De-development
Israeli Style
By Sam Bahour
10 August, 2004
Countercurrents.org
Faced
with the lopsided Oslo Peace Accords, Palestinians attempted to overcome
tremendous odds over the last ten years to sow the seeds of a modern
Palestinian economy. However, Israel had different plans, namely to
manipulate the uneven balance of power to eliminate any possibility
for Palestinian self-sufficiency and the emergence of a Palestinian
state. Mixing the greed of the corporate world with the might of the
Israeli military, Israel is well on track to undermine Palestinian achievements,
and by doing so, Israel has wrecked the Palestinian society with severe
consequences that will last for many years.
There are winners
and losers in today's cutthroat business world. Corporate America reigns
supreme with its breadth and depth into world markets increasing daily.
One huge market which is growing at an overwhelming pace is telecommunications,
especially the cellular business. Around the world and in the Middle
East specifically, the telecommunications sector is proving to be the
vehicle that is prodding governments to modernize and become more transparent,
accountable and market-driven. Countries, particularly smaller and least
developed ones, have benefited from this telecommunications boom by
liberalizing their markets in order to attract foreign direct investment
and gain firsthand experience in one of today's most dynamic industries.
In conflict-stricken Israel and yet-to-be Palestine, this globalized
model of development is not working and the Palestinians are losing
while those tasked with maintaining the rules and laws of today's global
village turn a blind eye.
The Telecommunications
Market
The Israeli telecommunications
market may be characterized as such: for a population of 6.5 million,
Israel has over 5 million fixed lines, over 6 million cellular subscribers,
and a highly competitive market with four cellular operators - three
of them with U.S. multi national firms holding majority equity. Israel
is in the process of having their independent telecommunications regulator
assume full responsibility for the entire telecommunications sector.
The Palestinian market is in its infancy: for a population of 3.2 million,
it has one privately-owned and publicly-traded on the Palestine Securities
Exchange fixed line operator (PALTEL [1]) with 260,000 fixed lines installed;
and it has spun off a cellular company (JAWWAL [2]) which has over 310,000
subscribers. The Palestinian Authority's Ministry of Telecommunications
and Information Technology plays the role of the regulator.
The total Palestinian
Authority market of revenue generating cellular subscribers today is
around 770,000, JAWWAL has 40% of the market and has been losing market
share to Israeli cellular operators during the past two years.
To an outsider,
it may seem that this sector is peacefully coexisting in a competitive
market despite the ongoing crisis, and may be regarded as a positive
interaction. But this is absolutely not the case.
The Agreements
Just as Israeli
tanks and gunships continue to militarily occupy and batter Palestinian
cities and towns, there is another facet of this illegal Israeli occupation
that is not apparent to the casual observer. Israel refuses to abide
by the provisions in the Oslo Peace Accords [3] which gave Palestinians
full control over their telecommunications sector. This Israeli refusal
is not a recent phenomenon, but deliberate disregard of agreements signed
on the White House lawn.
The Israeli-Palestinian
Interim Agreement on the West-Bank and Gaza Strip (better known as the
Oslo Agreement) was signed on September 28, 1995. Article 36 was very
clear as far as the telecommunications sector was concerned. It stated:
"Operators and providers of services, presently and in the future,
in the West Bank and the Gaza Strip shall be required to obtain the
necessary approvals from the Palestinian side." (Article 36, Section
B, Number 4) The problem is that Israel is allowing its cellular operators
to operate within the Palestinian cities and towns in clear violation
of the Oslo Agreement and in blunt disregard to internationally recognized
agreements, including the World Trade Organization treaties to which
Israel is a signatory.
The Violations
The Oslo Agreement
stipulation on the telecom sector is very clear. Any operator must be
licensed by the Palestinian Authority if they desire to sell their services
to the Palestinians in the West Bank and Gaza Strip. Not only are all
of the Israeli cellular companies illegally operating in Palestinian
areas without licenses, but the Israeli government is encouraging them
by disrupting the ability of the Palestinians to develop their own telecommunications
networks and refusing to take action against these Israeli operators
for violating agreements. The result is that these Israeli commercial
interests are fully aligned with Israeli political concerns and the
military occupation works in tandem with policies aimed at de-developing
the Palestinian economy.
During this most
recent four-year spike of Israeli military aggression, Israel refuses
to allow the Palestinian cellular operator to import desperately needed
equipment. Since all Palestinian imports must pass through Israeli ports,
Israel has repeatedly used the infamous, all encompassing blanket excuse
of 'security concerns' to delay or prohibit Palestinian imports. While
the same equipment that is destined for Palestine is being held up at
Israeli ports for 'security checks', Israel allows it to be freely imported
by Israeli operators.
