A Genealogy of Oligarchy: Part I

*Photo courtesy of Jakob Rubner (@mac_jack)

In Money, Power, and Their Discontents...", we sketched a schematic of economic power in the contemporary West Bank.

There, we began by delineating the vast holdings of a handful of elite families. After showing how these actors partner with elements inside the state to form and operate a commercial cartel, we proceeded to establish why this cartel's profit-oriented behaviors can only but produce social, developmental, and political failures for the Palestinian people.

If the purpose of the previous analysis was to disassemble the variety of capitalism institutionalized in the West Bank today, here we will aim to explain how this formation took shape in the first place.

Drawing on the work of a number of outstanding scholars and journalists¹, this will require that we first unwind the confluence of events through which Fatah—the party-movement previously stewarded by Yasser Arafat—and Palestine’s capitalist diaspora came together and into power in the occupied Palestinian territories (oPt). In Parts II and III of this series, we will then trace how public policy and foreign interventions were mobilized to bolster each of these parties and to reproduce their local hegemony across time.

Palestine’s Capitalist Diaspora

Those occupying the commanding heights of the West Bank’s economy today are, with a few exceptions, of the Palestinian diaspora, broadly defined. Some amongst these—whether the principal himself or their forebearers—were uprooted from coastal commercial hubs like Haifa and Jaffa in 1947-1948, casualties of the ethnic cleansing plans Ben Gurion had designed and administered in the lead up to partition and Israeli independence. Though spared the trauma of violent expulsion due to their pre-1948 residence inside the West Bank, the other members of today’s economic elite wound up in the diaspora all the same as of the early 1950s.

Distribution of Property in Mandate Palestine, 1945

Regardless of how these men experienced the Palestinian nakba, the losses and disruptions to livelihoods they suffered were, comparatively speaking, slight. This good fortune derived in large part from the individuals in question (or their families) having accumulated significant movable assets—cash, sterling bank deposits, and foreign stocks and bonds—during the final years of the British Mandate, as Pamela Smith has documented. Relatively less reliant on the land itself for income, then, while also being highly educated, English speaking, and intimately familiar with the commercial practices of their former colonial overseer, they were well positioned to capitalize on the new opportunities that would emerge in the early 1950s as oil discoveries increased throughout the region and newly independent states began undertaking enormous investments in infrastructure and public utilities.

Where many of Palestine's well-heeled initially migrated to Beirut (and found great prosperity there, at least for a time), the exile’s march first brought the giants of today’s economy to Amman. Capital of the now-expanded Hashemite Kingdom—which, mind you, absorbed the West Bank and Jerusalem after Israel’s foundation²—the city was not only the heart of Palestine’s political life for a spell but a growing economic entity due to the flows of international aid and development spending allocated to it in the post-1948 period. Cut off from the trade routes that had bound their families to the Mediterranean coast for so long, Amman, like Beirut, offered a welcoming base for the ambitious Palestinian scions then coming of age.

With an eye on energy markets to the east, two such scions—cousins Hassib Sabbagh and Sa’id Khoury—formed the Consolidated Contractor’s Company (CCC) in Amman in 1952 with their partner Muhammad Kamal Abd al-Rahman. After establishing a regional subcontracting arrangement with America’s Bechtel Corporation shortly thereafter, CCC swiftly became the civil engineering firm of choice for western-owned oil and gas behemoths and the petro-monarchies/republics that hosted them. CCC’s first contract was with the Iraq Petroluem Company—owned by a consortium of American, French, and British firms—who tasked Sabbagh et al with building their oil pipeline from from Kirkuk, Iraq to Tripoli, Lebanon. Flush with cash and linked with an ascendant American conglomerate, CCC subsequently won huge tenders during the bonanza that was the (literal) building of the Gulf states, growing into one of the largest construction and engineering firms in the world in the process.

The trajectory was fairly similar for the two future patriarchs of the Masri family, Munib and Sabih.

Munib founded his Engineering and Development Group (EDGO) in Amman in 1956. Though registered in Jordan, the firm’s business also came to center in the Gulf, where it operated as a supplier of equipment and technical support for the many multinational oil and gas companies then descending on Saudi Arabia and the neighboring trucial states. From these foundations, EDGO diversified into a do-it-all engineering contractor—building everything from airports to water and power systems.

