Still works in progress

Home from the Balkans for a couple of days, I’ve had time to reflect a bit on my almost two weeks in Podgorica, Belgrade and Sarajevo. I was in Podgorica and Sarajevo for academically-sponsored conferences. I inserted the stop in Belgrade during the week between them. In all three places, I organized my own visit, with the cooperation of friends and colleagues. The US embassies were not involved, except that in Sarajevo it was one of the sponsors of the meeting.

All three capitals are wrestling with internal political issues with profound implications: Montenegrin Prime Minister Djukanovic has taken some opposition figures into his cabinet to try to ensure wide acceptance of the October elections as well as NATO accession, Serbian Prime Minister Vucic is rejiggering his coalition in an effort to accelerate progress towards the EU, and the many levels of governance in Bosnia and Herzegovina are trying to convince the International Monetary Fund and World Bank to release $800 million to support implementation of the EU-imposed Reform Agenda.

Montenegro, despite some recent Russian-promoted disorder in Podgorica’s streets and even in parliament, has the best chances of success. NATO issued its formal invitation yesterday. The Russians objected, demonstrating how false its avowals of feeling threatened by NATO expansion really are. Montenegro’s 2000-person army is not even a threat to its immediate neighbors, much less to Moscow. The 28 members of the Alliance still have to ratify the accession. Podgorica is nervous mainly about US ratification, because of the Trump factor, and would like to see it done during the lame duck Senate session following the November election, in particular if he becomes president.

The real significance of NATO accession for Montenegro is that it keeps up the momentum in the Balkans, where Macedonia and Kosovo are already committed to joining the Alliance. That leaves only Bosnia and Herzegovina, which has asked for a Membership Action Plan, and Serbia, which has not made a decision on joining and flirts with Russia incessantly. Montenegro’s entry into NATO doesn’t threaten Russia, but the continued attraction of the Alliance to Balkans countries could end Russia’s troublemaking in the region.

Belgrade’s infatuation with Moscow was one of the disappointments of my trip to the Balkans. Normally proud and self-reliant Serbs tell me they need Russia’s warm embrace and cultural affinity. The pan-Slavic sentiment I get. We all like to chum with those who speak our language, or something close to it, listen to similar music and worship in ways we recognize.

The warm embrace is harder to comprehend. Russia is a declining regional power that allowed its currency to appreciate unrealistically during the period of high oil and gas prices, making its other industries uncompetitive in world markets. With prices now less than half of what they once were, Moscow is unable to balance its budget and lacks the industrial infrastructure needed to diversify its economy and finance the solution of its many serious social problems. It is also stuck in wars in Syria and Ukraine, not to mention smaller and less arduous military interventions in Georgia and Moldova.

Prime Minister Vucic recognizes the sterility of Russophilia and ran a markedly pro-Europe re-election campaign in April. But getting to Europe is not done in one big leap. Even while I was in Belgrade, masked thugs destroyed allegedly illegal construction on the waterfront, in order apparently to avoid a drawn-out court procedure. Many think the government was involved, or at least turned a blind eye, at the behest of someone well-connected. Calls to the police for help went unanswered. That’s not how things are handled in European states with consolidated judicial systems.

Many more liberal democratic Serbs and others in the Balkans think Europe and the US are turning a blind eye too. Washington and Brussels appreciate the progress Vucic has made reaching agreements with the authorities in Kosovo. He has accepted the validity of the Kosovo constitution on its whole territory, including the Serb-majority north, and has acknowledged that Serbia and Kosovo will enter the EU as separate states, each at its own pace. This is not far from formal recognition of Kosovo’s territorial integrity and sovereignty. But are Washington and Brussels rewarding this progress on Kosovo by ignoring Serbian government control of the media and courts as well as failure to reform its security services?

This is a good question. I hope the answer is no, but I also hope that we will be patient as well as exigent. There are lots of things that can be done to assist Serbia’s progress towards Europe: improved road connections to the Mediterranean through Montenegro and Kosovo, for example, as well as gas supplies that do not come from Russia. There are also next steps with Kosovo: the Serbian and Kosovar chiefs of staff, who have apparently never met, should be talking with each other regularly, and the boundary/border between the two should be agreed and demarcated.

