Dislocations Are Foreseen; Palestinians Seek Self-Reliance : Arab Uprising May Upset Economic Patterns

A year ago, the Jordan Plastic Co. here worked three shifts, producing a bounty of goods for the home: garbage cans and bright wastepaper baskets, picnic plates and baby bathtubs with a built-in soap tray.

Today, Tanas Abuaitah, a Palestinian, sits amid resounding silence at his family’s hilltop factory. It is shuttered; its 200 workers are out of luck. No demand, too much stock, pressures from Palestinian militants, hassles with Israeli authorities. Close the door.

“It’s not only that we’re losing lots of money, but also a good name that took 30 years to build,” said Abuaitah, whose factory is one of several closed or working at reduced output in the West Bank.

Israelis Feel It, Too

A few miles away, in a Jerusalem suburb, contractor Nachum Ballass, an Israeli Jew, dourly surveys the skeletons of four private homes. They are way behind schedule. Honoring frequent strike calls from underground Palestinian leaders, Ballass’ Arab workers have been showing up only about three days in five.

“You lose work, you lose money. I don’t know when we’ll finish,” the contractor said. “Worse, people are beginning to have second thoughts about big investments like a new home.”

The revolt in the West Bank and the Gaza Strip, lands occupied and administered by Israel for 21 years, is a losing business for Arab and Jew alike.

In a struggle so old, so political, so fundamental for both sides, money is not paramount. Still, hundreds of millions of dollars have vanished in swirling thunderheads of rocks, tear gas and bullets in recent months alone.

As unrest continues, analysts believe that current losses may presage major economic dislocation for both sides, with the Palestinians having the most to lose, but perhaps also the most to gain in the long run.

Today, the cost is as tangible as out-of-work Palestinian plastic makers and unslept-in Israeli hotel beds. It is as intangible as the refusal of a young Israeli to cross anew into Arab East Jerusalem, where she once shopped.

“I think we Palestinians understand that strife for political gain carries an economic price. It is a sacrifice we are willing to pay,” said Mahdi Abdul Hadi, who heads a Palestinian think tank in East Jerusalem. “Revolt is being institutionalized. We are beginning to examine ways to achieve not only the economic independence of the territories but also the social and educational independence.”

Hadi and other analysts say that a Palestinian determination gradually to seek economic self-reliance is a major consequence of the revolt. However discomfiting in the short run, it will pay dividends in the years ahead, they believe.

‘Fat and Dependent’

Israeli analyst Meron Benvenisti, a former deputy mayor of Jerusalem, agrees with the analysis. “The Palestinians have allowed themselves to become fat and dependent on Israel. Now, they are beginning to realize that it is time to build their own economic power base. Israel won’t like it,” he said.

Since Israel conquered the territories in 1967, both sides have become accustomed to economic interdependence. Both have profited from it: nearly full employment for the Palestinians; cheap labor and a larger market for the Israelis.

According to Israeli government figures, around 100,000 of the occupied territories’ 260,000 workers have jobs in Israel. Their pay accounts for one-third of the GDP (gross domestic product) for the 1.5 million people in territories where small business is the rule: the Jordan Plastic Co. is one of only five Arab-owned enterprises on the West Bank to employ more than 100 workers.

Inside Israel, the Palestinians generally work at low-level manual and clerical jobs that Israelis spurn. They collect the garbage, repair the streets, make the deliveries, man lower levels of the public administration. They are also the blue-collar backbone of some Israeli industries.

Now, in their anger, the beginnings of separation are apparent in tacit boycotts. No Palestinian tomatoes for some Israelis. No Israeli cigarettes for some Palestinians. Palestinians drink RC Cola, made in the West Bank, not Coca-Cola, made in Israel.

People on both sides seem certain that the movement toward economic separation will grow and with it, a grass-roots impact that demands some new arrangements.

Already, some Palestinian workers, like Ballass’ masons and carpenters, are hurting because they stay off the job on strike days. About 300 Palestinian police officers are out of work after they resigned as a political gesture.

Delivery trucks bearing Israel’s distinctive yellow license plates are inviting targets for stones in the occupied territories. For their part, Palestinian entrepreneurs like Abuaitah are whipsawed by conflicting priorities. They must balance their commercial instincts and their political sympathies.

They face on the one hand solidarity demands from Palestinian leaders that taxes be withheld in protest and the Israeli hard-line insistence on the other that no business-as-usual permits--for transport, import, export--can be obtained without tax clearance.

The Israeli government, which, like private business, has come to rely on the Palestinians, says about 80% have returned to their jobs. It warns that employment in Israel is a privilege that Palestinians could lose. Already, several hundred Portuguese workers have been imported for some factory jobs.

Much Soul-Searching

Even as the Palestinians rethink their economic future, so is there also soul-searching in Israel, where per capita income is about five times that of the occupied areas.

“Occupation has become expensive. The question is no longer whether we should be ruling 1.5 million Palestinians on the West Bank and Gaza but whether we can afford it,” said Finance Minister Gaad Yacobi, who favors a negotiated withdrawal.

Yacobi recently estimated that the cost of the insurrection to Israel has been around $650 million so far, counting actual increased expenditures for the army and police plus losses of tax revenue and tourism. Others think it is less, but nobody imagines it is insignificant.

There are hard-to-see costs, like the dislocations caused by the increase of up to 65 days of military service by Israeli reservists, and painfully visible victims, like the limping tourism industry. After a blizzard of hotel cancellations, estimates are for a slump of at least $300 million this year.

“It is ironic that those who have been quickest to cancel have been American Jews, and doubly ironic that those who have canceled least are Germans,” said Shlomo Maoz, economics editor at the English-language Jerusalem Post.

Israelis hope, amid signs the revolt is waning, that tourism will rebound in the fall, but long-range structural problems confront some other industries.

Like the textile industry, for example, which has grown using cheap labor behind high tariffs, construction is a conspicuous example of reform waiting to happen.

Before the disturbances began, Arabs made up more than 40% of the work force in the industry where, by government estimate, productivity fell 25% to 50% in recent decades.

Israelis completing their service in the armed forces are being offered incentives to work in construction and other industries most vulnerable to Arab labor pressure.

“It is clear that the presence of Arab workers in such a large scope has been a negative social development. We must reduce our dependence on this work force . . . to employ Israelis in jobs which in recent years have been filled by Arabs,” said Shlomo Amir of the Labor Ministry.

Change will likely come incrementally, but it seems clear that as the price of rebellion, both sides are determined to recast the pattern of economic relationships that has served them well for two decades.