The Madison-Rafah Sister City Project

Palestine: the economy of despair

The West Bank city of Nablus is relatively calm at present. Anyone who can raise money, even by selling their jewellery, is investing in the stock market. They want to make enough for a one-way ticket out of Nablus.

Benjamin Barthe, Le Monde diplomatique, July 2005

THE sun suits Nablus. It makes the stone buildings glisten and sweeps the dust off the narrow streets of the kasbah. Sunlight frees the West Bank capital from the narrow mountain gorge that encloses it, into which it huddles down for the winter. On this June morning a tradesman shouts the prices of his wares on the main square. The stalls laid out on the pavement overflow with produce. Passers-by, taxis and delivery trucks all converge on the roundabout in a cacophony of shouting and hooting, while three policemen, Kalashnikovs slung around their shoulders, look on good-naturedly.

On the other side of the valley, in a house nestled on the side of Mount Ebal, an old woman and her daughter watch television in silence. Pictures that flicker on the screen show the release of 400 Palestinian prisoners, but Sana al-Attabeh’s face, like her mother’s, is grim. Said, eldest child of the family and one of the longest-serving of the Palestinian prisoners, was not on the bus back to the occupied territories. Sentenced to life imprisonment as mastermind of two bomb attacks in Israel, he has been behind bars since 1977. No member of the family has been able to visit him in the past five years. His father is dead and his mother is now too sick to make the long journey to Ashkelon prison.

“The Israeli authorities have refused to give any of us brothers and sisters a permit as long as the intifada lasts,” says Sana. “Last February they relaxed the rules but it hasn’t changed anything. You have to be under 16 or over 46 to get a permit, which means that none of us qualifies. The Israelis could bring thousands of families around to the peace process if they released all the prisoners. Instead, they free them in dribs and drabs every six months, and then arrest just as many. When are they going to understand that when any one of us is imprisoned, our whole life stops?”

Nablus is a strange town. Proud, pulsating, but devastated. It has had its share of honours and scars. Since Mahmoud Abbas (Abu Mazen) was elected president of the Palestinian Authority, a semblance of routine has returned. Encouraged by the ceasefire negotiated in February 2005 and largely respected since then, the Israeli army has come to an informal agreement with the governor, Mahmoud al-Aloul. Palestinian police patrol the city between 6am and 11pm, after which the Israeli army takes over. This discreet compromise suits the PA, which still lacks the confidence to assert its full autonomy. It also suits the Israeli government, which is no great hurry to announce its official withdrawal from the “terror capital”.

The Israeli army still insists on taking action against what it calls “time bombs”, such as Ibrahim Hashah, a leader of one of the al-Aqsa Martyrs’ Brigades, murdered on 14 April. The raids, searches and summary arrests have not stopped, particularly in the Balata and Askar refugee camps, seen as the bastions of the uprising.

But these operations are relatively modest compared with previous years when tanks occupied the town centre, the curfew lasted for months on end and snipers brought death to many households. Since the beginning of this year the Israeli army has killed seven Palestinians in the Nablus area, out of a total of 496 since the beginning of the second intifada. Of these 98 were under 18 years old.

This relative calm has been good for investors. In six months the Nablus stock market index, al-Quds (Arabic for Jerusalem), has risen by 150%. This boom in share prices has caused frenzied share-buying on the West Bank. “It’s crazy, but it’s all anyone talks about these days,” says Ayman al-Shakaa, chief of staff to the former mayor, Ghassan al-Shakaa. “Some women in the villages around here are even selling their jewellery to invest in the stock market.”

Every morning a hundred investors crowd into the offices of Target, a brokerage firm that attracted only a few die-hards a year ago. Small shareholders, already familiar with investment jargon, follow their stocks on the quotation screens, anticipating limits up and down and speculating about the impact of Abbas’s visit to Washington. “When the situation’s quiet, like now, the market’s buoyant,” says Muhammad, a 24-year-old Islamic law student. “In January I invested $1,800 in shares and now they’re worth more than $5,000.”

Up to now this euphoria has not been enough to kick-start the economy, formerly the pride of Nablus. Most of the companies that reopened over the past six months are barely ticking over. “Our textile manufacturing has dropped 70%,” says Hussam Ijawi, secretary general of the chamber of commerce. This crisis cannot be explained just by the checkpoints that criss-cross the West Bank. “The PA’s inertia has enabled Turkish and Chinese exports to dislodge our own products,” explains Ijawi. “Malhees, a well-established shoe manufacturer, used to employ 400 workers. Now it’s only got 70.”

But two companies have succeeded despite the stagnation, and between them are driving the stock market. Padico is a holding company belonging to Palestinian magnate, Munib al-Masri, while Paltel, which has the Palestinian telecoms monopoly, is run by Sabih al-Masri, a distant cousin of Munib’s. Both companies are positioned on buoyant markets, have a strong shareholder base and a dynamic marketing policy. These heavyweights survived the upheavals of the intifada and are now generating astronomical profits. Paltel is even considering investing abroad through its subsidiary, Paltel Offshore, having earned a net profit of 14m Jordanian dinars ($16m) in the first half of 2005.