When it comes to Bosnia and Herzegovina, I confess to being flummoxed. I’m not at all sure that the rather slow and rudimentary steps so far in the European Reform Agenda are worth $800 million, especially if some portion of that amount ends up feeding the corruption beast. The IMF and World Bank will tell you they can account for their funds, but part of the money will be displacing Bosnian funding that will then be diverted to less transparent purposes. Money is fungible. Some authorities in Bosnia are past masters at enriching themselves whenever it passes through their hands. That helps them to consolidate power and maintain their stranglehold on a country that deserves better.

Or it may help them defy the international community and make promises about independence for Republika Srpska, the Serb-dominated half of the country. That isn’t going to happen, because the international community won’t accept it. But those who support that goal are succeeding at making Bosnia and Herzegovina exceedingly difficult to govern effectively. A coffee at an outdoor cafe in Sniper Alley and a walk with an old friend to buy a Sarajevo football club tee shirt for my grandson are great pleasures, but I’d trade them happily for a Bosnia in which ordinary people could enjoy European standards of living and freedom from bombastic nationalism.


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The Syrian opposition narrative

I returned home from the Balkans yesterday and today is commencement at SAIS, which means I’ll be spending a good part of the working hours dressed up in Princeton’s imitation of medieval academic garb and unable to tweet or blog. So here is a video the Syrian Coalition (Etilaf) sent this morning, with its narrative of the conflict with Bashar al Assad. I do not agree with every word of this, and it certainly leaves out some relevant developments, but narratives are important and it merits attention.

I would be interested in learning if the Assad regime has put out a comparable narrative from its perspective.

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When and where America really was great

Wherever I go abroad–on this trip to Podgorica, Belgrade and Sarajevo–the topic people most want to discuss is–you guessed it–Donald Trump. Across political sympathies, religions, genders and ages, people are fascinated and mostly disgusted by his appeal to Americans. The exception is a few of the more nationalist leaders in the Balkans, who are Trumpites because they admire his autocratic style and remember that he was a vigorous opponent of the NATO war against Yugoslavia.

Here is what I tell my Balkans interlocutors: Trump reflects a real and important slice of the American electorate. His greatest strength is among white, working class males, many of whom have not seen a rise in income for decades. They incline towards blaming others, which makes some of them xenophobic, misogynist and racist. Europeans in particular should understand this, as many European countries are suffering analogous rises of comparable nationalist political forces. Trump has discovered how to tap into nationalist sentiment, much the way the UK Independence Party, Marine LePen in France, and Hungarian Prime Minister Orban have done.

Hillary Clinton is a much better known figure worldwide, but especially in Europe and the Balkans. If elected, I expect her to continue what has become traditional American policy in the region: support for democratization and European Union accession for the seven successor states to former Yugoslavia (two of which have already succeeded) plus Albania and openness to NATO accession for those who want it. As on many (but not all) other issues, Clinton is likely to serve the moral equivalent of Barack Obama’s third term. After all, Obama has delegated the Balkans mostly to Vice President Biden, who was a strong supporter of Bill Clinton’s 1990s interventions in the Balkans and a close associate of Clinton thereafter when both were in the Senate.

The odds are heavily in Clinton’s favor, but no one can reliably predict the outcome of American elections, especially six months out. A relatively strong economy, revulsion at Trump’s more extreme and erratic stands, and dissent from his candidacy within the Republican elite (and to some extent in its base) favor Clinton. The American electorate is increasingly Hispanic, female, gay and aging, all categories that will vote disproportionately for Clinton. Some establishment Republicans have made it clear they will support her, though many more are now flocking to Trump, despite his obvious lack of conservative credentials on social issues. Independents, who decide most American elections, are leaning towards Clinton.