Furthermore, Israeli cellular operators have installed a comprehensive
network covering the entire Palestinian area. These firms place their
equipment inside the illegal Israeli settlements, under the pretext
of serving the settlers, but in reality position their equipment and
provide it with excess capacity to cover every Palestinian community.
This is easily done given that the settlements are usually located on
the hilltops next to Palestinian population centers and are well protected
by Israel's military occupation forces.
Furthermore, besides placing towers and equipment in settlements - and
recently on contiguous Palestinian lands - these Israeli companies have
flooded the Palestinian marketplace with pre-paid scratch cards to market
their services. Capitalizing on the inability of the Palestinian Authority
to regulate its market, the Israeli companies continue to dump their
services in the West Bank and Gaza Strip. The pricing schemes for these
illegal services are structured in a way that directly threatens the
Palestinian operators' ability to survive. Faced with four illegal operators
working without licenses and without any type of regulation - commercial,
environmental, or otherwise - the Palestinian operator competes against
tremendous odds.
The Culprits
The motivation of
the Israeli Government is clear. To them, denying the Palestinians the
ability to develop their communications market is consistent with continuing
the military occupation and sabotaging Palestinian efforts to develop
an independent economy. In addition, there are many hints that corruption
within Israel may explain the Israeli government policies that hinder
equipment importation to Palestine.
The Israeli firms in question are the following:
Israeli Cellular
Operator Majority Foreign Shareholder and % of Ownership
Partner (Orange),
www.partner.co.il Hutchison Whampoa - 43.10%, www.hutchison-whampoa.com
Pelephone, www.Pelephone.co.il
Shamrock Holdings, investment arm of the Disney Group - 50%, www.shamrock.com
Cellcom, www.cellcom.co.il
Bell South Corporation USA - 34.75%, www.bellsouth.com
MIRS, www.mirs.co.il
Motorola - 66%, www.motorola.com
These companies
through their Israeli operations are responsible for illegal activities
in the occupied territories. At a time when the issue of corporate responsibility
has reached the chambers of Congress, these firms blatantly contribute
to the internationally recognized illegal occupation of Palestinians
in total disregard to their social and corporate obligations.
The foreign firms behind these Israeli companies which are illegally
operating in Palestine without a license and in full disregard to international
agreements are, not only part of the problem, but are putting their
own shareholders at risk of legal action which could easily reach into
the billions of dollars.
The Damage
The Palestinian
economy has been wrecked during the second intifada by draconian measures
and deliberate destruction. The illegal Israeli operators compound these
destructive measures and have become an integral part of the Israeli
occupation of the West Bank and Gaza Strip.
First, the Palestinian
government does not collect taxes on the activities of these illegal
operators. It is estimated that over $40 million of tax revenue has
been lost thus far. While the international donor community, led by
the European Union and United States, continue to drip-feed 'development'
funds into Palestine, they ignore the fact that these lost tax revenues
could have reduced the Palestinian dependence on international donors.
Illegal Israeli operators deprive the Palestinians of means to develop
their own economy and state.
Second, an estimated $500 million of Palestinian funds were drained
out of its economy by such operations. This revenue leakage should be
going to licensed Palestinian operators and the associated taxes should
be deposited in the Palestinian treasury. These are the funds that should
be the driving force for allowing the Palestinian market to develop
and employ more Palestinians.
Further compounding the problems facing the Palestinian operators are
the dumping practices used by these illegal service providers. Palestinians
consumers are offered telecom services at less than a third of the cost
as consumers living in Israel. This price discrimination and dumping
is injurious to Palestinian operators who are further placed at a disadvantage.
The entire Palestinian communications market is damaged by such developments.
While elsewhere in the world telecommunications have provided a tremendous
economic stimulus, Palestinians are hindered from developing this key
sector, and having the opportunity to create an alternative to the wrecked
economy caused by the 37-years of military occupation.
The Israeli practice of dumping products and services in the Occupied
Palestinian Territories is not new. Widely covered by the media, was
the ferris-wheel currently operating in Ramallah that was sold to Palestinians
after it did not meet Israeli safety standards. Food products that are
expired or near expiration are regularly sold with large discounts into
the Palestinian market with no regard to food safety or the rule of
law. All of these commercial practices take place with the full knowledge
and support of the Israeli government bodies.