Cutting out the Jordanian layover, Sabih Masri registered his first major enterprise, the Arab Supply and Trading Corporation (ASTRA) directly in Saudi Arabia, where he initially tapped into the profit vein of Gulf state building through food supply contracts with the Saudi Arabian Ministry of Defense. Over time, ASTRA moved into hospital construction and medical equipment supply and grew into a genuine multisector conglomerate as of the late 1970s. Leveraging the capital thereby accumulated, Sabih went on to make big plays in the Jordanian banking sector (initially through Cairo Amman Bank, later through Arab Bank). In Amman and in Saudi Arabia, Sabih’s expanding business ventures typically included members of the Sukhtian and Khoury families as junior partners. Their co-ventures metastasized quickly once privatization and liberalization initiatives were forced upon Jordan’s King Hussein in the 1990s.

(Due to the obvious political ramifications, one need make note that Masri, like Hassib Sabbagh and Sa'id Khoury, also profiteered from the creative destruction of the American war machine in the Middle East. Specifically, subsidiaries of ASTRA were contracted to feed and house Colin Powell’s enormous army when it arrived in Saudi Arabia in 1991, an army that was to soon decimate Iraq. As revealed in his testimony before a New York court in 2014, ASTRA also fed the troops during their war-on-terror campaigns in Iraq and Afghanistan).

The last of the diaspora moguls that would go on to carve out independent territory in Palestine’s post-Oslo economy, Omar Aggad, also made his bones in Riyadh, albeit through hustles that were more commercial in nature. After relocating to the Saudi business capital in 1950, Aggad first worked for the Juffali Group for more than two decades, a time during which he acquired the capital—both financial and social—needed to insinuate himself into the oil-rent financed cornucopia. Eventually launching his own holding firm in 1975, Omar’s Aggad Investment Company grew to contain subsidiaries operating in fields as afar as tile manufacturing, medical equipment supply, and automobile importation, accruing major profits via Saudi’s then booming consumer market. Like Sabih Masri, Aggad also branched into banking and finance through a major equity purchase in Britain’s Smith Barney in 1982.

If each of these Khaliji Palestinians managed to accumulate enormous wealth through Gulf-centric businesses, they nevertheless had ample reasons, material and otherwise, for seeking some kind of return to Palestine.

Though CCC, EDGO, and ASTRA had been major beneficiaries of the Gulf’s lack of local capacity in 1950s and 1960s—a lacking that forced Gulf royals to rely on Palestinian expertise during this initial modernization period—the enormous capital accumulation realized through oil production eventually sufficed to midwife domestic bourgeoisies in Saudi, Kuwait, and the like, along with a number of large state-owned enterprises. With the emergence of these new endogenous social forces and economic entities came a political imperative to feed them. This imperative, in turn, precipitated a series of regional shifts as related to policy, public tendering, and private business practices, all of which were designed to privilege Gulf nationals.

In Saudi Arabia, for instance, government diktats forced the then-American owned Aramco to Saudiize its workforce to the maximum degree possible while informal pressures ensured that subcontracting was funneled to Saudi firms first and foremost. Likewise in Kuwait, new legislation banned non-nationals from establishing banking and financial firms and mandated industrial firms be majority-owned by citizens. For more on this, see Pamela Smith's outstanding research.

Over time, these changes created rigid and discriminatory hierarchies throughout the Gulf’s rapidly expanding economies. While the Khourys, Masris, and Sabbaghs retained privileged positions within these hierarchies, all parties were rendered unmistakably subordinate to the elites of the host nations. As their businesses came to be dwarfed by local (and royally-connected) firms, it became clear to Palestine’s diasporic elite that commercial life in the Gulf, auspicious though it was, would nevertheless always be limited due to the strictures of their non-citizenship.³

In Jordan, meanwhile, though the Hashemites had long treated citizen-businessmen of Palestinian ethnicity quite well, political dynamics introduced following 1970’s brief civil war threatened that tradition of bonhomie, too. Taking a lay of the land by the middle of the 1970s, then, the attractiveness of a state to call their own would have been intense for these men. Mediated by genuine patriotism as well, their simmering economic grievances would henceforth drive them to look for a way home to Palestine.

