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In economics we are one nation


November, 2014

There is a feeling amongst professionals and specialists that Israel will allow the entrance of a couple thousands of Palestinians to work inside the country, if everything goes well and stays stable. This is the first sight of a non-official understanding between Israel and the Palestinian Authority that will allow the permission to Palestinians, with no background problems and of a certain age, to pass and work on a daily basis within the Israeli economy. Ignoring the situation in Jerusalem, it looks as if the first steps of the Fatah-Hamas unity government in the economical field are smoothly making their path and becoming apparent.

Recently, there have been insights that the Palestinian government is going to issue the salaries' payments of the 45 thousands of Hamas employees that didn’t get their wages in the last couple of months. The money contributed by the Qatari government seems to be ready for delivery, which can only mean that there is a development of the practical relations taking place at the Keren Shalom Gate, operated by the Ramallah government who will influence the process of normalization.

There is no doubt that at the political level there is a total freeze, accompanied by certain erosion in the relations between the parties that are working on the clash path, however, in the economic sphere we can certainly witness some kind of cooperation, and even signs of normalization. The West Bank and East Jerusalem have long ago become an integral part of the Israeli economy and activity. Indeed, 66% of the imports destined to the Palestinian territories come from Israel, and 81% of the Palestinian export goes to Israel. However, while the export activity from Israel to Palestine remains important to Israel, at the same time, it stays quite marginal.

Economically there is no border between Israel and the West Bank. Although there is a physical fence between the two tens of thousands of Palestinians currently work in Israel and the settlements. Although there is quite a significant effort to control the transactions of goods from the West Bank into Israel, these appear to be sometimes ineffective and to even reveal some flaws. As such, the "economic lows" remain stronger than the politics, and so when the wages of the Israeli professionals are three times higher than those in the West Bank, fences become obsolete and lose all kind of effectiveness on the ground. Sometimes the cost in time and money of passing goods through official channels (checkpoints) lead merchants to try and bypass them; in such situation, the governmental policy should be reconsidered.

Finally, if the same situation of goods and workers flowing in from the Gaza Strip is given, the same principles that work for the ongoing bilateral business between Israel and the West Bank might also apply to this side.