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The Political Economy of Israeli Occupation: What is Colonial about It?

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aliasesFarsakh - EJMES paper

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Summary

Leila Farsakh argues that Israel’s management of the West Bank and Gaza Strip since 1967 has been colonial — not because it sought economic exploitation per se, but because it expropriated Palestinian land, disarticulated the Palestinian economy and made it fully dependent on Israel, seeking “to appropriate the land without the people” (The Political Economy of Israeli Occupation: What is Colonial about It?, PDF p.2). The Oslo process did not end that structure but redefined it, on three new foundations: the institutionalisation of Israeli security concerns as the governing principle of Palestinian political and economic life, a Palestinian Authority with only limited, functional autonomy, and the subcontracting of the occupier’s responsibilities to the international donor community, above all the World Bank and the International Monetary Fund (PDF p.7, p.9).

What the file is

A journal article in the Electronic Journal of Middle Eastern Studies, No. 8, Spring 2008. 14 PDF pages, printed p.1-14 on PDF p.1-14, about 9,499 words (9,497 words in the text copy by word count). Main text PDF p.1-12, notes 1-50 on PDF p.12-14. The running header on each page gives the source file name and the date 2/5/2014. The text copy is clean and complete, with no garbled passages, tables or figures; printed slips in the text are recorded under Open questions and in the reading notes without silent correction.

