MAS Proposes Pathways to Palestine’s balanced integration into the global economy to the Conference on Reform of the International Financial Architecture
In his statement at the “Conference on Reform of the International Financial Architecture”, organized by the IDEAS Network in Rio de Janiero, Brazil from 7-9 August, MAS Director General Raja Khalidi proposed several principles for Palestine’s future balanced integration into the global economy. He was speaking as part of a panel on “Consequences of Financial Inclusion and Exclusion” to the Conference organized as a preparatory event for the forthcoming Social Summit in Brazil, attended by leading economists and development practitioners from the global south .Khalidi’s statement was delivered by pre-recorded video as his participation at the Conference was not possible given the current conditions in Palestine and the region.
Khalidi noted that Palestine ‘s economy has always been a strange hybrid of inclusion in the global economic system and exclusion from the multilateral trading and financial system. Palestine has been included as an open economy, but subsumed within that of Israel and its international trade and financial relations, and subject to rules and crises of global economy, and to Washington Consensus policy commitments. However, Palestine has been excluded from international multilateral economic institutions and from recourse to any form of policy space (monetary, fiscal, investment or trade).
He explained that Palestine been included in the global economy through several channels:
- A customs union with Israel that is only part of a skewed and imposed economic union, featuring no Palestinian monetary or fiscal policy space;
- Adoption in 1994 of a commitment to a free market economy (subsequently enshrined in the Basic Law of 2004) and a neoliberal social and economic agenda in conditions of structural market distortions;
- Pursuit of an inappropriate or unfeasible development policy (export led, and hence import-open, without much to export or able to export), ignoring industrial and agricultural productive base, and unable to deliver social justice
Meanwhile he added that Palestine been excluded from the multilateral economic system and financial architecture by the nature of its commitments under Oslo/Paris within Israel’s economic envelope, agreed for only a 5-year interim period but which have been prolonged indefinitely. The cynical position of the international community after the second intifada has been to place new conditionalities on Palestine, security and financial, calculated to prolong an adverse and insincere peace process. This in turn allowed the international community to deny Palestinian sovereignty: under the pretext of an unresolved statehood, membership in international economic institutions was easily dismissed. Hence Palestine has no resort to any international economic rules affecting trade facilitation, or sovereign borrowing, except for those imposed by the global financial system on Palestinian banking system to control illicit financial flows.
He emphasized that the core missing component in this unbalanced exposure is of course that of sovereign governance. That status remains denied to Palestine 75 years after Israel declared its sovereign state and built its self-reliant and highly productive economy. Meanwhile, Palestine was reduced to a prolonged confrontation with a settler colonial campaign, in waves over the decades, that has only grown fiercer and wider and more powerful in recent years, and more brutal and unabashedly racist during this war.
Khalidi recalled that the world has borne witness over ten months to the terrible war that Israel refuses to halt and he stressed that economists could find few conventional theories to analyze or methodologies to measure its socio-economic impacts. Instead he said that new concepts are necessary to understand the the economics of genocide. These, he said, included the overriding Israeli war aim of making Gaza unlivable, through innovative and destructive strategies, described today by scholars, humanitarian agencies and UN experts by concepts such as weaponization of famine, domicide, spatiocide, scholasticide and Sociocide
In light of the current historic juncture whereby sovereign statehood remains a Palestinian strategic goal, Khalidi suggested that a South-South agenda to enable Palestinian balanced integration into the global economy and protect its economic integrity could include four vital initiatives that could produce concrete changes in the political landscape and in prospects for peace and justice.
- Supporting the establishment of sovereign economic functions to precede statehood, independence or even resolution of the conflict, including customs borders, regional trade and investment agreements and greater domestic fiscal autonomy.
- Financial sanctions against Israel in retaliation for financial and economic collective punishment practiced against Palestine
- International fiscal solidarity: according State of Palestine sovereign borrower status in multilateral financial institutions and development banks, to enable access to finance for development and reconstruction
- Swift moves to grant Palestine observer member status in the WTO in its capacity as “a separate customs territory”