x Abu Dhabi, UAEWednesday 17 January 2018

A 'Marshall Plan' for the Middle East? Not quite

Tony Blair has US$4 billion to spend in the Palestinian territories.

John Kerry, centre, says the Palestinian economy would benefit immensely from the $4 billion investment plan. Jim Young / AP Photo
John Kerry, centre, says the Palestinian economy would benefit immensely from the $4 billion investment plan. Jim Young / AP Photo
Tony Blair has US$4 billion to spend in the Palestinian territories. That much we know, because no less an authority than John Kerry, the US secretary of state, announced the fact at the World Economic Forum at the Dead Sea resort in Jordan at the weekend.

What we don't know, as yet, is where that enormous sum is coming from, nor how it will be spent, nor whether it will, on its own, advance the cause of peace between Israel and Palestine at all.

As major initiatives go, this one, under the banner of "breaking the impasse", is so vague and undefined that much more information is required before economists, business strategists and executives can begin to assess the effect it will have on the regional economy, let alone on the stalled peace process.

Mr Kerry talked up the repercussions of the $4bn investment plan. He said Palestinian GDP would grow by 50 per cent over three years, unemployment rates would fall by two-thirds, and the Palestinian wage rates would almost double.

He also held out the prospect of a regional financial centre in Israel, Palestine and Jordan in a place where few businessmen want to travel at all at the moment.

Certainly the region needs an economic stimulus. Currently, some 40 per cent of the Palestinian economy is supported by donor aid of one kind or another. Such an injection into Palestine with a population of only 4 million would, if handled properly, have an immediate effect on the economic well-being of citizens, not just in the occupied West Bank, but should spillover into the economies of Israel and Jordan too.

Nonetheless, the initiative falls short of being the "Marshall Plan" for the Middle East some experts believe is required.

For one thing, it is as yet unclear as to where the money is coming from. Certainly it is not from the 300 or so businessmen from Israel and Palestine assembled at the forum to call for renewed peace talks. They may be backed by billionaires, but even they would have trouble laying $4bn on the table at the drop of a hat.

Maybe the money is from the US government. It represents a relatively small sum for the Americans, who give many more billions in military aid to the Israelis.

Yet, from the tone of Mr Kerry's speech, it does not seem like government money. He talked about the "need to partner with the private sector", and called for a "new model for development, with an understanding of the role economics can play".

That is where Mr Blair comes in. He is the representative of the Middle East "quartet" of nations working for peace, but has spent the past few months assembling a group of business leaders to make the initiative "real and tangible", Mr Kerry said.

This group, which has undertaken the work voluntarily, consists of corporate executives, renowned investors, and business analysts. It has also been discussed with the authorities in China, Japan, the European Union and Brazil, and is backed "100 per cent" by Barack Obama, the US president.

This seems to suggest a mixture of venture capital and foreign direct investment as the means by which the cash will be injected into Palestine.

But doing the financial sums would be very tricky in a region where the investment could be entirely wiped out in one serious escalation of the military situation.

And this seems to be the main reservation regarding the $4bn plan. As virtually all the participants at the forum stated, economics on its own can never work properly without the political dimension, which Mr Kerry said remained his "top priority".

Is there a will on the part of Israeli and Palestinian political leaders to heed the calls of their business and financial leaders and to restart serious peace talks? Judging by past and current intransigence, the odds do not look good.

A "Marshall Plan" for Palestine would probably only work in a situation where peace had already been restored. That still seems a long way off. Where there is a lack of political will, business and economics can only do so much.