Kerry’s $4-Billion West Bank Plan Faces Hurdles, Skepticism

By Patrick Goodenough | May 29, 2013 | 4:44am EDT

Secretary of State John Kerry addresses the closing plenary session of the World Economic Forum in Jordan on Sunday, May 29, 2013. (Photo; State Department)

( – Secretary of State John Kerry’s announcement of an ambitious plan to secure $4 billion worth of investment to boost the West Bank economy--and thus peace efforts--comes just weeks after the resignation of the Palestinian politician most often credited with providing reassurance to foreign investors.

Attracting the type of investment Kerry is talking about to an administration lacking the oversight of outgoing Palestinian Authority (P.A.) prime minister Salam Fayyad will be an uphill battle, especially at a time of serious regional instability and uncertainty.

Fayyad, a U.S.-educated economist and a former International Monetary Fund official, resigned in mid-April despite personals appeal from President Obama and Kerry.

His departure signals the end of a long and frequently tense working relationship with P.A. chairman Mahmoud Abbas, with whom Fayyad was often at odds over governance issues. Abbas also viewed the prime minister – reviled by Hamas – as an impediment to his attempts to reconcile with the rival group that controls the Gaza Strip.

Abbas’ Fatah party has a history of financial mismanagement and corruption (Fayyad was not a member), and also lacks political legitimacy – presidential and legislative elections are more than three years overdue.

Still, Kerry sounded an optimistic note when he spoke at the World Economic Forum in Jordan on Sunday about a plan which, he said, experts believe could boost the size of the P.A. economy by up to 50 percent within three years, reduce unemployment by almost two-thirds and raise average wages by 40 percent.

He said business leaders and experts were looking to mobilize $4 billion of investment, with the aim of boosting boost tourism, agriculture, new home construction and other sectors.

The plan, to be coordinated by Mideast Quartet envoy Tony Blair, was not a substitute for advancing the Israeli-Palestinian peace process, Kerry stressed.

“The economic approach is not a substitute for the political approach. The political approach is essential and it is our top priority,” he said. “None of it will happen without the context of the two-state solution.”

State Department spokesman Patrick Ventrell said Tuesday the emphasis in the initiative outlined by Kerry was on “leveraging the private sector.”

“Any additional U.S. government assistance would be from existing funds, but this is really about leveraging private sector assistance to spur economic growth in the Palestinian territories,” he said.

$4 billion, incidentally, is roughly the value of the bilateral assistance the United States has given to the P.A. since the Oslo accords established Palestinian self-rule in the West Bank and Gaza Strip in the mid-1990s, according to the Congressional Research Service.

Over those two decades the Palestinians have become among the world’s largest per capita recipients of international foreign aid.

In requesting congressional approval for that aid, successive administrations have cited among its three main priorities the creation of “a virtuous cycle of stability and prosperity in the West Bank that inclines Palestinians toward peaceful coexistence with Israel and prepares them for self-governance.”

Secretary of State John Kerry meets with Palestinian Authority chairman Mahmoud Abbas last month. (AP Photo/Evan Vucci, File)

Similarly, in his comments in Jordan Kerry spoke of the need to “create the conditions for peace,” while Blair in a statement afterwards said the plan was “intended to create the positive surrounding environment for the re-launch of the Israeli-Palestinian political negotiations.”

Kerry said both Abbas and Israeli Prime Minister Binyamin Netanyahu “support this initiative,” but a day later a senior economic advisor to Abbas sounded a skeptical note.

“The Palestinian leadership will not offer political concessions in exchange for economic benefits,” Mohammad Mustafa said in a statement.

The economic component, he said, must be “part of a political framework that will ensure the creation of a Palestinian state based on the 1967 borders with east Jerusalem its capital and the rights of refugees and a reference to a political solution – these are the priorities.”

On Tuesday, Mustafa told the Palestinian news agency Ma’an that while the P.A. leadership welcomed Kerry’s initiative, “we told him that the political element should go side by side with the economic element because part of the establishment of an independent Palestinian state must be an independent economy.”

Some Israeli reaction was also doubtful.

“If billions of dollars have not bought P.A. support for a two-state solution in 20 years why should anything change now?” Barry Rubin, director of the Global Research in International Affairs Center in Israel, wrote Tuesday.

“Predictably, the P.A. reaction was that Israel would have to give still more concessions before it would do Israel and the United States the favor of returning to negotiations so that it could obtain a state, even though it is so weak that these two have to prop it up and it only controls half the territory it is bargaining for,” he said. (Abbas lost control of the Gaza Strip to Hamas in 2007.)

“No matter how much time and money Kerry takes to restart the ‘peace process’ nothing is going to happen,” Rubin said. “It is remarkable that the West still doesn’t understand this. Or perhaps it does and is putting in all this effort for show?”

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