Section by section

  • Introduction (PDF p.1-2): By end of 2006 real GDP per capita had fallen 40% from 1999, unemployment touched 20-38%, poverty reached 67%, and the Palestinian economy lost 800 million a year kept it from destruction, on World Bank figures. The paper’s aim is the structural mechanisms behind that collapse. The colonisation perspective has been developed sociologically — Maxime Rodinson, the new Israeli sociologists Baruch Kimmerling, Uri Ram and Gershon Shafir, and Ilan Pappe among the new historians — and by Palestinian academics, but not seriously as political economy, and Palestinian work did not frame the Oslo years’ structural changes colonially or show how the colonial economic structure compromised Palestinian statehood. The economic literature instead calls the Palestinian economy distorted, stalled, skewed, under-developed or de-developed and assumes the occupation is ephemeral. Against it, the paper argues the economics of occupation is a structural relation of domination that itself transformed the prospects for a political solution, and that Oslo made Israeli security, not the illegality of the occupation, the defining element of Palestinian political and economic life.
  • What is colonial about Israeli occupation? (PDF p.2-4): On Osterhammel’s account and on Elkin and Peterson’s [as printed in the text; note 9 gives Caroline Elkin and Susan Pedersen], colonial projects share a settler community seeking to dominate, and in some cases eliminate, an indigenous population to create an exclusive polity and expropriate inhabited land, and differ over three elements: the relation to the indigenous population, the relation to the metropolis and the international legal system, and the economic structure of domination over land and labour. Two obstacles to calling the 1967 occupation colonial are examined and set aside. On intention: the official Israeli account of a pre-emptive war, territories held as bargaining chips and no search for markets or economic exploitation is recorded, but colonial foundation cannot be established on intention — France in Algeria and the Boers in South Africa show non-economic intentions do not prevent colonial processes, and Israel’s economy in fact benefited, the Palestinian economy being until 1993 its supplier of cheap labour and its second export and import market after the US. On law: the international framework, unlike the League of Nations mandates, refused to legitimise the occupation — UN Security Council Resolution 242 conferred no legitimacy, East Jerusalem’s annexation was never accepted, and the Fourth Geneva Convention applied (UNSCR 237) — but Resolution 242 does not address Palestinian self-determination, is unspecific about the land, and was written under Chapter 6 of the UN Charter, “without implementation force”, so Israel could pursue territorial ambitions without major repercussions.
  • Military Rule: Land without the people (PDF p.4-5): The military ruled nearly 1 million Palestinians, 30% of the population under Israeli rule in 1967, whom Israel would neither incorporate (for fear of jeopardising the state’s Jewish character) nor mass expel as in 1948. The government chose maximum incorporation of the land with societal separation. The military issued over 200 military orders between 1967 and 1970; orders 58 and 59 (state and absentee land), 418 (the high planning committee) and 569 (land transactions and settlement registration) organised expropriation, Palestinians were barred from registering or investing in their land without military approval, and the military took direct control of the 35-40% of the WBGS declared state land. Settlements were the territorial claim: over 178 built between 1972 and 2003, 400,000 citizens transferred, half of them during the Oslo years, although settlers mostly used the territories as a subsidised dormitory — under 48% worked in the settlements in 2000. The military instituted two legal systems, Israeli civilian law for settlers and military law for Palestinians, a de facto institutionalised legal segregation in which Palestinians were not included in the polity even as second-class residents and their status was left unresolved.
  • The Economics of Occupation (PDF p.5-6): Full economic integration, advised by the military’s chief economists, was rejected because it would harm Israeli workers, draw capital to cheaper Palestinian labour and threaten the Jewish trade union and agricultural lobbies and exclusive citizenship. Instead the Palestinian economy was incorporated in a way that maximised territorial incorporation without creating an Israeli dependency on Palestinian labour: after 1967 WBGS labour was under 7% of the Israeli labour force. The colonial economics rested on four pillars: pacifying the population economically while preventing Palestinian competition; a one-sided customs union giving Israeli products free access while restricting Palestinian goods, with Israel appropriating tariff revenues of 12-21% of WBGS GNP between 1970 and 1987; restricted investment and capital flows, with heavy Palestinian taxation and low infrastructure investment; and Palestinian labour flowing into Israel while Israeli workers were barred from the territories. The effect to 1987 was paradoxical: per capita income doubled and GNP grew 3% a year, carried by labour migrants — 45% of Gaza’s and 32% of the West Bank’s workers employed in Israel in the mid-1980s, their income 25% of GNP, with Israel taking 70% of Palestinian exports and supplying 90% of imports — while productive capability diminished.
