This article is based on interviews conducted between 1994 and 1996 with 30 Palestinian businessmen in the United States, 25 in Canada, 25 in Syria, 57 in Egypt, 54 in the United Arab Emirates, 15 in Lebanon, and 25 in the United Kingdom.
The human and economic resources of Palestinians living outside of the West Bank and Gaza Strip have never been surveyed with any degree of accuracy. This has been largely due to the dispersion of Palestinians across the globe and also to the priority given, until recently, to political affairs on the Palestinian agenda. However, following the Israeli-Palestinian Accord of September 1993, the need to develop the local economy in order to ensure a lasting peace has become clear.
Within this general framework, the (French) Center for Economic, Legal and Social Research and Documentation (CEDEJ) in Cairo, has undertaken a vast research program to evaluate the potential contribution of Palestinian businessmen from the diaspora to the economic development of the future Palestinian state. This article will employ case studies to illustrate the relationship between Palestinian businessmen in the various countries in which they are based as well as their relationship with the Palestinian National Authority (PNA).
Elements of Palestine’s diaspora economy
A number of studies suggest that for ethnic minorities, the choice of economic activity and its outcome: size, growth, performance, is governed by the interface between available ethnic resources and an enabling environment. By “ethnic resources” we mean the collective resources skills, capital, expertise, competence and clientele to which entrepreneurs from a certain ethnic group have privileged or preferential access.
In this respect, it is difficult to speak of just one type of economic orientation for the diaspora’s Palestinians. The Palestinian economy is fragmented and its presence is felt in many diverse areas, but one type of activity is widespread: commercial enterprises. Indeed, about half of the businessmen surveyed were active in this field. The predominance of trade can be explained by the fact that it requires very little startup capital, relies on existing Palestinian networks created over successive migratory waves, and does not call for the sort of long-term commitment required by an industrial enterprise. For example, industrial activities among Palestinian immigrants are marginal in North America, where immigration has resulted in a dearth of capital and loss of home-based skills. In Egypt and the United Arab Emirates, by contrast, industry represents 28 percent and 14 percent of all Palestinians’ activity. Two major contributing factors, mentioned by interviewees, have been geographic proximity and the prior existence of business links between Palestine and these two Middle Eastern countries.
The United Arab Emirates is an exceptional case, with construction and public works accounting for 36 percent of total economic activity. The high concentration of Palestinian engineers and entrepreneurs in the UAE (28 percent) is a result of the construction boom in the petro-monarchies of the Gulf. A second characteristic of Palestinian businessmen in the Gulf is their diversification into a wide array of activities. Profits from one’s main activity are often invested in a second activity requiring little experience, such as real estate. Diversification is also geographic, and investments are made in different countries, particularly in the United States. In effect, the 1990-1991 Gulf War has created a climate of insecurity amongst Palestinians residing in other Arab countries, since they often have no clear destination in the event of expulsion. The War has created an overall psychology of “transience” alongside a feeling of “impermanence.” This explains, among other traits, the preference of Palestinian immigrants for multiple investments and diversified business locations.
The survey has largely confirmed the “self-made” image of Palestinian businessmen. In North America, most have started their businesses from scratch without family help. In the case of Arab countries, however, geographic proximity has facilitated the transfer of capital: such is the case of 14 percent of Palestinian businessmen in Egypt. In the Gulf countries, though farther a field, the figure rises to 18 percent. Such higher levels in the Gulf may be due to a younger community aided by family and relatives already established in the local diaspora. Nevertheless, a major feature distinguishing Palestinian businessmen from their local counterparts in the Gulf is that many of the latter rely on inherited sources for their financial success.
The question then arises as to what extent the dispersion of Palestinians around the world has hampered the reproduction of certain social structures and checked the perpetuation of traditional Palestinian elites. To be sure, prominent Palestinian families can be found in Jordan as well as in Egypt, both of which are adjacent to Palestine, but less well-known families are also present in other countries where Palestinians have resettled in the past.
