• Latest News
  • Pitch a Story
  • Work with a Journalist
  • Join the Blog Squad
  • Afghanistan
  • Africa
  • Asia
  • Baltimore
  • Canada
  • Egypt
  • Europe
  • Latin America
  • Middle East
  • Russia
  • Economy
  • Environment
  • Health Care
  • Military
  • Occupy
  • Organize This
  • Reality Asserts Itself
  • US Politics
  • The PLO and the Road to Neo-Liberalism

    Raja Khalidi: The credit bubble driving development in the West Bank is not sustainable -   January 29, 2013
    Members don't see ads. If you are a member, and you're seeing this appeal, click here


    Share to Facebook Share to Twitter

    I support the real news because they deal with real issues, not meaningless articles and sound bites - Gary
    Log in and tell us why you support TRNN


    Raja Khalidi has spent most of his professional career with UNCTAD, where he is currently Chief, Office of the Director, Division on Globalization and Development Strategies. He holds a B.A. from Oxford University and M.Sc. from University of London SOAS. From 2000-2006, Mr. Khalidi was Coordinator of UNCTAD's Programme of Assistance to the Palestinian people, which combines the analytical and operational expertise of the UNCTAD secretariat in an integrated manner. His assignments at UNCTAD have also dealt with Debt and Development Finance, the global economic crisis and institutional development and strategic management reform. His own publications include a book on the dynamics of Arab regional economic development in Israel and contributions on Palestinian economic development issues to the Palestinian Encyclopedia, the Journal of Palestine Studies, edited volumes, as well as Jadaliya online and Palestinian, Israeli and international media. The views expressed here are his own and do not necessarily reflect those of the United Nations.


    The PLO and the Road to Neo-LiberalismPAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I'm Paul Jay in Baltimore.

    We're continuing our discussion about whither the Middle East, particularly Palestine, and what kind of economies are going to be built there.

    Now joining us from Geneva is Raja Khalidi. He's spent most of his professional career with the UN Conference on Trade and Development, UNCTAD, where he's currently chief, Office of the Director, Division on Globalization and Development Strategies. He speaks here on his own behalf—his opinions are not necessarily those of UNCTAD.

    Thanks for joining us again, Raja.


    JAY: So let's pick up the conversation. The forces at play in Palestine are a reflection of the same kind of struggle going on throughout the Middle East, but it has its own specific form. Back in the day of Yasser Arafat, certainly in the early days, there was a kind of more socialistic vision, you could say, for Palestine. It was the idea that, you know, not simply building a capitalist Palestine was the objective; it was independence plus a certain amount of social agenda. What's the nature of that struggle now?

    KHALIDI: Well, it's a great, you know, issue, because—you know, for me to say something about, because, you know, one of the first studies I did as an economist was back in 1980, '81, '82, when I participated in a UN study on Palestinian economic institutions in Lebanon. That's when the PLO, of course, was at its apex, and it had a whole infrastructure, in fact—economic, social, consumer cooperatives [incompr.] production, factories, farms, employment, vast employment sort of network, trade union federations, etc.

    So, you know, I think, if anything, the PLO, the Palestinians were never closer to having a state with an active public sector than they were, unfortunately, in another country, in Lebanon in the early 1980s. Then, you know, in many ways it's something that I think even Arafat after '94 was dreaming of, that he could have that sort of control of the economy when—you know, that he assumed administration of under the Oslo Accords in 1993.

    However, the PLO was quickly trapped into several things. Globalization, you know, it was on the—the wave was definitely still building. The neoliberal policies that we've now come to question and calls neoliberal policies in those days were, you know, probably looked at very differently, had an extraordinary reach and influence among policymakers.

    The other thing is that the only—you know, the United Nations was involved in the reconstruction, etc., after '94, assisting the Palestinian Authority to become a government or prepare to become a state. But, you know, the main drivers of the process, of course, were the IMF and the World Bank. And, you know, we know what sort of light-touch regulation, you know, private sector determined, market-based economy they advocated then—and less so, perhaps, now, but certainly then. And this was part of the terms of the deal, quite simply. You know.