  • The Oslo Years; Redefining Security and Military Rule (PDF p.6-8): The Economic Protocol’s preamble promised a Palestinian economy guided by Palestinian interests, but, like Resolution 242, the agreements specify no right to a state or economic independence and no aim of ending the occupation. Arnon and Weinblatt’s “incomplete contract” reading is noted: Israel kept borders and the decisive economic levers. Oslo created a new colonial structure on three foundations — institutionalised Israeli security, a constrained PA, and donor subcontracting — with security embedded in the agreements themselves and, new after 1993, the PA’s de facto consent. The military did not retreat but redeployed; Joint Israeli-Palestinian committees and a cooperating Palestinian police were among Oslo’s first stipulations. The Interim Agreement kept Israel in control of 59% of the West Bank (Area C) and of the settlements; between 1993 and 2004 Israel expropriated over 120,000 dunums, built over 72 new outposts and transferred 209,000 new settlers. Article IX of the Protocol of Redeployment and Security Arrangements made closure an accepted Israeli prerogative, including intervention in Areas A and B on perceived threat: 484 days of closure between 1994 and 1999 and as many as 230 checkpoints. The permit system, first applied to Gaza workers in 1988, was institutionalised by Oslo and extended in 1996 to all movement.
  • A Constrained Indigenous Authority (PDF p.8-9): The PA’s jurisdiction was mainly functional, not territorial: it ran the civilian and economic affairs of 93% of Palestinians, but by 2000 had direct control, without sovereignty, over only 20% of West Bank land and 70% of Gaza (Areas A), and could not abolish Israeli land law. The Economic Protocol kept the customs union rather than a free trade area, bound Palestinian trade to Israeli tax rates, standards and import regulations, allowed only limited direct trade (lists A1, A2, B) and no Palestinian currency, and for the first time remitted VAT and customs collected on WBGS-destined goods. Customs revenues became 60-70% of PA revenues and 20% of Palestinian GNP, transferred by a committee of the Israeli Finance Ministry, the military and the Prime Minister’s office, with the National Security Council involved — Israel moved from direct manager to “gatekeeper of Palestinian finance and access to the world”.
  • The Donor Community (PDF p.9-10): The World Bank, the IMF and the Ad Hoc Liaison Committee became the PA’s advisors and managers: the IMF effectively oversees the Palestinian Finance Ministry and intercedes with Israel over customs transfers; the World Bank manages donor funds. Donors disbursed $3.2 billion between 1994 and 2000, an annual WBGS GDP. Their fiscal-restraint and private-sector prescriptions conflict with the PA’s security-heavy public employment, which closures make necessary; they can determine aid to the PA but cannot compel Israel, whose sovereignty is not questioned. The cost of occupation is thereby subcontracted to a community that has always refused to legitimise it, and the World Bank’s 2005 disengagement report, which names closure rather than occupation as the source of Palestinian economic demise and seeks to accommodate closures, shows how it might indirectly legitimise a colonial relation in the name of security.
  • Economic Implications (PDF p.10): Real GDP per capita shrank 18% in 1994-1996 and 36% in 2000-2004; poverty (under US$2 a day) reached 23.2% in 1998 — 46% in Gaza against 15.4% in the West Bank — and 60% of the WBGS population in 2001-2006. Donor aid at 25% of GDP replaced pre-1993 labour remittances. Three trends: public employment absorbed nearly 30% of Gaza’s labour force in 1996-2000, dominated by 60,000-80,000 security employees out of 110,000-140,000 public wage earners; monopolies tied to the PA, the security establishments and Israeli military or para-statal companies restructured rather than eliminated dependency; and the West Bank and Gaza economies grew apart — West Bank–Gaza trade fell 30% in 1993-1998, Gaza employment in Israel fell from 35% of its workers in 1992 to under 2% in 2005, while the West Bank remained integrated, with 55,500 of its workers, 12% of its employed force, in Israel in 2006.
  • The Economics of Disengagement (PDF p.10-12): Israel’s response to the Al-Aqsa Intifada consolidated the Oslo structure: the Separation wall, begun June 2002 and not on the 1949 armistice line (408 km built by end of 2006, 479,881 dunums trapped west of it by military order 378, 395,900 Palestinians to be isolated on completion, 90% of settlers integrated into Israel’s would-be borders, Palestinians left under 53% of the West Bank, on UN OCHA figures); the August 2005 Gaza disengagement, which removed 8,500 settlers but kept Israeli control of Gaza’s borders, airspace and economic resources; and West Bank checkpoints hardened into bureaucratised terminals, cutting the West Bank into “8 disconnected Bantustans”. Unemployment in 2006 touched 40% in Gaza and 23% in the West Bank; the 2002 raids on PA offices and Hamas’s 2006 election cut PA revenues 61%, and in March 2006 Israel withheld 1,022 million a year on average, and after the boycott of the Hamas government increased emergency funding to $750 million by end of 2006, while private-sector activity shrank an estimated 60% and employment in Israel fell to 44,000 workers, 7% of WBGS GDP. As “bailer of first, rather than last, resort” the international community compromised its impartiality and deepened the colonial relation.
  • Conclusion (PDF p.12): The occupation “has been colonial, by default if not by design, by its consequences if not by explicit intentions”, a structure of domination that appropriated Palestinian land, maintained Israeli political and economic hegemony and prevented Palestinian independence. Oslo transformed but did not end it, and nor did disengagement. The colonisation perspective explains the causes of the Palestinian economy’s “distortion”, identifies the structural factors preventing independence, and shows a dynamic relation of domination that “has so far foreclosed any viable two state solution to the conflict”.
  • Notes (PDF p.12-14): Notes 1-50, the works and statistical sources cited throughout, recorded in the Evidence section below.