That said, stuff happens. A mass casualty terrorist attack or a sudden economic downturn would tilt the table towards Trump. So too will Clinton’s “negatives”: many Americans regard her as untrustworthy and excessively tied to Wall Street. The North Atlantic and Pacific coasts seem pretty solid for Clinton right now, but there is a lot of political turf in between. Billionaire New Yorker Trump is not a natural fit with the heartland, but he has surprised all observers during the primaries and may continue to do so, as he adjusts his positions to garner more mainstream support. His shifting stances do not seem to weaken his core support.

Election of Trump would really do serious damage on the foreign policy front. Even if he is unable or unwilling to follow through on his promises to get Mexico to pay to build a wall on the border, block Muslims from entering the US, withdraw from NATO and allow South Korea and Japan to build nuclear weapons, it will take months or even years for the course corrections to become clear. In the meanwhile, a great deal of damage will be done.

In the Balkans, uncertainty about American policy will allow all sorts of crackpot proposals to emerge in the next six months. I’ve already heard from some who claim that Trump will unrecognize Kosovo. No doubt others will emerge suggesting ethnic partition of Kosovo, Bosnia and Macedonia. But Donald Trump, who is married to a Slovenian, is nevertheless unlikely to pay even passing attention to the Balkans, which are way down the list of American priorities. Apart from rallying a few Serb voters in Ohio with an offhand remark or two, he is likely to focus much more fury on the mess in the Middle East, on the Chinese challenge and on his much-vaunted promise to make America great again.

He will ignore the very real accomplishments Washington delivered in ending the war in Bosnia, saving Kosovo Albanians from expulsion, and rescuing Macedonia by diplomatic means. America really was great in the Balkans during the unipolar 1990s.