    The deal was that you get administration of the West Bank and Gaza,very small parts of the West Bank and Gaza, but much of the population, Palestinian population in return, and some limited, you know, playing with tax regimes and certain aspects of trade, banking, various other things that had been exclusively within the hands of the occupation authority until then, in return for buying into the Israeli economy, i.e. you become part of that economy, effectively, through a customs union, which is the Paris Protocol, and you attach yourself to its fortunes as a people, as an occupied territory, supposedly, in an interim period that was supposed to lead—.

    Of course, after five years of Oslo we were supposed to have achieved Palestinian independence in 1999, 2000. That was the implicit, if not some explicit understandings, at least on the part of the PLO, certainly not on the part of a lot of other people. So what happened was that they basically said, look, guys, you know, let's cut our losses, let's do, you know, what is—not cut our losses; let's do what is expected of us; you know, let's play the good soldier; and we don't know, we've never run a state before; let's take the advice of these people and do what they say. And so that was the beginning of the process of liberalization, if you wish.

    But it was liberal to begin with. There hasn't—I mean, what we've had since then, especially under the most recent Palestinian government since 2005, under Prime Minister Fayyad, is a much more elaborate version, a much more drawn-out and, you know, more pervasive version of the same policies that really were bought into by the PLO in the '90s. I would add, though—and I think this is important—is that this was—again, you know, they were very conscious of the need to build a state and the need to build a strong public role in that state. But I think they really were quite naive about, you know, whether—the extent to which it would be possible. And the early visions, you know, of the '94-'95 were very much those of an economy, market economy, open economy, but one where you have a very strong, an assertive role of government, because you're talking about an economy which is supposedly recovering after occupation and war. It's an economy which needs, you know, protection, it needs rebuilding, it needs, you know, agriculture, it has to be protected, you have to build your infant industries, all of those things.

    I think they really believe, to a certain extent, that they can do some of those things, i.e. carry—the baggage of the revolutionary period they brought with them when they arrived back in Palestine, they thought they could actually, you know, wear some of that stuff in the new circumstances. But it turned out they couldn't.

    And once once that was the deal, I think, you know, with someone like Prime Minister Fayyad, who comes from the IMF and the World Bank in government, you know, his being there has helped them solve, you know, to be honest, a lot of their financial problems. But it's been at the—I mean, you know, it's kept the PA in business, let's say, as the employer of last resort for the last two or three years, but it's been at, I think, a terrible cost to the economy.

    Now, the cost to the economy is about—is not only the most, you know, sort of extreme episodes we've had of structural adjustment and attempts to further privatize, perhaps, what remains of some public utilities or public services or public assets, which has been continued in the last couple of years, but you have a lack of any sense—Palestinian policymakers do not seem to have the sense that they can change things by changing their policies. They see themselves as locked in by Oslo, which is a broader agreement. It's not just an economic agreement. It's a political agreement—which has failed, of course, [because] there's no process anymore, and it's a security agreement which has been successful.

    So, you know, the economic part of it is only part of it, is only one part of a broader sort of deal that if they're going to start changing it, even if they believe they should—and I think that, you know, the protest of this last year in February against the income tax law, which were protests led both by middle income and lower income, but also the business sector because of—I think some of the provisions were ill-considered; and then further protest, much more widespread, in September about the cost of living, about inflation, about the energy prices and fuel prices, all of which are to do with this relationship with the Israeli economy.

    JAY: The other thing in Palestine which doesn't get talked about very much in the West bank, and also in Gaza—when I was in Ramallah, I was absolutely blown away by the number of gorgeous condos and big villas and many members, leading members of the PA living in these and Fatah living in these great big houses. But also there's a whole class of millionaires in Gaza and the West Bank, and they have quite entrenched interests. And I would assume some of them are actually doing okay under the status quo.