One can't discount the damage caused by the Israeli military on the
Palestinian economy. The Israeli military has damaged the offices of
the Palestinian operators and has confiscated network equipments, records
and mobile handsets. In addition, dozens of Palestinian engineers have
been detained arbitrarily in Israeli military prisons. Many of the Palestinian
staff daily risk their lives while trying to service the Palestinian
consumer. Several have been wounded, one paralyzed for life.
Given that there is no regulation on Israeli operators in the Palestinian
areas, the Palestinian consumers have no privacy or data protection
guarantees. It is assumed that the Israeli military and the Israeli
operators are also extensively using the popularity of mobile phones
by Palestinians to track 'wanted' persons movements and whereabouts.
One day, when the Israeli military will be held responsible for its
violations of Palestinian human rights, it is most likely that these
illegal cellular operators will also be held partly liable for their
complicity.
As Dr. Khalil Nakhleh states in his newly released book, The Myth of
Palestinian Development [4], "This is a process of un-developing
Palestinian society, and undermining and dismantling any potentially
viable Palestinian institution." Israeli driven de-development
of Palestinian society is happening at an increasingly rapid pace at
all levels - economic, social, and political. It has become explicitly
clear that Israel's policies are designed to voluntarily empty Palestine
of its citizens, and thus, clear the way for an Israeli defined "final
solution" to the Palestinian "question".
The Blind Eye
What is happening in the telecommunications market in Palestine is not
new or unknown. It has been going on ever since the Oslo Agreements
were signed back in 1993. Among others, the United States government
has been formally and informally made aware of these blatant Israeli
violations of the agreements. They also were made aware of the fact
that several prominent U.S. firms are party to these illegal practices.
President Bush and Secretary of State Colin Powell continue to repeat
the need for economic development to happen in the Palestinian areas
in order for the ruined Palestinian economy to start offering a way
out of the Israeli-created poverty and despair. But President Bush and
Secretary Powell refuse to move beyond sloganeering. If they were genuinely
concerned for Palestinian economic development, then Bush and Powell
would inform these U.S. companies of their obligations in front of U.S.
and International Law and demand that they move to stop their complicity
in these illegal practices by their Israeli partners.
Ariel Sharon's current so-called Unilateral Disengagement Plan [5] is
sadly viewed by the international community as ending the occupation
in Gaza. However, it is clear that the intention is nothing of the sort,
and when it comes to telecommunications, we can expect a continuation
of the damaging relationship. It has stated: "The water, electricity,
sewage and communications infrastructures will be left in place."
If Israel were really withdrawing their illegal occupation why would
they need to retain the control of the communications infrastructure
that was supposed to serve the Israeli settlers only?
An Eye on the Future
Israel's intentional
and systematic destruction of our past achievements and their refusal
to allow Palestinian economic sectors to develop will not shake the
Palestinian determination for building for a better tomorrow - one free
from foreign military occupation.
Commercially, a
report issued this month by the Arab Advisors Group ranked JAWWAL as
the firm that operates in the highest level of competition in the Middle
East and North Africa region. Palestinians will continue to do whatever
is humanly possible to develop their economy out of the ruins of military
occupation, and will do so while in the face of unfair odds due to the
illegal Israeli competition. As Mr. Hakam Kanafani, the CEO of JAWWAL
recently stated, "Israeli companies are not doing this for the
security of Israel, they do this for a quick profit. This situation
is unlike any in the world. No law, no rule, no ethical principal worldwide
would permit what Orange, MIRS, Cellcom and Pelephone are doing."
The corporate leaders of these firms must be compelled to stop their
involvement in illegal activity in Palestine and stop violating international
agreements. JAWWAL has already initiated legal action in the Palestinian
courts against two of these Israeli firms with action against the other
remaining two in the process. Following last month's International Court
of Justice ruling, which amounted to the fact that Israel's occupation
is a blatant violation of international and humanitarian law, Palestinians
are positioned more than ever to undertake legal actions against violators
of international law and accepted treaties. These telecommunication
operators clearly violate accepted norms of conducting business, they
violate international law, and they violate the letter and the spirit
of the signed-treaties.
August 2004
1 www.paltel.net
2 www.myjawwal.com
3 www.nad-plo.org/index.php
4 www.passia.org/publications/Myth/
Myth-Palestinian- Development.htm
5 www.haaretz.com/hasen/pages/
ShArt.jhtml?itemNo=432763&contrassID=1
* Sam Bahour is a Palestinian-American businessman living in the besieged
Palestinian City of Al-Bireh in the West Bank and can be reached at
[email protected]. Sam
participated in founding of PALTEL, which also owns JAWWAL. The writer
also co-authored Homeland: Oral Histories of Palestine and Palestinians.