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Peace picks May 16-20

  1. The New Arab Wars: Uprisings and Anarchy in the Middle East | Monday, May 16th | 12:00-1:30 | Carnegie Endowment for International Peace | REGISTER TO ATTEND | Less than twenty-four months after the hope-filled Arab uprising, the popular movement had morphed into a dystopia of resurgent dictators, failed states, and civil wars. Marc Lynch’s new book, The New Arab Wars, is a profound illumination of the causes of this nightmare. It details the costs of the poor choices made by regional actors, delivers a scathing analysis of Western misreading of the conflict, and questions international interference that has stoked the violence. Please join us for a discussion of the book’s main findings with Marc Lynch, moderated by Michele Dunne, director and a senior associate in Carnegie’s Middle East Program. A light lunch will provided from 12:00 to 12:30 p.m. The discussion will begin at 12:30 p.m., with an introduction by Carnegie President William J. Burns. Following the discussion, copies of the book will be available for sale with signing by the author.
  1. Preventing Another Tragedy: The Plight of Crimean Tatars | Monday, May 16th | 12:00-1:30 | Atlantic Council | REGISTER TO ATTEND | On May 18, 1944, the Soviet Union began the deportation of Crimean Tatars to Central Asia. Decades later, Tatars returned to an independent Ukraine. Since Russia’s illegally attempted annexation of Crimea in 2014, Crimean Tatars have born the brunt of increasing human rights violations in the peninsula: they suffer searches, kidnappings, torture, and killings, and authorities shut down their cultural institutions. Recently, the Russian authorities banned the Mejlis, the Tatars’ legislature. The panel will discuss the Crimean Tatars’ plight, and how the West should respond to the human rights situation and the efforts to restore Ukraine’s territorial integrity. We hope you can join us for this important and timely discussion ahead of Ukraine’s Day of Remembrance for the Victims of the Deportation of the Crimean Tatars. Panelists include Valeriy Chaly, Ambassador, Embassy of Ukraine, Emine Dzheppar, First Deputy Minister, Ministry of Information Policy, Ukraine, Dr. Agnia Grigas, Senior Fellow at the Atlantic Council, and John Herbst, Director, Dinu Patriciu Eurasia Center, Atlantic Council.
  1. TPP: A Strategic Imperative—A Conversation with Admiral Michael Mullen | Monday, May 16th | 5:00-6:30 | Atlantic Council | REGISTER TO ATTEND | Debate on the merits of the Trans-Pacific Partnership (TPP) often overlook its strategic ramifications. This is true whether on the presidential campaign trail or in the soon-to-be-released International Trade Commission report on the deal’s economic impact. But trade carries both economic and security ramifications. How would TPP help to secure strategic US leadership in Asia and partnership in Latin America at a time of global uncertainty? Join us for the first public event in which Admiral Michael Mullen, former Chairman of the Joints Chief of Staff, will speak on the national security implications of TPP. Governor Jon M. Huntsman, Jr., Chairman, Atlantic Council, will make introductory remarks. Jason Marczak, Director, Latin America Economic Growth Initiative, Adrienne Arsht Latin America Center, Atlantic Council, will moderator.
  1. Dadaab to Dollo Ado: Why East Africa’s Refugee Crisis Can No Longer Be Ignored | Tuesday, May 17th | 9:00-10:30 | Wilson Center | REGISTER TO ATTEND | On May 6, 2016, the government of Kenya announced plans to end the hosting of refugees by closing the world’s largest refugee camp and taking other steps that would put the safety of nearly 600,000 people at risk. Kenya has played a vital leadership role in East Africa for decades by providing safety to people forced to flee war and persecution in Somalia, South Sudan,and other neighboring countries. The news may affect other countries hosting refugees from the same conflicts, including Ethiopia, where drought and insecurity make humanitarian response increasingly complex. Join the Wilson Center for a conversation with the Kenya and Ethiopia country representatives of the United Nations Refugee Agency on these emerging developments and current efforts to respond to what have tragically become “forgotten crises” at a time when global conflict and displacement are at a historical high. It is a year full of opportunities to improve the response to such crises, including this month’s World Humanitarian Summit and two September summits on refugees being convened by the United Nations General Assembly and President Obama. Panelists include Roger-Mark De Souza, Director of Population, Environmental Security, and Resilience at the Wilson Center, John Thon Majok, Program Associate, Environmental Change and Security Program at the Wilson Center, Raouf Mazou, Representative in Kenya, United Nations High Commissioner for Refugees, and Clementine Awu Nkweta-Salami, Representative in Ethiopia, United Nations High Commissioner for Refugees.
  1. Broken Borders, Broken States: One Hundred Years After Sykes-Picot | Tuesday, May 17th | 9:00-1:00 | Wilson Center | REGISTER TO ATTEND | The Sykes-Picot agreement of 1916, regularly cited as the document that sanctioned the division of the former Ottoman Empire into British and French zones of influence, creating new states and drawing new borders, was never implemented. The boundaries negotiated by Mark Sykes and Francois Picot were superseded by political reality, and the post war-map of the region bore almost no resemblance to that drawn by the two diplomats. The failure of the Sykes-Picot agreement, and the history of what eventually shaped the post-Ottoman order in the Middle East, is critical in analyzing the current turmoil in the region and the forces that might shape it in the future. Panels and panelists may be found here.