Key passages

Evidence the work relies on

  • The author’s own earlier book, Palestinian Labor Migration to Israel: Labor, Land and Occupation (Routledge, 2005), cited for settlement figures (p.62-63), labour shares and the West Bank–Gaza trade fall (PDF p.5, p.6, p.10, notes 16, 21, 43).
  • World Bank reports: Investing in Palestinian Economic Reform and Development (Paris, 2007), The West Bank and Gaza Update (March 2007), Four Years: Intifada, Closures and Palestinian Economic Crisis (2004), Developing the Occupied Territories (1993), Long-Term Policy Options for the Palestinian Economy (2002), the 2002 poverty report and Stagnation or Survival? Israeli Disengagement and Palestinian Economic Recovery (2005) [title as printed] (notes 2, 3, 23, 37-40, 48, 50).
  • The colonisation literature: Rodinson (1973), Kimmerling (1983), Ram and Shafir in Pappe (ed.) (1999), Shafir (1989), Zureik (1979), Aruri (1989), Samara (1988); Osterhammel, Colonialism: A Theoretical Overview (1997), and Caroline Elkin and Susan Pedersen, Settler Colonialism in the Twentieth Century (2005), cited in the text as Elkin and Peterson (notes 8, 9).
  • The economic literature the paper argues against or with: Gharaibeh (1985), UNCTAD (1993), Sara Roy, The Political Economy of De-Development (2001) and The Gaza Strip, Cobham and Kanafani, The Economics of Palestine (2004), Arnon, Luski, Spivak and Weinblatt, The Palestinian Economy (1997), Arnon and Weinblatt (2001), Kanafani (2001), Fischer, Alonso-Gamo and von Allmen (2001), Kleiman (1999) (notes 6, 20, 22-27, 32, 34, 42).
  • Legal and documentary sources as cited: UNSC Resolutions 242, 237, 252, 478 and (as printed) 295; the 4th Geneva Convention; the July 2004 ICJ ruling on the wall; the Declaration of Principles and the Interim Agreement (Oslo II), including the Protocol of Redeployment and Security Arrangements, the Protocol of Civil Affairs and Protocol III; Raja Shehadeh, Occupier’s Law (1988) (PDF p.3-5, p.7-8, notes 14, 18, 19, 25, 28, 29).
  • Statistical sources: FMEP settlement reports (notes 16, 31), MAS, The Economic Monitor 1994-2000 (notes 30, 41), ICBS Labour Survey 2000-2001 (note 17), PCBS Labour Force Survey 2006 (note 44), UN OCHA on the barrier (2007) (note 45), UNCTAD (2006) (note 49), Diwan and Shaban (1999) (note 39), and Nur Masalha on 1967 displacement (note 12).
  • Moshe Dayan on settlements in 1971, quoted from Aronson, Creating Facts (1987), p.4 (PDF p.5, note 15); Yitzhak Rabin’s Knesset speech of 21 September 1993 (note 28); Rema Hammami on checkpoint economy (note 47); and the author’s own apartheid and Bantustans articles (2003, 2005) (notes 33, 46).

Analysis

The paper’s method is a structural political-economy argument built on three comparisons: against other settler colonialisms (Algeria, South Africa, Kenya, Zimbabwe, Korea), whose economic exploitation and reliance on indigenous labour Israel is shown not to share; against the pre-Oslo occupation, whose four economic pillars Oslo is shown to have restructured rather than removed; and against the international legal framework, whose refusal to legitimise the occupation is shown to coexist with, and after Oslo to slide towards endorsing, the priority of Israeli security. Its central evidentiary move is institutional: military orders, agreement articles (Area C, the PRS, the customs arrangements) and revenue percentages are used to show domination as a structure independent of stated intention — colonial “by its consequences if not by explicit intentions”. Its limits, on the evidence it gives, are those of a synthesis: the figures are drawn from the World Bank, MAS, PCBS, FMEP and the author’s own 2005 book rather than from primary data presented in the paper, several of its strongest characterisations (the apartheid analogy, the Bantustans claim) are referred to the author’s other articles, and the PA’s own agency is treated mainly as constraint — its jurisdiction, revenues and monopolies — rather than examined independently.