    KHALIDI: Yeah, sure. There's been an extraordinary—these last few years have been an extraordinary opportunity for, you know, what I would call, so to speak, the cowardly capital, in reference to the previous—reference to the courageous capital (I've used this term in some work I've done), a lot of hot money that came in, quick bucks, you know, be it in the startups, you know, restaurants and retail trade and various services.

    But in real estate you have some major investments made by big capitalists, Palestinian, particularly, but with certain Arab partners. I mean, you have different forms of excessive consumption or capitalist aggrandizement, let's say. The excessive consumption comes because you have 150,000 salaried PA employees whose salaries are used to deduct for bank loans, car loans, consumption loans, which has fueled the credit bubble, and in particular in the West Bank in the last couple of years a private credit bubble.

    And then you have a class of entrepreneurs who I think, you know, one should not put down, because they've survived against all odds, they've built up, you know, accumulated their capital gradually and, I think, more or less fairly, if one can use that term, and have struggled to survive and are good examples of, you know, what one could call national capital.

    And then you have—I won't say vulture capital, but we have a class of Palestinian investors who it's not so much because they're making money; it's more to do with the sort of values that their moneymaking are bringing into the country. I mean, if you drive down those same roads that you mentioned, you'll see big public signs, for example, exhorting, you know, taxpayers to pay their—or "citizens", quote-unquote, to pay their, you know, utility bills on time, exhorting good governance, a whole set of neoliberal slogans which have creeped into discourse and are very—.

    You know, they had the first Palestinian real estate conference. Now, this first Palestinian real estate conference is done—was supposedly an academic, you would assume, policymaking conference. It was underwritten by this real estate development company called Rawabi, which is building this model city outside of Ramallah, etc., etc. You know. So there's, one would say, even conflicts of interest. So there's a whole culture that's been coming in with a lot of this capital, which I think is not—I don't want to say it's alien to Palestinian society, but it's not really what Palestine needs.

    JAY: Now, let me ask you a question to wind things up. When I was in the West Bank and I met with a lot of activists and other people, there's a real debate going on about what's next for the Palestinian movement, you know, mass civil disobedience, is it really two states or one state that people should be fighting for. But in terms of a vision, a different kind of vision for the economy, how things are owned and how things are distributed, what do you think people might be asking, demanding, wanting? I mean, what is the alternative for Palestine?

    KHALIDI: The last few years, especially, of relative security and the good life, in the West Bank especially, have, you know, made people very wedded to what they have. And that's reasonable, I think, for a people that have been, you know, under war, occupation, etc., for so many years. And we should not begrudge them that, and I don't, to be honest.

    On the other hand, I think Palestinians are as thirsty for national liberation, independence, some form of real independence, freedom, simply freedom, and dignity as they are for the good life. And I think that as long as it's unresolved and as long as you continue to have an aggressive colonial—settler colonial regime under which you're living, you know, however good the life is and however much the, you know, Palestinians try to just put up with it and not somehow rebel, it's just—I don't see any history to tell us that that's what's going to happen.

    And the region, I think, is another reason to expect that this is not sustainable, namely, that, you know, the policies that in Arab countries, and many postcolonial countries around the world, in fact, came these neoliberal policies, liberalization, privatization, etc., that came as a result of the failure of some previous postcolonial socialist experiments, the, you know, central planning, etc. All of these governments who have now reached—or these regimes (it's broader than the governments) have reached, I think, the logical sort of conclusion of the failure of many of these policies.

    Oddly enough, in the Palestinian context,these same policies have been applied in a colonial situation, which ultimately, as they fail around the region—and I think they're failing also; we've seen signs of their own internal failure in the narrow Palestinian context—as they fail, then, you know, the people who, however much they might be wedded to the benefits of some of those policies or some of the benefits of those policies, you know, they're going to start—there's an identification process between the two. So as people will again reconsider whether they're willing to live indefinitely under military occupation in the West Bank, under siege in Gaza, under segregation in Jerusalem, as they reconsider that over the coming years or months, I think they'll realize that, you know, in rejecting that sort of a continued indignity and lack of freedom, that the policies that they've become accustomed to also should be reconsidered.

