paltel and Padico, an investment powerhouse with a paid-up capital of $250m (€180m).
“Palestine is not Switzerland but we have something to offer compared with other emerging markets,” says PSE head Ahmad Aweideh. Here, he notes, there are no restrictions on foreign exchange or international investors, no protected sectors and no capital gains tax. But there is the Israeli occupation, giving Palestinians little freedom of movement or control over yet-to-be-defined borders. Gaza remains closed off as a market. Imports and exports are coordinated with Israel, whose security concerns lead to numerous restrictions.
And, crucially, there is the image Palestine presents to itself and the outside world. The posters celebrating suicide “martyrs” that once plastered the walls of Ramallah may have been superseded by slick adverts for the Bank of Palestine and Wataniya, but struggle and resistance are still central to Palestinian identity. Some are not happy with Fayyad’s state-building enterprise. The Palestine Papers – 1,600 confidential documents leaked to The Guardian and Al Jazeera in January, detailing the unprecedented concessions the Palestinian Authority was willing to make to Israel in a peace deal – have made the establishment particularly unpopular. Anyone here close to the US – as Fayyad is – is treated with huge suspicion here.
Critics also note that despite the economic growth, there is 20 per cent unemployment in the West Bank, with the average wage only around $28 (€14) a week. “So many people ask me whether this is really the right time to brand Palestine. We are not even a country,” says Kamel Husseini, head of the Ellam Tam PR agency. “But another side of me says that we will benefit. Our prime minister is trying to brand Palestine as a place getting ready for statehood. We need political support – good branding will get that.”
It’s not just giant business conglomerates that could benefit from Brand Palestine. More than 1,700 Palestinian farmers already belong to the Palestine Fair Trade Association and notable successes include Zaytoun, which produces artisan olive oil, herbs and grains for a discerning export market. Then there are outfits such as Taybeh, Palestine’s only brewery, whose product has become a success in bars across Europe.
The new generation of business leaders argues that economic development has a nationalistic element, helping the Palestinian Authority to rely less on donor aid, which has amounted to more than $3bn in the past three years. “We have been accused of beautifying the occupation, of not being patriotic,” notes Aweideh over seared scallops at the Mövenpick in Ramallah. “It’s usually by people who think Palestinians should be eternal victims. We think we have to build a state, not have it presented on a gold platter. I don’t see how it helps the Palestinian cause, this image of being constantly trodden upon.”
But the fact is that investment here remains a hostage to politics. The story of the Jacir Palace, a 100-year-old Bethlehem mansion and now a luxury hotel, provides an object lesson in the perils of both West Bank tourism and a previous attempt at rebranding. In 1998, renovations began on the palace, built by Bethlehem’s Ottoman-era mayor as a cream-and-pink fantasy of Oriental architecture. There was relative stability following the Oslo peace agreement and the Jacir Palace – its new annexe containing 250 rooms and four ballrooms – was intended to capitalise on the millennium celebrations promoted worldwide as “Bethlehem 2000”.
But success was brief. In September 2000 the Intifada broke out. Tourism collapsed and the hotel closed for seven years. Even now, back in business as a five-star InterContinental franchise, occupancy is dependent on politics. “The political situation imposes an image of Palestine which fails to reflect its diverse potential,” says Khouloud Daibes, the glamorous Palestinian Authority tourism minister, in the new Bethlehem visitors’ centre. Some 80 per cent of tourists are pilgrims, but most stay in Israel and venture to Palestine for only a day or two. Daibes intends to change that.
“We need to enhance the experience of pilgrimage but also introduce new types of tourism to suit global needs,” she says, noting the recent launch of “Jericho 10,000” birthday events to celebrate what is supposedly the oldest city in world. The cheery logo, featuring a palm tree and azure sky, lacks any nationalist emblems.