People, organizations, places and events

Leila Farsakh, Baruch Kimmerling, Gershon Shafir, Ilan Pappe, Moshe Dayan, Yitzhak Rabin, World Bank, International Monetary Fund, UN-OCHA, Hamas, Palestinian Authority, Oslo Accords, Paris Protocol, Second Intifada, Gaza

Concepts

Settler Colonialism, Bantustans, Closure system, Separation wall, Apartheid, Two-state solution, Zionism

How it relates to other sources

  • With Zionist Colonialism in Palestine and The 1936-39 Revolt in Palestine, the paper shares the colonisation frame for Zionism and Israel, and extends it where those sources do not go: to the political economy of the post-1967 occupation and, in particular, to the Oslo years, which it reads not as partial decolonisation but as a new form of colonial domination. Unlike Sayegh and Kanafani, it stresses that the Israeli project did not seek economic exploitation or reliance on indigenous labour — WBGS labour stayed under 7% of the Israeli labour force — and locates the colonial relation in land appropriation and imposed dependency instead.
  • With Palestine Inside Out: An Everyday Occupation, published the same year, it agrees on the core picture — land without the people, permits, closures, the wall and Bantustan fragmentation, a PA administering the population while Israel keeps borders, taxation and land — and gives figures Makdisi also uses (Area C at about 60%, customs revenues as the PA’s main income, their withholding after the 2006 Hamas election). Farsakh’s distinctive addition is the economic mechanism: the four pillars of 1967-1987, the customs-union and clearance-revenue structure of the Paris Protocol, and the donor community as subcontractor of the occupation’s cost.
  • With Palestine: A Socialist Introduction, Chapter 5’s “separation and control” reading of Oslo and Adam Hanieh’s chapter in From the River to the Sea: Essays for a Free Palestine on the Paris Protocol agree closely: all three treat Oslo as restructuring rather than ending occupation, with clearance revenues at about 60% of PA revenue and donors locking the arrangement in. Farsakh (2008) is the earliest of the three statements of that reading in this wiki.
  • On the Two-state solution: where Palestine: The Legitimacy of Hope judges the two-state consensus a dead end by 2013-2014 and Makdisi argues it has already collapsed into one state, Farsakh in 2008 already concludes the evolving colonial structure “has so far foreclosed any viable two state solution” (PDF p.12).
  • On the World Bank: where later sources quote its progress reports on the PA, Farsakh treats the Bank and the IMF as governing actors in the Palestinian economy whose prescriptions and disengagement report accommodate, and may indirectly legitimise, the colonial relation.

Open questions

  • The paper gives no volume, issue pagination or URL for the Electronic Journal of Middle Eastern Studies beyond “No.8, Spring 2008” on its first page; the file’s running header is a 2014 document file name and date, and no publisher or retrieval information is given in the work itself.
  • PDF p.11 prints “44, 273 Palestinians have been trapped in 1149 localities” west of the wall; the locality figure sits oddly against the 479,881 dunums and the completion figures around it and is not resolved elsewhere in the paper.
  • PDF p.10 defines poverty by individual earnings under US$2 a day but gives the 1998 West Bank figure as “15.4% of households” against population percentages for Gaza and the WBGS as a whole; the units are as printed and not reconciled in the paper.
  • Note 19 lists “UNSC resolution 295, September 1971” among the resolutions on East Jerusalem; as printed. The paper does not return to the number.
  • Printed slips preserved in the reading notes, as printed: “has fell” (PDF p.1), “a under a colonial structure” (PDF p.1), “rapture” for rupture (PDF p.1), “sewed” for sowed (PDF p.2), “Boars” for Boers (PDF p.3), “Elkin and Peterson” in the text (PDF p.2) against “Caroline Elkin” and “Susan Pedersen” in note 9, with note 13 printing “Elkins and Pedersen”, “Ibrahim Au-Lughod” (note 11), “Nur Masalhah” (note 12), “Ha’aratz” (note 28), “230 removal checkpoints” (PDF p.8), “challenged it as emergency support” for channelled (PDF p.11), and the World Bank disengagement report’s title as “Stagnation or Survival?” (PDF p.9).
  • The paper’s Gaza disengagement figures stop at end of 2006 and its June 2007 Gaza–West Bank separation is mentioned only in the Introduction; how the post-2007 Gaza blockade fits its disengagement account is not developed in the work.

Coverage

PDF p.1-14 of 14, read in full.

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