    And I think we saw that again in the demonstrations of September. We saw, you know, explicit public—you know, and this was not just some left-wing activist, active, like, left-wing group. This was widely based popular demands for the abrogation of the Paris Protocol, the economic agreement, because people understood the link between their misery and a certain specific agreement and accord. And I think that shows an awareness of how—you know, and the Palestinians, if—you know, all of the Arab people, given the amount of political change they've witnessed over 50 (whatever it is) years, but especially the Palestinians, you know, they're very aware and they're very responsible. They don't—I don't think they're—you know, they've learned some things, some lessons from their experience, and I don't think they will embark easily on another intifada. And I would be the last to predict it around the corner, as many—you know, if you look at the headlines these days, you'll see it every other week.

    But on the other hand, I don't see this as a sustainable economic project, I don't see it as a sustainable human project. I mean, you know, as you said, one state, two states, three states, we don't know. Ultimately the UN's—you know, has described this as a one-state reality, regardless of whether, you know, [incompr.] the right solution [unintel.] there's still a possibility for a two-state solution, or whether inevitably the one-state reality will impose a one-state solution.

    JAY: I know we're going to get email about this. When you say "good life," what are you talking about? You're talking about somewhat better economic conditions in the West Bank. You're not talking about good life in Gaza, right?

    KHALIDI: No, I was talking specifically about the West Bank, mainly about its cities. And when I talked about the private credit boom or bubble, it's very much in those areas. Gaza's a very different situation, certainly.

    JAY: Okay. Thanks very much for joining us. This is just the first in a series of interviews we're going to do with Raja. So if you have questions or comments, please write in, and I think he'll come back and respond to them. Thanks for joining us again, Raja.

    KHALIDI: Thank you very much.

    JAY: And thank you for joining us on The Real News Network.