  1. Higher education in Syria: Protecting academia amid civil war | Tuesday, May 17th | 10:00-11:30 | Brookings | REGISTER TO ATTEND | The war in Syria has generated the 21st century’s worst humanitarian crisis, with as many as 300,000 Syrians killed and half the population displaced. This violence and insecurity has also had a devastating impact on professors, university students, and the country’s education sector, exemplifying the consequences when scholars are targeted. Before the conflict, Syria boasted one of the Middle East’s largest and most well-established higher education systems. War, however, has decimated the university system inside the country, and amongst the refugees are an estimated 2,000 university professionals and a minimum of 100,000 university-qualified students. On May 17, the Center for Universal Education at Brookings will host a panel discussion to explore the frequently overlooked impact of the Syrian crisis, and the broader political and security implications on higher education in conflict settings. The panel will also highlight the Institute for International Education’s Scholar Rescue Fund, which supports visiting appointments for threatened scholars worldwide, as well as perspectives from a Syrian beneficiary of the fund. After the session, panelists will take audience questions. Panelists include Mohammad Alahmad, Visiting Lecturer, Center for Contemporary Arab Studies, Georgetown University, Rochelle Davis, Associate Professor and Academic Director in Arab Studies, Georgetown University, Allan E. Goodman, President and CEO of the Institute of International Education, and Jennifer L. Windsor, Chief Executive Officer, Women for Women International. Rebecca Winthrop, Director, Center for Universal Education.
  1. Human rights in a turbulent world: A conversation with United Nations High Commissioner for Human Rights Zeid Ra’ad Al Hussein | Tuesday, May 17th | 12:15-1:30 | Brookings | REGISTER TO ATTEND | In today’s world, threats to human rights abound, challenging the fabric of so many societies: The war in Syria has shattered the lives of millions, with human rights under attack on multiple fronts; rising authoritarianism is curtailing basic liberties in many countries; and the rights of women and marginalized communities remain under constant pressure around the world. International tools for responding to and preventing human rights violations are proliferating, but political will for action is weak. On May 17, Foreign Policy at Brookings will host U.N. High Commissioner for Human Rights Zeid Ra’ad Al Hussein for an Alan and Jane Batkin International Leaders Forum focusing on the international progress and challenges facing human rights and how the United Nations is meeting them. High Commissioner Zeid will offer his assessment of how the Office of the High Commissioner of Human Rights and other U.N. bodies are working to ensure effective global action to safeguard human rights in today’s turbulent context. High Commissioner Zeid will speak on the U.N.’s role in the field, its impact, and its contributions to the prevention of crises and early warning of unfolding human rights violations. After the program, the speaker will take questions from the audience.
  1. A Conversation with The Right Honourable Saara Kuugongelwa-Amadhila, Prime Minister of the Republic of Namibia | Tuesday, May 17th | 2:30-4:00 | Wilson Center | REGISTER TO ATTEND | Namibia has been lauded for its success in generating economic growth, establishing democracy, and ensuring political stability. But this success story still faces important challenges ahead. Sparsely-populated and with vast deserts, Namibia is particularly vulnerable to climate change. The need to provide more opportunities women, reduce poverty, expand educational and economic opportunities, and incorporate the next generation of women leaders, particularly given the country’s vast youth bulge, is critical. What’s next for Namibia as it tackles these and other key issues? Join as we discuss these fascinating successes and challenges ahead with the country’s Prime Minister Saara Kuugongelwa-Amadhila. Other speakers include Melvin P. Foote, President, Constituency for Africa, and Gwen Young, Director, Women in Public Service Project.
  1. India in Asia: A Conversation with Nirupama Rao | Wednesday, May 18th | 10:30-12:00 | Wilson Center | REGISTER TO ATTEND | The Asia region boasts two-thirds of the world’s population, and will soon house more wealth than any other region. Its military reach is expanding globally, and it is home to several rising powers. Ambassador Nirupama Rao, a former Indian foreign secretary and one of her country’s most distinguished diplomats, will discuss how she envisions the role of India in its broader neighborhood, with particular attention to the Asia Pacific. What are India’s objectives? What are the opportunities and challenges? How should the past inform present policy? And what are the implications for India’s relations with the United States? This event marks the launch of the Wilson Center’s India in Asia initiative—one meant to fill a need in the Washington discussion of what may be the world’s next superpower, and that seeks to advance U.S. understanding of India. The initiative examines how one of Washington’s key partners engages in one of the world’s key regions—one to which the U.S. pledges to rebalance. Topics will encompass diplomacy, security, economics, and trade.
  1. Civilian Suffering in Arab Conflicts: A Discussion with Kenneth Roth of Human Rights Watch | Wednesday, May 18th | 12:00-1:30 | Atlantic Council | REGISTER TO ATTEND | Throughout the last decade, the human cost of Arab conflicts has affected millions in the region as well as populations across the transatlantic community. Policy makers and humanitarian leaders often address these conflicts at cross purposes given divergent—and seemingly incompatible—priorities. Please join us on May 18 for a discussion with executive director of Human Rights Watch Kenneth Roth to explore these priorities. Are there options to protect civilians in Syria that would not only save lives but also reduce the flow of refugees to Europe that is destabilizing the continent, and diminish the recruiting capabilities of extremist organizations including the Islamic State (ISIS)? Do similar trends span across the region’s conflicts, suggesting there exists a shared interest that could lead to cooperative action by governmental and nongovernmental decision-makers?
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A foreigner’s view of Belgrade today