Hence, we should look into the diaspora and its impact on social reproduction. It seems that contrary to the case of local entrepreneurs in the Middle East, the persistence of prominent families in economic affairs has been greatly affected, and Palestinian society has generally been unable to reproduce its traditional economic sociology. Palestinian economic elites abroad are mostly attracted to those liberal occupations suited to the modern age, and have thus integrated into the new forms of the meritocracy.
The problem of borders acting as a constraint to Palestinians has deprived them of many possible advantages which could be made available by their kinship networks. Palestinian enterprises are generally restricted to the local level. Those having a regional, Arab or international reach are the exception, yet they are too important to be overlooked. Examples are: Talal Abu-Ghazaleh International (TAGI) in accounting services, the Arab Insurance Company, the Agricultural Material Company, the Arab Bank and the Consolidated Contractors Company.
Investment in Palestine: A “wait-and-see” attitude
In addition to numerous fringe income sources allowing many Palestinian families to subsist in the Occupied Territories, there are also large-scale investment projects. According to Jamil Harrara, Director-General of the Palestinian Investment Office, 221 investment projects launched by Palestinians both at home and abroad have been signed by the PNA and are already underway. But what are the characteristics of these individual investment projects? Based on interviews with Palestinian businessmen and on personal observations, a number of conclusions can be drawn.
First, the general tendency is not to invest individually. In Canada, there are practically no such projects, and in the United States there are only three. Also, businessmen tend to invest more as we approach the Palestinian territories. Those residing in Egypt are now implementing 19 projects led by eight entrepreneurs from among 57 businesses, in the case of Palestinians living in the United Arab Emirates and Egypt, and mostly among refugees of the 1948 War who do not have the right to visit the Palestinian territories. Incidentally, this factor lies at the root of the refusal of our respondents in Syria to invest in Palestine, since the local Palestinian community stems from the exodus of 1948.
Third, a number of respondents have not felt an incentive to look into potential investment opportunities because they are waiting until the peace process rectifies the ambiguous and disadvantageous clauses of the accords signed so far. Although this view is only marginal in the United States (nine percent), it is significant in Canada (35 percent). The reasons for this large gap are tied to the nature of the integration of Palestinians in Canada, and also to the geographic origin of Palestinian businessmen. In Canada, 68 percent of our interviewees are refugees coming via other Arab countries, as opposed to only 20 percent of our respondents in the USA. In other words, they have left Palestine in their childhood and have kept few - if any - family or economic ties with the Palestinian territories. Their knowledge of the land is often very limited, and access to the territories is not easy. Nonetheless, this has not kept them from researching or seeking business opportunities in countries like Lebanon and Jordan, where they lived before moving to North America. The “wait-and-see” attitude was noticed in 25 percent of those living in the United Arab Emirates and Egypt.
Fourth, the enterprises established in the Palestinian territories have spanned all spheres of economic activity, namely industry, commerce, construction, finance, services and tourism. Particular emphasis has been laid on the manufacture of furniture, shoes, mattresses and olive oil presses, and also on cement mixers, hotels, housing, business concerns, banks, and so on. The non-implemented projects currently under evaluation are equally varied.
Even though investment has been made in a number of fields, few of the projects are in “productive” enterprises. Although it is true that housing construction projects are numerous, this does not necessarily mean that businessmen are, for the most part, looking for investment opportunities with short-term profitability. Investment conditions in other fields of activity remain extremely complex and volatile: requests for licenses for economic projects must still be submitted first to Israeli authorities; decisions are made primarily on political grounds - based on the current status of relations between occupation officials and the PLO - and only secondarily on economic grounds; in trade, imported products must not have Israeli equivalents, even if the latter are more expensive; moreover, products must be submitted to Israel’s Center of Measures and Standards (CMS), which is apparently an extremely discriminatory agency, according to sources.