The tourism potential should spread much further. PIF’s portfolio includes projects such as a Dead Sea tourism development dubbed “Moonlight City”. Unfortunately, it lies outside the 40 per cent of the West Bank where Palestinians can build without restrictions. Moonlight City will remain a dream until control is transferred from Israel to Palestine and, while Israel’s prime minister Benjamin Netanyahu talks of an “economic peace” widely interpreted as allowing Palestinians concessions in trade and industry, he stops far short of sovereignty.
This is anathema to Palestine’s leaders. “Absolute baloney” is how Padico chairman Munib al-Masri describes Netanyahu’s vision. He has grander plans. The dapper 76-year-old likes to describe his mansion, on a hill overlooking Nablus, as an example of just what can be achieved here.
The immense neo-Palladian palace was built amid the violence of the Intifada. Its purpose, says al-Masri as he wanders through its grounds past an 18th-century arc de triomphe from Tours (dwarfed by a modern version hung with a giant Palestinian flag), is “to show that Palestinians can do things under duress – to send a message that you destroy but we build”.
His home has now become part of the West Bank tour for international statesmen, along with the refugee camps, the security barrier and Arafat’s Ramallah tomb. It is a very different face of Palestine. “This is not a jungle in the Middle East,” he declares. Padico recently became a signatory to the UN global compact on corporate responsibility, and al-Masri chairs the newly established Palestine branch of the International Chamber of Commerce. “That’s excellent for branding Palestine. We, the people, brand Palestine as a peace-loving country providing something positive to the world. The only brand we have is that we want to live. And I am building and investing as if we are going to have peace tomorrow.”
As the West Bank economy improves, Gaza remains in steep decline, with the private sector decimated and income sources largely down to donor money and smuggling revenue. A blockade has been imposed on the strip ever since Hamas seized power in 2007 and Israel’s assault on the territory in 2008/9, in response to continued rocket fire, further damaged infrastructure.
Restrictions on imports and exports have been eased since last summer’s debacle over a Turkish aid flotilla intercepted by Israeli forces in which nine activists were killed, but Gaza remains a closed market – or, as Palestinian business leaders prefer to pitch it, an untapped economic resource.
“When I talk to investors I say, look at Gaza, it’s a positive thing, we have room to grow if things change,” says Ammar Aker, CEO of Paltel, noting that while the West Bank has nearly 80 per cent mobile phone penetration, Gaza stands at 53 per cent.
And then there’s the famed Gazan ingenuity. “They are the most resilient, flexible and innovative people imaginable,” says Hashim Shawa, himself from a long-established Gaza family and chairman of the Bank of Palestine, the fast-growing and largest bank in the territories.
The closure has quite literally led to a thriving underground economy. Some 1,500 tunnels dug under the border from Egypt bring in everything from dismantled cars to weapons. With nowhere to go – and not much to do – Gaza has become an untapped reserve of avid recyclers and rebuilders, as well as self-taught IT enthusiasts and systems hackers.
Tourism potential for Gaza – with miles and miles of golden beaches and a perfect winter sun climate – could be huge. “The tourism there could be second to none,” says Shawa wistfully. But that’s far off in the future, if peace ever delivers its dividends.
The first challenge faced by Israeli design students Ziv Schneider and Eido Gat, tasked with rebranding the Palestinian city of Hebron, was getting there.
Hebron is home to some 165,000 Palestinians, 500 hardcore Jewish settlers, and often a flashpoint for violence. Schneider and Gat could only visit for half a day and had to have a police escort.
Schneider and Gat took on the project for an end-of-year show at Israel’s Shenkar College of Engineering and Design. “We needed to present a positive image of the city, so we dug into its history as a trade centre and came up with the idea of creating a convention to show what the city could be,” says Schneider.
They adopted the city’s Palestinian name, with a logo branding it the “The New Al-Khaleil” and forming the graphic basis for the city’s businesses, both real and imaginary. The pair also created items from espresso cups to T-shirts that firms would give away at the theoretical conference.
Their design was not without controversy. “We got a lot of criticism – people thought it was a fantasy and could never happen.” For now, their project remains theoretical. Schneider says they would both love to gift it to the city, but “the political situation makes it so difficult”.