A visitor to Ramallah can see how the economy has changed in recent years—not for the better. The building boom of several years ago has stopped; new office buildings stand empty; the once bustling café and restaurant scene is bustling no more. Banks have been ordered by the Palestinian central bank to reduce loan repayment requirements for public workers by half this month, as these workers have been on half salary for some time now. Fearful of making loans that cannot be repaid, the banks are holding on to their reserves, unwilling to lend more.
This past spring, the new Palestinian Authority government under the leadership of Prime Minister Mohammad Shtayyeh, an internationally regarded economist, decided to forego the tax repayments owed to them under the 1991 Oslo Accords by Israel, after Israel insisted on withholding funds that it estimated the PA would transfer to families of Palestinians convicted by Israel of terror attacks. More recently, the PA was hit with the Trump Administration’s unilateral decision to cancel funding for education and refugee relief, medical care and health services, and more.
Meanwhile, the recent Bahrain Conference organized by Trump son-in-law Jared Kushner, promised a potential pot of gold to the Palestinians if they showed up. They didn’t, of course, because the Trump administration has shown no interest in presenting a political settlement that the Palestinians could accept—that is, one that could lead to a genuinely independent and viable Palestinian state.
When I met with Palestinian Prime Minister Shtayyeh in his Ramallah office, he took advantage of the day of our meeting—July 4—to stress the centrality of that independence.
“The official name is Palestinian Interim self-governing authority,” he said, emphasizing the word “interim” with an exaggerated pronunciation. “That is the official name. Palestinians have accepted this authority because of the letter ‘I.’ We wanted the ‘I’ to go from [standing for] ‘interim’ to standing for ‘independent.’ This ‘I’ for independence should have taken place on May 4, 1999, which did not happen,” he said—a reference to the stipulations of the Oslo Accords.
“How long can a peace process last?” he asked. “For how long can any negotiation last? This peace process has been ongoing for 28 years now. And [during those] 28 years, so many fait accompli have been established. Realities on the ground are invented every day.”
Now, within the limited scope in which it can operate, Shtayyeh’s government is implementing its own realities on the ground, realities that make it less dependent on—and more independent from—Israel.
SHTAYYEH'S PLAN toward a self-sufficiency of sorts befits his economic mindset. As he spoke, he drew models on paper, pausing every few minutes to make certain I was following his economic arguments.
“My responsibility is to break the status quo, through every means,” he told me. “We are dependent on Israel for water, electricity, trade, labor, goods, and so on. Our strategy is the gradual disengagement from this colonial dependency and widening the productive capacity for the Palestinian economy with every support for the national products.
“We stopped medical transfers to Israel and are now building capacities in our hospital and opening channels for referral to Jordanian and Egyptian hospitals. Our Israeli electrical bill is high. Now, we are importing electricity from Egypt to Gaza and from Jordan to Jericho. Small amounts but this is a start. This country is also the best country for moving from electricity to solar. We have 300 days of sun,” he says,
“We are now also thinking of ending this dependence on the Israeli shekel. There are 25 billion shekels in circulation in the Palestinian economy. And, there are four billion shekels stuck in the Palestinian banks that Israel is refusing to take back. So maybe we will be one of the first countries in the world to use encrypted currency. Don’t misunderstand me. I am not talking about Bitcoins. I am talking about encrypted Palestinian electronic currency. We are studying all the options.“
At times, Shtayyeh sounds like a third-way Democrat, stressing the need to move Palestinians off government assistance to become more productive. To this end, he explains, “we have established a special fund and a special ministry called the Entrepreneurial and Empowerment Ministry.” Palestinians are beset by one of the world’s highest unemployment rates for university graduates (and have one of the world’s highest rates of university graduates); Shtayyah’s solution is to shift university graduates and university-bound students toward technical and vocational training that would enable them to work on development projects.
At other times, though. Shtayyeh sounds more like a top-down economic planner. The government, he says, is examining the land under its control—in both the West Bank and Gaza—to create clusters that will link economic sectors to specific regions to capitalize on each area’s strengths. “What is the competitive advantage of Jenin? Agriculture. But Jenin is not actually producing agriculture. Jenin has land available and water available and a university and it has human capital, etc., etc., so we are saying now [it should focus on] agriculture only. Every piece of land that is cultivatable will be cultivated. We tell the village council, bring your map—this is cultivated and this is not. We will buy the seedlings and we will bring the bulldozer to dig the ditches and we will ask the Arab American University students in Jenin to volunteer as well as every civil servant to dig the ditches and then we hand the keys to the farmer and then we ask the Palestine Investment Fund to establish a marketing company. So, we produce, we develop, and we market. We ask the university to establish an agricultural college there.
“If you come and say I am going to invest in agriculture in Bethlehem,” he continues, “we won’t let you do that. Bethlehem is a tourism cluster—you don’t spoil our planning. Nablus is industrial; Hebron is industrial. Ramallah is government and finance and tech and so on; Jericho is entertainment. Gaza is also divided into clusters,” he says, though of course the gnawing problem of Hamas is still preventing any of this from taking hold in Gaza.
Shtayyeh will need all his economic smarts and political savvy to realize even some of this vision. He received his academic training in the United Kingdom, and was part of the 1991 Madrid negotiating team that met with then-Israeli premier Yitzhak Shamir under the watchful eye of George H.W. Bush’s then-Secretary of State James Baker. His new government was formed just a few months ago, and since then, he has sought to rebuild public support for President Mahmoud Abbas and the Palestinian Authority. The prime minister’s demeanor is academic; he filled our interview with economic terms like “senurage” (the difference between the cost of printing money and the value written on the face of the paper), and “import substitution strategy” (creating your own market of goods). But he also has PLO bonafides from his student days at Bir Zeit University, where he was a leader of the First Intifada, and where he subsequently went on to teach and became Dean of Students.
At bottom, the new government’s program represents an effort to give Palestinians something to do, rather than simply witness, or protest, the ongoing encroachments on their land and lives, while European and even Arab governments do nothing to stop it, or, in the case of the government headed by Donald Trump, enthusiastically abet it. It also represents an effort to revalidate the Palestinian Authority with the Palestinian people, who have grown disillusioned by the PA’s corruption and inability to win independence. The Palestinian leadership needs a vision that will help them dig out of this difficult historic moment. It needs something for people to do. “No” is not a program, as I once learned in my own days as a leftist activist.
THE ISRAELI PUBLIC has essentially put the occupation on a back burner. It is a non-issue, at best, in the current rerun of the Israeli election slated for September 17, with an electorate that has moved to the right, and the current Netanyahu-led government floating (along with its allies in the Trump administration) the once-forbidden idea of annexing the Israeli-controlled parts of the West Bank. The Arab states, while still holding to their agreement not to formally recognize Israel without a two-state solution, are nonetheless playing a public game of footsy with Israel.
Many Palestinians—intellectuals, activists, and particularly the young, both in the West Bank and around the world—have despaired of a two-state solution and now favor one state, as an inevitability with a state emerging with a Palestinian majority. The PLO leadership and the PA under Shtayyeh, however, still firmly hope for the two-state solution. “In one state, all things are not equal,” said longtime PLO official and current head of the PLO Department of Diplomacy and Public Policy, Hanan Ashrawi when I met with her at the PLO’s headquarters. Population numbers, she pointed out, don’t necessarily translate into corresponding levels of freedom and power. For now, the Palestinian government believes that the way to get to two states is for the Palestinians to practice the disengagement they’ve embarked upon and the greater self-sufficiency they’re laboring to create.