As for industrial projects, conditions are even more restrictive. For instance, if a factory requires a high consumption of water, the project is immediately discarded. Over and above administrative problems, respondents have also complained about the lack of the necessary infrastructure for industrial establishments, such as roads, energy and water. All of these arguments taken together do not provide a justification for those Palestinian businessmen who have refrained from investing in industry or other “productive” sectors, but preempt a biased or judgmental analysis of the “lack of patriotism” of which the Palestinian economic elite of the diaspora may be accused.
Anonymous investment societies
In addition to individual efforts by Palestinian businessmen, a collective mobilization of resources has also taken place. A number of stockholding companies have been founded, chief among them are: the Arab Palestinian Financial Foundation (Beit al-Mal al-Arabi al-Falestini), the Palestine Bank for Investment, the Arab Palestine Investment Company, Jericho Motels Company, Palestine for Investment and Salam International Company (under implementation). The impact of such societies has been limited when compared with that of the Palestinian Development and Investment Corporation (PADICO), founded by 140 prominent local and diaspora Palestinian businessmen with a capital of US$200 million. The weight of this company warrants a more detailed analysis below.
On the initiative of an ambitious group of Palestinian businessmen, PADICO was created in October 1993 in order to take the leadership of the Palestinian private sector and to participate in the reconstruction of an economy devastated by occupation. The idea of implementing large-scale economic plans was welcomed by a group of 700 Palestinian and Arab entrepreneurs. Rules and regulations were set up so that no individual investor could dominate the company, which has been cast as an expression of the national rather than the interests of any particular group. By the same token, the minimum individual participation was set at US$25,000 for stockholders and US$100,000 for founding members so as to bypass small investors who would not be in a position to bear great risks and who would eventually demand compensation. The company motto is not to turn rapid economic profits, but rather to seek social benefits by investing in large-scale ventures that exceed the ability of individual entrepreneurs.
PADICO has bridged the gap between local and diaspora Palestinians by establishing branches in which home investors can participate even with small amounts, such as the Jerusalem Tourist Investment Company, the Palestine Industrial Development Company, the Palestine Real Estate Investment Company, the Itisalat Company, the Palestine Exchange Market Company, and so forth. At present, and despite initial trials and errors, numerous projects drafted by these companies are already at the implementation stage.
In concluding, the investments conducted individually or collectively by Palestinian businessmen of the diaspora remain modest relative to the total financial might of the Palestinian bourgeoisie, yet they are very significant when compared to the overall foreign aid promised so far (US$2 billion to be disbursed over a period of five years). Palestinian businessmen are apparently not waiting for a Marshall Plan before they start building a Palestinian entity, as was hoped by the leaders of the PLO or even the Palestinian population in general. What they expect from the West is political rather than economic support. They have also learned to take the initiative as a private sector, without requesting assistance from the state.
What will the ability of such diaspora networks be to focus on the public interest rather than to concentrate on their own “private gain”? It is still too early for a precise answer. The Palestinian bourgeoisie has a high degree of independence from the “quasi-state” represented by the PLO, and benefits from a great deal of room for maneuver, since it is supported by a powerful civil society in the Occupied Territories. It has the option to cooperate either with the PLO or with a range of associations and NGOs that have flourished in the absence of a state, especially during the Intifada. An alliance between such NGOs - whose dynamics has given rise to a process of social, political and economic mobilization - and Palestinian businessmen would forge a visible and powerful force capable of pressuring the PLO into taking its views into account. Although the economic activities of some Palestinian businessmen are mixed with national concerns, their background - be it leftist or Islamist - has nonetheless a great measure of impact and importance.
Bibliography
• Blin, Louis. 1994. “Les Entrepreneurs Palestiniens”. In Philippe Fargues and Louis Blin (eds.), Economie de la Paix en Proche-Orient. Paris: Maisonneuve & Larose-CEDEJ.
• Hanafi, Sari. 1994. “Les Entrepreneurs Palestiniens en Syrie”. In Fargues and Blin, op. cit.
Sari Hanafi is a sociologist now living in Egypt. Dr. Hanafi is currently in charge of the “Diaspora Palestinian Economy” project at CEDEJ, a French research institute in Cairo.