    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


    Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at


    Latest Stories

    Demystifying the Role of Mitigation in the Most Recent IPCC Report
    Hypersurveillance State Won't Prevent Another Boston Marathon Bombing
    The Modern History of Venezuela from 1973 to the Caracazo Massacre - Edgardo Lander on Reality Asserts Itself (3/9)
    Univ. of Maine Faculty Reinstated After Students Protest Against Cuts
    The Modern History of Venezuela from 1908 to 1973 - Edgardo Lander on Reality Asserts Itself (2/9)
    IMF Will Address Global Inequality, Says Managing Director Christine Lagarde
    Raising Big Banks' Leverage Ratio Good, But Not Nearly Enough
    TRNN Replay: Austerity Road to 19th Century
    Has Palestinian Maneuvering Revived Peace Talks?
    Late Jackson Mayor Lumumba's Son Wins Primary to Replace His Father, Runoff Election Ahead
    Quebecers Reject PQ and Elect a Liberal Government Representing Big Business
    TRNN Debate: Decriminalization vs. Legalization
    The Beginning of the Chavez Era - Edgardo Lander on Reality Asserts Itself (4/9)
    "Off With His Head": Court Upholds Obama's Power to Kill
    Workers at Nation's Top Hospital Strike For Fair Wages
    From Exile to Radicalization in Venezuela - Edgardo Lander on Reality Asserts Itself (1/9)
    Rwanda 20 Years Later: Genocide, Western Plunder of Congo, and President Kagame
    Ukrainian Protesters in the East Demand More Autonomy From Kiev Government
    Hunger Strikers Demand President Obama Halt His Record 2 Million Deportations
    Indian Parliamentary Elections - A Primer With Vijay Prashad
    West Looks to Carve Up Ukraine & Privatize Industries Held by Kleptocrats
    Where Are Israeli-Palestinian Peace Negotiations Headed?
    The Multiple Kingdoms of Saudi Arabia (5/5)
    Do the Afghan Presidential Elections Signify Progress?
    Republican Presidential Hopefuls Pay Homage to Billionaire Casino Tycoon Sheldon Adelson
    Will Extremist Lieberman Become Israel's Next Prime Minister?
    Why do the Saudis Want the US to Attack Iran? (4/5)
    Immigrant Advocates and Families Tell President Obama 'Not One More'
    Elections, Pipelines, and Protests - The Canada Panel
    Chris Hedges on "Israel's War on American Universities"
    Baltimore Residents Decry Lack of Affordable Housing
    Yellen Talks the Talk But Will She Walk the Walk?
    Hopkins Hospital Workers Speak Out against "Poverty Wages"
    Will Venezuela's New Floating Exchange Rate Curb Inflation?
    The European Central Bank's War on Wages is Pushing Europe's Economy to the Brink
    Supreme Court Decision Opens Floodgates for More Campaign Cash
    Charles Keating, the Financier Behind the Savings and Loan Scandal, Dies at 90
    Saudi Arabia and the al-Qaeda Monster (3/5)
    Maryland Residents Voice Opposition to Natural Gas Fracking Export Facility
    Supreme Court Ruling Gives Wealthy Individuals More Influence Over Elections
    What are the Saudis Afraid Of? - Madawi Al-Rasheed (2/5)
    Baltimore's MICA Adjunct Professors Set to Vote on Unionization
    Boycott of Israel Moving to Next Level?
    Hypocrisy Dressed Up as "Realism" Justifies American Alliance with Saudi Dictatorship
    Immigration Reform in the Shadows of Cesar Chavez's Legacy
    Leaked Senate Report Shows Use of Torture As "Ineffective"
    UN Report Says Climate Change Will Threaten Food Production Worldwide
    The Hypocrisy of US Calling for Enforcement of International Law
    How the Ecuadorian Economy Grew in a Global Recession
    'Shadows of Liberty' Trailer
    Kristina Borjesson on Why CBS Shut Down Her investigation into Flight 800 (2/8)
    Glen Ford on Racism in the American Media (3/8)
    Paul Jay on What Drives Corporate Media and What Drive The Real News (4/8)
    Creating a New Media Paradigm After Citizens United (5/8)
    Should The Left Engage with the Mainstream Media? (6/8)
    What Is the Financial Backing For The Real News? (7/8)
    Standing up to Character Assassination (8/8)
    Oligarchs, Fascists and the People's Protest in Ukraine
    TRNN Debate: Is Obamacare In the Interest of Workers?
    Too-Big-To-Fail Advantage Remains Intact For Big Banks
    Obama and the Saudi Agenda
    TRNN Replay: Investigating the Saudi Government's 9/11 Connection and the Path to Disilliusionment - Sen. Graham on Reality Asserts Itself pt 1
    The Iraq War's Real Legacy
    Petitions with 100,000+ Signatures Call for Snowden's Passport to be Reinstated