I’ve been the darling of the pro-government press in Serbia the last few days, largely because I called on Prime Minister Vucic in front of a lot of photographers. As I’ve sometimes been highly critical of Serbia (especially its behavior in Bosnia and Kosovo), I’m alleged to have changed my opinion, as if that accords a democratic seal of approval.

First: let’s be clear about who I am: just a private citizen with long experience in the Balkans, starting with my first trip to Sarajevo in November 1995. That does not make me more than a devotee of the region whose views are strictly unofficial. If you want to know what the US government thinks, ask its ambassador.

I suppose it is true that I’ve changed my view of Serbia, most of all because Serbia has changed in important ways since the fall of Slobodan Milosevic going on 16 years ago. I’ve given a detailed account of those changes in a recent book chapter that I recommend highly, as any self-respecting professor would. Serbia today has made significant progress away from the electoral autocracy Milosevic ran. Progress towards the European Union was slow under President Tadic but has accelerated under Prime Minister Vucic. Serbia is headed in the right direction.

But that doesn’t mean the road ahead is clear. Here I’ll give a quick summary of just the more important challenges Serbia’s democracy faces today, all of which have more to do with values rather than the more technical requirements of Europe’s acquis communautaire:

  • The government exercises excessive influence on the media. This is well-documented by the OSCE as well as others and is the most common complaint I hear from friends across the political spectrum in Serbia. Editors are too often court-appointed, journalists are intimidated, self-censorship is common, media are heavily dependent on government advertising, and the prime minister too often attacks the questioners rather than the questions.
  • The courts are neither independent nor efficacious. This makes a difference in many spheres: cases like that of the murdered Albanian American Bytyqi brothers remain unsolved despite many promises to prosecute the perpetrators, impunity for corruption and abuse of state resources is still more the rule than the exception, citizens feel alienated and abused, and investors are wary of risking their resources.
  • The security services still require reform. Higher-level war criminals have not been brought to justice, eavesdropping and other domestic spying is too common, police are still not trained to serve and protect, and civilian control is not strictly observed.

Let me add a fourth:

  • Russia’s anti-democratic influence has grown by leaps and bounds. Moscow subsidizes candidates, high officials embrace Putin’s autocratic behavior, emotional pan-Slavism is all too common, Belgrade refuses to align itself with European Union sanctions levied in response to the invasion of Ukraine and some even suggest that the US is attempting to mount a Euromaidan type coup in Republika Srpska.

Now one Serb wag or another will respond that all those problems exist in one form or the other in the US as well, even the last. Donald Trump has made no secret of his admiration of Vladimir Putin.

My response would be: yes. That’s true. Putin’s Russophilia is just as ridiculous as some of what I’ve heard in Belgrade. Washington also has trouble bringing war criminals to justice, our police mistreat too many citizens, our courts are sometimes subject to too much political influence, and the White House is often accused of manipulating the media, most recently on the Iran nuclear deal. There are differences of degree, and validity, but all democracies continue to struggle with these important issues. Neither the US nor Serbia is an exception.

But I hasten to add that a lot of what I’ve seen here is positive. Last night in Belgrade I attended a packed documentary film about the wholesale murder of Albanians in Kosovo in 1999 and the hiding of their bodies at a police installation in Serbia because Milosevic thought “no bodies–no crime.” The Albanian diplomat who represents Kosovo here came up to introduce himself. I also enjoyed a beer with two friends from Kosovo I met on the street here: one is Serb and the other Albanian. They had driven from Kosovo together yesterday afternoon. Picture that happening 10 years ago.

