Middle East

Palestinians mull 'economic peace' plan

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Media captionYolande Knell takes a look at the economic outlook for Palestinians

With talks between Israel and the Palestinians stalled, US Secretary of State John Kerry returns to the Middle East with the incentive of a major investment plan for the Palestinians, dependent on progress towards a peace deal. The plan could boost the struggling Palestinian economy, but there are some who fear it could come at the price of their political demands.

At the new Transcend call centre in a West Bank industrial park, a dozen or so Palestinian graduates wear telephone headsets and sit at computer screens absorbed in their work.

When I visit they are doing telemarketing and customer services for a local firm but they have already done projects for companies overseas.

A series of clocks on the wall are set to US time zones following a recent sales campaign with an American company.

So could Bethlehem become the new Bangalore? The young people working here are convinced of it.

"This is a new sector but in Bethlehem we speak English with a good accent and we can speak Arabic in an accent that's acceptable in all Arab countries," says Mowahad Darras. "We also have the analytical skills."

"We want to be a call centre doing international outsourcing for the USA, UK and the Gulf. That will mean bringing money from outside to Palestine and boosting our economy a little."

Jessica Salameh has been working at the call centre for the past year. "I'm so lucky to have this opportunity because as a fresh graduate it's really hard to find a job," she tells me.

Economics and politics

Across the Palestinian territories, nearly a quarter of the workforce is unemployed. Overall the economy relies on foreign donors' aid and is stagnating.

The difficult economic situation is caught up with the politics; the Palestinians' long-running conflict with Israel has led to restrictions on the movements of people and goods.

That is why the new peace plan that is now being worked on includes financial inducements.

Image caption Kerry said the plan could boost the Palestinian economy by 50% in three years

Last month at the World Economic Forum at the Dead Sea in Jordan, John Kerry announced plans to raise some $4bn (£2.6bn) in investment.

He suggested the Palestinian GDP could be increased by as much as 50% over three years, wages put up by 40% and unemployment reduced by two-thirds.

"It is a plan for the Palestinian economy that is bigger, bolder and more ambitious than anything proposed since Oslo, more than 20 years ago," he said.

"And this, the intention of this plan, of all of its participants, is not to make it merely transformative, but frankly, to make it enormously powerful in the shaping of the possibilities of the future."

Few details were given at the time, but the office of the special envoy to the Middle East, Tony Blair is continuing to work on the project with private sector experts.

They are looking in particular at opportunities in information and communications technology, tourism, construction, energy, light manufacturing and agriculture.

'Peace first'

Their efforts owe much to a group of some 300 Palestinian and Israeli businesspeople, many of whom travelled to Jordan to present their vision for future economic co-operation, once a peace deal based on a two-state solution is finally reached.

The Palestinian billionaire Munib al-Masri, who comes from Nablus in the West Bank, is a leader of the Breaking the Impasse initiative.

Image caption Munib al-Masri says there cannot be economic prosperity without a peace deal

He stresses that a peace agreement cannot be bought but is essential for prosperity.

"I have been advising everybody there is not something called an 'economic peace plan'. It does not exist in anybody's mind. There is a political situation. Fix the political situation first," he says.

"Don't think any Palestinian will say, 'yes, I will take money for my dignity or my independence'. It is about time we had an independent Palestinian state.

"We cannot normalise relations with Israel with occupation, you cannot do joint ventures. Economic co-operation is absolutely forbidden. We say finish the occupation and we'll start doing some other things."

Border controls

For now many Palestinian businesses are struggling.

The Arja Textiles Company in Beit Jala employs more than 70 local workers but recently it has had to cut jobs.

Most of its dyeing machines sit idle because of high electricity costs and water shortages.

"As you can imagine water is essential for this process and water is very short here so we might work here just twice a week and in July we have to shut the operation down because the electricity price will be higher," says Tamara Arja.

Palestinian allocation of water is laid out in the 1993 Oslo Accords. In the summer, supplies to the West Bank can be restricted.

All electricity in the West Bank is currently supplied by Israel. The owners of the family firm say it also faces other impediments.

Image caption Al Arja Textiles experiences delays importing raw materials and exporting its garments

"Israel controls the borders - and that means the importing, exporting, the checkpoints, the regulations. Our government - the Palestinian Authority - doesn't have much control and it leaves us helpless," Ms Arja adds.

Israel says its checks on Palestinian goods are necessary for security.

Part of the role of any future economic plan will be building trust between the two sides.

Yet that cannot happen without a peace deal. It is another reminder of the high stakes as Mr Kerry continues to press Israeli and Palestinian leaders to return to the negotiating table.