    We Need to Harness People Power - Andy Shallal on Reality Asserts Itself (4/4)
    BC Pipeline Fight and Quebec Elections - The Canada Panel
    Jonathan Schell - 1943-2014: Board Member of TRNN on Why We Need The Real News
    Teachers on Strike from the UK to Argentina
    Connecticut Poised to Become First State with $10.10 Minimum Wage
    Oil Spill Threatens Wildlife and Local Economy
    DC School Test Scores Up, But Poor Black Kids Are Doing Worse - Andy Shallal on RAI (3/4)
    Obama's Proposal To End NSA Bulk Data Collection Won't Protect Privacy
    How Google, Apple & The Biggest Tech Companies Colluded to Fix Workers' Wages
    An American Should be One that Questions Their Government - Andy Shallal on RAI (2/4)
    What's Driving Putin & Obama's Posturing on Ukraine?
    Hundreds of Students & Faculty Occupy College Campus to Fight Cuts to Public Higher Ed
    Due Process 'Impossible' In Harsh Death Sentencing Of Over 500 Muslim Brotherhood Members
    Has Anglo-American Capitalism Run Out of Steam?
    Being the "Other" in America - Andy Shallal on Reality Asserts Itself (1/4)
    TRNN Debate: Should Baltimore 'Ban The Box'?
    How Fallujah Became the Iraqi Government's New Battleground
    Why I Decided to Blow the Whistle on the NSA
    NASA Climate Predictions Show Serious Threat To Humanity
    Professor Who Teaches Israel-Palestine Conflict Accuses College of Violating His Academic Freedom
    CIA and NSA Wrongdoing Requires Independent Investigation, Says Former Church Committee Staff
    Are Tuition Breaks Enough To Combat High Student Debt And Low Graduation Rates?
    Industries Across the U.S. Are Stealing Wages From Their Lowest Paid Workers
    Who In Ukraine Will Benefit From An IMF Bailout?
    NSA Recording All International Calls From U.S.
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (2/2)
    BP Gets Green Light to Drill in Gulf, But Has Safety Improved?
    Residents Still Not Drinking Tap Water Two Months After West Virginia Spill (1/2)
    Libya's Descent Into Turmoil Three Years After NATO Intervention
    From Pipelines to Peladeau - Canadian Report
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (1/2)
    Congressional Progressive Caucus Budget Strikes Back Against Austerity
    Libya Three Years Later - Chaos and Partition
    Why Was Gaddafi Overthrown?
    Should Ukraine and West Accept De Facto Crimea Joining Russia? (2/2)
    Tony Benn Saw Socialism as the Culmination of Democratization
    Why Didn't Bush/Cheney Attack Iran and Can Obama Make and Sell a Deal? - Gareth Porter on Reality Asserts Itself (3/3)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi? (2/2)
    Crimea Referendum: Self Determination or Big Power Manipulation? (1/2)
    Sen. Graham: President Must Side with Openness About CIA and 9/11
    Manufacturing a Narrative for War - Gareth Porter on Reality Asserts Itself (2/3)
    Protesters Hit the Streets of Brooklyn to Demand $15 Minimum Wage
    Hammer: 'Moral Bankruptcy' Behind Massive GM Recall
    White House Withholds Thousands of Documents from Senate CIA Probe
    I Grew Up Believing in Time Magazine's Version of America - Gareth Porter on RAI (1/3)
    Western European Banks Vulnerable to Ukrainian Sovereign Debt Crisis
    TRNN Debate: What's Driving Inflation in Venezuela? (2/2)
    CIA vs. Senate: Who Is Obama Protecting?
    Will Tipped Workers Get Excluded Again From Minimum Wage Hike?
    TRNN Debate: What's Driving Inflation in Venezuela? (1/2)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi?(1/2)
    TRNN Replay: A Look at Who's Poised to Become No.2 at the Fed
    How Right-Wing Nationalism Rose to Influence in Ukraine (2/2)
    Netanyahu Attacks Boycott As Campaign Enters New Phase
    Moving Towards a Police State - Michael Ratner on Reality Asserts Itself (7/7)
    Fighting Reagan's Secret, Illegal Wars - Michael Ratner on Reality Asserts Itself (6/7)
    Puerto Rican Independence Movement and Cuba Further Radicalized Me - Michael Ratner on RAI (5/7)
    The Butcher of Attica - Michael Ratner on Reality Asserts Itself (4/7)
    MLK and a Radicalizing Moment in American History - Michael Ratner on Reality Asserts Itself (3/7), Real News Network, Real News, Real News For Real People, IWT are trademarks and service marks of IWT.TV inc. "The Real News" is the flagship show of IWT and Real News Network.

    All original content on this site is copyright of The Real News Network.  Click here for more

    Problems with this site? Please let us know

    Linux VPS Hosting by Star Dot Hosting