But it is still is incumbent on a foreign visitor to hold up a mirror and point out the most glaring things needing correction. If he is lucky–and I think I am–he might be heard by those with some power and authority, or those in civil society with energy and influence, to do something to fix things. He can also offer a helping hand, if the local people want it.

If not, he can still write another book chapter, or a blog post.

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Israel and the Palestinian economy

Yael Mizrahi-Arnaud, who recently completed the requirements for a Masters degree in international economics and Middle East studies at Johns Hopkins SAIS, contributed this post to the Matzav blog of the Israel Policy Forum  (reprinted here with its permission). She is a former Israel Air Force officer, and project manager at the Peres Center for Peace. She has conducted research in Israel and Iraq on innovative conflict management solutions.

Recent months have seen an increase in unilateral plans to resolve, or at least mitigate, the Israeli-Palestinian conflict. Since the Oslo Accords of the mid-1990s, the international community has embraced the consensus that a two-state solution is the only viable outcome. But barring any progress towards that result on the political front, buttressing the Palestinian economy may be the only realm in which tangible results can be achieved. A boost in the Palestinian economy will not only benefit the lives of millions of people and restore waning public confidence in the Palestinian Authority, but also set up the Palestinians as a self-supporting peace partner that can maintain the institutions of statehood.

A new push to buttress the Palestinian economy would stem not from an economic-peace rationale, which sees economic advances predicating political advances and statehood, but rather from the idea that a functioning Palestinian economy is a crucial component in and of itself, independent of negotiations. The desire is to merely keep the door open for a future resilient Palestinian polity, one that can be a viable state and a constructive neighbor to Israel. The Israeli military chief of staff has put it most aptly: “there is a clear Israeli interest, beyond the issue of values, to develop the Palestinian economy.”

Current trends in Palestinian demography and economics provide reason to worry. Unemployment stands at 27 percent, and for people 20 to 24, rises to 40 percent. With half of the population under 18, the Palestinians face a youth time bomb; without avenues for employment and advancement, these youth represent a growing security threat to Israel.

In addition, the Palestinian economy relies heavily on international aid to fuel its consumption, and suffers from a bloated public sector and static private sector. Annual GDP has improved, from -0.4 percent in 2014 to 3.5 percent in 2015. These trends arise due to restrictive and outdated economic arrangements with Israel, as well as poor governance by the Palestinian leadership.

A recent World Bank Report estimated that the PA loses $285 million a year as a result of its current economic arrangements with Israel, which date back to the 1993 Paris Protocol. That agreement saw the creation of an Israeli-Palestinian customs union, and a joint economic committee tasked with overseeing the movement of goods and labor between the two economies. A common truism of the Israel-Palestinian narrative, that the interim often becomes the reality, is nowhere truer than here.

The bulk of this loss comes from value-added tax (VAT) and import duties that Israel collects on the PA’s behalf, which are handed over on a monthly basis. These taxes are known as clearance revenues, and make up two-thirds of the PA’s public revenues. Israel takes a three-percent collection and processing fee on the VAT and import duties.

Any delay in these payments creates instability in the Palestinian economy, as the PA is the largest single employer in the West Bank, employing over 16 percent of citizens. Late payments mean the PA must take out bank loans, turn to foreign aid, or leave a large number of its employees unpaid. The last of these scenarios unfolded in the first quarter of 2015, when 40 percent of public sector wages went unpaid due to Israel’s withholding clearance revenues in protest of the Palestinian move to join the International Criminal Court.

Recent deals that Israeli Minister of Finance Moshe Kahlon struck with PA Finance Minister Shukri Bishara and Civil Affairs Minister Hussein al-Sheikh have led to the transfer of $128 million in unpaid clearance revenues. Coupled with the proposed increase in cooperation in the high-tech, medical, and construction fields, this is a good start.

Still, it is far from enough. Congress also recently voted to unblock $108 million in funds placed on hold after PA President Mahmoud Abbas’s September 2015 statement that the Palestinians were not longer bound by the Oslo Accords. An additional $51 million remains blocked today. Read more

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