Let’s help the Palestinian economy to grow

By Douglas Alexander, May 22, 2008

This week’s Palestine Investment Conference can change the face of the region

The path to peace in the Middle East is as rocky as it is long. Progress has been arduous, sometimes non-existent, and it is not surprising that at times hope has fallen by the wayside.

Today, once again, we are at a fork in the road. One route leads to continued conflict, the other potentially to lasting peace. For everyone in the region, that would be a great prize. After decades of bloodshed and hatred, there is a chance of a brighter future.

A political settlement is, of course, the key. The Annapolis negotiations helped put that back on track — however shakily — but they also set in motion a parallel and equally important economic process.

I believe that a two-state solution, with Israel secure in its own borders, can only come about if the Palestinian Territories can stand on their own two feet financially.

Gordon Brown has announced that Britain is ready to underpin the peace process with up to £243 million over the next three years. We have already provided £55 million of this in 2008. But there is a limit to the impact of aid. Yes, we can help tackle the humanitarian crisis in Gaza, and we can assist the Palestinian Authority in trying to establish stable government in the territories. But aid cannot by itself bring prosperity.

That’s why I travelled to Bethlehem this week to show the UK’s support for a gathering of more than 1,000 international business leaders. If successful, the Palestine Investment Conference could transform the economic prospects of the region. Two-hundred projects, worth up to £1 billion, have been put forward in an attempt to create not just profits but jobs and infrastructure.

For too long, too many Palestinians have relied on an inefficient public sector for their livelihoods. Prime Minister Fayyad is tackling this through a bold reform agenda. This conference is an attempt to create the beginnings of a thriving commercial sector, to harness the entrepreneurial spirit not just of global companies but of the Palestinians themselves. By showing that there are opportunities in an untapped market, we can reverse years of economic decline and foster new levels of prosperity.

I have announced a £3 million project to match funds raised by small firms that wish to expand and to support business organisations dedicated to increasing productivity and exports. Britain has already committed £10 million towards building 30,000 affordable homes in the West Bank over the next five years. With others, we are working to reduce the cost of mortgages and allow people on limited incomes to buy their own places to live. We hope that too will act as a confidence-building measure to stimulate private-sector investment and provide jobs.

Most of the investors attracted to the Bethlehem conference are from the wider Arab world, Europe and the United States. There is no reason why this new market should not also be attractive to British firms which are active in the Middle East.

Prosperity in the Palestinian Territories will also benefit Israel. Both sides would share the economic proceeds of the peace dividend that an end to conflict would bring.

But there’s the rub. The Palestinians can only prosper if they are allowed free movement of goods and people. The Israelis will only contemplate that if their citizens are not under threat of suicide attacks or being targeted by missiles. That may sometimes seem like an impossible task. But the international community, Tony Blair and the Quartet are working hard with regional leaders to keep the peace process on track. It is not easy and to have any chance of success they need to know they have economic muscle behind them.

There is no shortage of international goodwill. In Paris last year, donor countries pledged almost £4 billion to support the search for peace. We are lobbying hard to ensure that those promises are matched by action.

Success is not guaranteed. Years of violence have entrenched bitterness and mistrust on both sides. But those committed to peace can help break down the barriers and together we can shine the light on the road ahead.

Douglas Alexander is Secretary of State for International Development

Last updated: 11:17am, May 27 2008