In Nablus, these success stories make some locals bitter. Deep down, people fear that they merely strengthen the hold of leading families, such as the Masris who have always governed the city. “Up to now, only a small minority has profited from these investments,” says Hassan Ayub, a militant in the left wing Democratic Front for the Liberation of Palestine. “We’re not seeing the effects in day-to-day life.” Some 55% of the 150,000 inhabitants survive on less than $2 a day (the West Bank average is 38%). The closure of the Israeli markets, which employed 13,000 Nablus residents before the intifada, has compounded the economic crisis. According to Tayseer Nasrallah, a Fatah leader in the Balata refugee camp, “The PA should declare us a disaster area. Our city was once the capital of the Palestinian economy. Now it’s the capital of poverty.”

Questioned about this, the Israeli commander of the Samaria Brigade, Colonel Yuval Bazak, pleads not guilty. “We have lifted a number of barriers to improve transport into and out of Nablus,” he says. But the detailed reports of the UN office for the Coordination of Humanitarian Affairs in Jerusalem are less convincing. They show that between November 2004 and April 2005 the number of obstacles to free movement (checkpoints, earth mounds, stone walls and trenches) in the district of Nablus was reduced only from 120 to 117.

The Huwara checkpoint on the outskirts of the city is the heart of the system. During the early years of the second intifada, launched in September 2000, when Palestinian suicide bombers blew themselves up in the cafes of Tel Aviv and Jerusalem, it served as a cul-de-sac, as only a few permit-holders were allowed to pass through it.

Since Abbas has taken over and the armed groups are keeping a low profile, Huwara is a hive of activity. Thousands of Palestinians jostle there every day, on foot since private cars are still forbidden. Going through the checkpoint means passing through a remote-controlled metal gate, then a corridor of stone blocks, followed by an electronic turnstile. A soldier then manually searches clothing and luggage, after which there is a second remote-controlled gate, then a few meters more on foot and under guard until the final obstacle: an electronic ID check.

Those who succeed in squeezing through this steel and concrete funnel aren’t free of checkpoints. “There’s often a checkpoint after Huwara,” explains Rania Hussein, a 30-year-old employee at the ministry of the interior. “Then there is the Za’atara checkpoint, not to mention other random checks along the road before you arrive at the Kalandiya checkpoint, that finally gets you into Ramallah. It took me four hours to get there and back today, and the two towns are only 50 km apart.”

Majdi Shobaki, a 42-year-old engineer who also works in Ramallah, agrees. “These fine speeches about peace make me want to laugh. We might as well be talking about somewhere like China. They’re just empty words, that’s all.” Hassan Ayub has heard these words before, in September 2000 after the failed Camp David talks between Yasser Arafat, Bill Clinton and Ehud Barak. “When the retreat from Gaza has been completed, we’re likely to find ourselves in exactly the same situation we were then. The conditions are ripe for it. Only this time there’ll be more settlers, more prisoners, more checkpoints and an increasingly impotent state. I can see the frustrations growing even stronger and I’m afraid that violence will erupt again.”

The risk is greater because armed groups still have the upper hand. They have no hesitation in resorting to such tactics as machine-gunning the governor’s offices when they want a job in the security services. Some members take part in the thefts, racketeering and murders that have proliferated in the past 18 months. Criminal elements feed on old rivalries between districts and influential clans, as well as the split of the al-Aqsa Martyrs’ Brigades into many cells, some of which confuse intifada with business. The Palestinian leadership is tangled in this criminal mess and is not in a hurry to act.

The inquiry into the November 2003 killing of Ahmed al-Shakaa was never completed. “We organised a conference at the university and invited all the parties in Nablus,” says Tayseer Nasrallah. “We had both the army and the gangs. We invited the governor to speak but he refused. And we still don’t have a mayor, and haven’t had one since Ghassan al-Shakaa resigned in early 2004. Municipal elections are being held all over the territory but no date has been set for Nablus.”

Insecurity was the official explanation for this, but it convinced no one. Last May in the Balata camp, Fatah thugs interrupted an election in a local youth club while the counting was only three-quarters complete but showed a clear lead for Hamas. “It’s just the same with the municipal elections,” said Muhammad Ghazal, Hamas leader for Nablus and professor of mechanical engineering at An-Najah university. “Only instead of interrupting the ballot, Fatah prefers to prevent the elections being held in the first place. They’re afraid that we’d win.” In April, during the second round of the municipal elections, the Islamist group came first in dozens of areas.

“Hamas could have the same success here in Nablus,” admits Nasrallah. “They’re paving the way for that, the way they’re behaving now.” This view was confirmed by someone close to government circles in Nablus: “People here know that all the problems of corruption and insecurity are due to Fatah, without exception. Compared to them, the Hamas people are beyond reproach. You never see them acting like big shots in town. They have people like Muhammad Ghazal and Nasser Shaer, dean of the faculty of Islamic law, who are competent, modest leaders and highly respected in the community. It’s not easy to find leaders of that quality. We’re looking for a consensus candidate among our sympathisers, but haven’t found one yet. Even the independent candidates don’t want to run on our ticket.”

This is a strange, disconcerting town. The sun lights up the horizon, but the future is hazy. Will you find work tomorrow? Will it be possible to get into Ramallah? To visit a brother in prison? Elect a mayor? Nobody has the answers. Life is a question mark.

The stock market is one of the rare things that inspires people’s confidence. The inherent uncertainties of the financial markets do nothing to check the investment frenzy, which is fed by the promise of wealth, but also the heady thought of moving into the modern world, of making an impossible break into the land of possibility. The possibility of getting rich, travelling, breaking free from the prevailing despair.

Fathi Bouzia, who lives in the village of Kafr Hares and has already pocketed a tidy sum, is dreaming of continuing his studies at a European university. Far, very far, from the Israeli checkpoints.