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Jewish Journal

‘Out of Business’

by Tom Tugend

August 14, 1997 | 8:00 pm

"We're winding up our operations and terminating our relationship with the U.S. government," said Joseph DeSutter, executive director of the Washington-based organization. "For all intents and purposes, we're out of business."

Builders for Peace was born in the wake of the September 1993 handshake between Yitzhak Rabin and Yasser Arafat on the White House lawn. Its demise sadly illustrates the contrast between the euphoria of that historic day and today's harsh realities on the ground.

Within days after the White House ceremony, Vice President Al Gore phoned attorney Mel Levine, a former congressman from West Los Angeles with impeccable credentials in the American Jewish community. Gore put it to his old friend that the peace process would fail if the economic lot of the Palestinian masses did not improve. The vice president suggested that the Jewish and Arab communities in the United States apply their business acumen and capital to jump-start business ventures with Palestinians in Gaza and the West Bank, bolstered by initial support from the U.S. government.

Gore assumed that the joint projects would stand on their own feet within a year, at which time Levine would have fulfilled his volunteer assignment.

Before accepting, Levine phoned another old friend, Prime Minister Rabin, who approved of the idea and reiterated his support during a private meeting in New York.

As co-president of Builders for Peace, the choice was James Zogby, head of the Arab-American Institute in Washington. Levine had come to respect Zogby as a skilled adversary during many debates on the Middle East; he considers him "the most articulate Arab spokesman in the United States."

Builders for Peace was formally launched in November 1993, with a first-year operating grant of $350,000 by the U.S. Agency for International Development (AID). Financial cooperation was pledged by the Overseas Private Investment Corporation (OPIC), an independent federal agency.

The heavy lifting in building up the infrastructure of Gaza, and to a lesser extent the West Bank, was to be the job of an international consortium of donor countries, which, in the afterglow of Oslo, pledged $2.4 billion.

In its nearly four years of existence, Builders for Peace lent a hand in launching a few projects, though even their ultimate success is not certain.

The showpiece undertaking is the Gaza Marriott Hotel and Business Center, an $80 million-to-$100 million project on the Mediterranean coastline. DeSutter credits the incredible tenacity of Arab-American architect Ziad Karram for keeping the enterprise alive despite constant setbacks. Ground was broken in March, and Levine is "cautiously optimistic" that the complex will be some day be completed.

A group of upscale condominiums have been built in the West Bank town of Ramallah. In different stages of development are a Culligan bottled-water plant in Jericho and a factory for manufacturing pre-cast concrete walls for modular-house construction.

Put together, these projects do not constitute an impressive track record, especially if contrasted to the high hopes and goals at the beginning.

Who is to blame? All participants agree that neither the donor countries nor the U.S. government's OPIC came through as expected, and that the lost political momentum in the peace process inevitably soured the investment climate.

After that, opinions divide.

Levine believes that the main stumbling block has been Arafat's failure to establish a basic legal and commercial structure for the Palestinian Authority.

"I told Arafat many times that the PA had to provide accountability and transparency for all negotiations and transactions, but he was never interested enough to do anything about it," said Levine, who, over the years, has met with Arafat a dozen times.

"After awhile, it seemed that the Israelis were pushing much harder for Palestinian economic development than the Palestinians themselves."

DeSutter concurred. "Until agreements can be reliably entered into, honored and enforced, few people will invest," he said.

Endemic corruption, bureaucratic foot-dragging, huge overheads and the ability of Arafat favorites to muscle other businessmen aside, widely reported by Palestinian and other sources, presented additional disincentives for foreign investors.

While acknowledging the shortcomings of the Palestinian Authority, Zogby put the burden of the blame on Israel.

"The Israeli civil administration may have left, but Israel still dominates the Palestinian economy," Zogby said. "Everything has to go through Israeli middlemen; there is no free-market economy."

The biggest distortion in the Palestinian economy is caused by frequent closures of the territories, maintained Zogby. Such border closures generally follow terrorist attacks on Israeli civilians, such as the recent suicide bombings at a Jerusalem marketplace.

Closure prevents Palestinian laborers from reaching their jobs in Israel, but equally damaging, they prevent Arab businessmen from importing raw materials and exporting finished goods, noted Zogby. "You can't do business that way," he said.

Israeli security measures force trucks to wait in long lines at checkpoints and border crossings, and make the transport of perishable goods all but impossible, Zogby argued.

DeSutter noted that while he appreciated Israeli security concerns, it would be "relatively simple" to allow Palestinian goods to move freely between Gaza and the West Bank, among the seven West Bank cities controlled by Arafat, from Gaza to Egypt, and from the West Bank to Jordan.

A retired Air Force colonel and former White House aide, DeSutter also faulted the U.S. government for failing to take a more active role in the development of the Palestinian private sector.

Whichever way the blame is parceled out, there is common agreement that the Palestinian economy is in shambles and presents a potential powder keg.

A recent UNESCO report cites unemployment at more than 50 percent, with the population and labor force growing constantly. By practically all other indicators, including national and per capita income, the Palestinian economy has drastically declined since the signing of the Oslo agreement.

In Gaza, a few luxury developments only mask a Potemkin village, said Zogby. "There is no water, no electricity, no infrastructure," he said.

"We had hoped to accomplish more, but at this point, we've done all we can," Levine said. "Whatever comes next will have to be done by the people of the region."

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