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Monday, May 30, 2011     INTELLIGENCE BRIEFING

Unleashing Palestinian economic potential, no thanks to the Arab petro-sheikhs

When he unsuccessfully tried to cut Israeli Prime Minister Benjamin Netanyahu off at the [Congressional] pass with a purportedly seminal speech, President Barack Obama laid out a rather immodest economic agenda for the Arab region. The “developmental” proposals were immediately overshadowed by his unfortunate call for 1949 Israel-Arab armistice lines as the basis for any Israeli-Palestinian settlement.


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Still, this speech, Mr. Obama’s third ballyhooed proffer to the Arab/Muslim world, was somewhat more realistic. At least we were spared another call for “a Middle East Marshall Plan”.

The severity of Washington’s economic problems and the Euro crisis made any such new “initiative” with big bucks a non-starter. Soaring visionary rhetoric often gets out of hand, ignoring, for example, major differences of time and place. It was the Europeans — contrary to the myth it was Washington’s genius instead of American dollars — who rebuilt their then world’s largest industrialized economy from wartime ruins. Nor were the Europeans “nation-building”and attempting “take-off” for an “underdeveloped” economy — politically correct jargon for disguising attempts to modernize backward societies by creating nation-states out of whole cloth. But President Obama’s new proposals were just about as vapid. And there was a glaring omission: his categories — debt relief, encouragement of private investment, expansion of trade — trumpeted no call for Arab petrosheikhs to put their vast dollar holdings where their mouth is.

In Mr. Netanyahu’s somewhat condescending if accurate review before the Congress of Mideast history since 1947, one base left untouched was the obvious parallel between the region’s Arab and Jewish refugees. Some 800,000 Arabs originally fled or were expelled from a small part of British Mandated Palestine when six Arab states tried to smash a self-proclaimed but UN proposed Jewish state. Almost the same number of Jews, curiously enough, who had lived, many for centuries, in Muslim countries, simultaneously fled for their lives. The wealthier ones [particularly in French-colonial North Africa] immigrated to Europe. But the vast majority, with little more than the clothes on their backs, was absorbed by the nascent Israeli state funded by the Jewish diaspora Zionists and generous American taxpayers.

Nothing like that happened in the vast, oil-rich, [then] 200-million Arab world. Their Arab neighbors mostly refused to accept the new arrivals, even many with tribal and family affiliations. Worse, the Arab regimes with enthusiastic help from high salaried if often incompetent, prejudiced UN do-gooders chose to create “open political sores” — surrounding Israel with semipermanent, burgeoning, fetid refugee camps. Nor despite occasional highly publicized “aid” checks-in-the-mail have they made any effort since.

That, as they say, is history. But one new “fact[s] on the ground” is the current boom in what everyone but the Israelis and the Palestinians calls “the West Bank”. Mr. Netanyahu can claim some credit for the roaring Israeli economy as longtime advocate in and out of government for breaking the former socialist hold on his own country’s economy and decades it blocked rapid growth. Jerusalem, for its own purposes of course, has encouraged the Palestinian entrepreneurial elite, boosting West Bank gross domestic product growth to over 10 percent annually. In describing conditions Mr. Netanyahu may have iced the cake a bit but again Palestinians have demonstrated what they can do when they turn from obsessive revenge.

That’s not new. On the eve of the First Iraq War individual Palestinian refugees were already widely recognized in the professions and business in the Gulf States. But Palestinian politicians — not excluding Jordan’s King Hussein under his own “Palestinian” majority’s pressure — sided with Iraq’s Sadam Hussein against the U.S and even Washington’s Arab allies. The Palestinians were again expelled, for example from Kuwait where many had made good before Sadam Hussein’s Iraqi invasion.

In his speech, again for what it was worth, Mr. Obama inferentially acknowledged one important if little respected fact of the last half century’s experience: government to government economic “aid” to preindustrial economies largely has proved a dismal failure, and even more so when administered by multilateral agencies.

Unless and until the Arab/Muslim states break with their traditions of reliance on foreign subsidies, state capitalism, cronyism, protectionism, hypocritical redistributive strategies and threatening political rhetoric, they will remain backward, and at the mercy of domestic instability and outside forces. Whether that can happen without a commensurate revolutionary break with Islamic religious obscurantism is doubtful. But Mr. Obama did not touch on that forbidden subject, either.

Sol W. Sanders, (, writes the 'Follow the Money' column for The Washington Times . He is also a contributing editor for and An Asian specialist, Mr. Sanders is a former correspondent for Business Week, U.S. News & World Report and United Press International.

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