For different reasons altogether, elements inside Israel and Jordan also had an interest in these western-oriented, embourgeoised Palestinian exiles regaining influence and status within the oPt. In Israel’s case, the businessmen, like Hamas later, represented a potential conservative counterweight that might be leveraged against the various Fedayeen movements who, in spite of their own years wandering the desert, nevertheless remained politically dominant inside the West Bank and Gaza. As for the Hashemites, one need remember that King Hussein still harbored his own claims on the West Bank and Jerusalem up and through the late 1980s. In his eyes, then, the restoration of the patrician class represented the best way to prepare the ground for a renewed confederation between the east and west banks of the river Jordan.

Jordan and Israel’s shared interests eventually coalesced into (quietly) concerted action, though only after Israel first attempted to ease political tensions in the oPt through devolving limited governing powers to local actors. This trial run for Oslo was operationalized through the allowance of municipal elections in 1976. Israel’s gambit quickly proved a strategic disaster when those elections wound up ushering in a group of radical leftist mayors (including Bassam Shak’aa in Nablus, a long time adversary of the Masri family), who used their pulpits to agitate and organize against the occupation. After gathering considerable political momentum and esteem, the left’s rise was only blunted (and temporarily so) after the Israeli military summoned a mix of brutal coercion, terrorism, and targeted assassinations.

Regardless of repression’s momentary efficacy, the Mayors’ tenure had clarified the left’s standing as a common threat to Israel, Jordan, and Palestine’s exiled capitalists. Henceforth, the first two parties in particular began working on an arrangement through which the latter might re-establish an economic and political base in the West Bank.

Their efforts first came to fruition in 1986. On the economic side, the Cairo-Amman Bank, of which Sabih Masri was Chairman, became the first non-Israeli bank allowed to operate in the oPt since 1967, establishing a financial foothold from which it was hoped the exiles might rebuild power. Politically, meanwhile, Sabih’s brother, Zafer, was appointed Mayor of Nablus by the Israeli Civil Administration in January of that same year.

As it played out, the political bridgehead Masri’s appointment was meant to afford the diaspora did not last long. But a few months into his tenure, Zafer was himself assassinated, likely by the Population Front for the Liberation of Palestine (PFLP), one of the leftist party-movements who had deemed him a collaborator with the Israeli military.

At this point, the dangers of direct political involvement were made morbidly manifest. Discerning of the fact that local gains inside Palestine required working in tandem with one of the Fedayeen factions—factions, who, after all, controlled the Palestine Liberation Organization and were collectively regarded as the stewards of the nation by a vast majority of the Palestinian people—the diaspora henceforth sought a partner that might allow them to operate behind the scenes.

Amongst the Fedayeen, Arafat’s Fatah represented the only real option for a coalition mate. Though his movement was no monolith in terms of sociological composition or ideological outlook, its upper ranks were largely of petite bourgeois stock and relatively prudish when it came to matters of social revolution (A number of Fatah’s top lieutenants had, in fact, matriculated there after an initial stop in the conservative and pro-market environs of the Muslim Brotherhood). Class-blind and agnostic on most socioeconomic questions, Fatah’s brand of pragmatic, bourgeois-friendly nationalism presented obvious synergies for exiled capitalists in need of a political vessel.⁴

The two groupings also had priors. It was Munib Masri’s interventions with the King of Jordan that helped save the Palestinian Fedayeen—Fatah included—from a final deathblow at the hands of the Jordanian army in 1970.⁵ It was also the Masris, Hassib Sabbagh, and Sa’id Khoury that subsequently mediated Fatah’s access to patrons in the Gulf, vastly increasing the financial resources at the disposal of Arafat et al in the process. After the Fedayeen were expelled from Lebanon in 1982—depriving Fatah in particular of the revenues it previously gained through a network of factories and informal systems of taxation—the Gulf’s support and the diaspora’s willingness and capacity to deliver it became basic to the movement’s survival.

Nor did the diaspora’s utility to Fatah end with money. Once Arafat began to take the diplomatic option more seriously vis-a-vis Israel, it was also the American-connected Masris, Sabbaghs, and Khourys that opened back channels to the Reagan and Bush administrations on his behalf.

None of this should be taken to suggest that the strategic and financial importance acquired by these nominally apolitical businessmen was sufficient to turn Arafat and Fatah into their surrogates. Arafat in particular would prove amazingly capable in retaining his independence as a political actor until the very end, regardless of the strings he allowed others to believe they were holding. Nevertheless, it is undeniably the case that the relationships between Fatah and the diaspora—and, by extension, between Fatah and the Gulf and Fatah and the United States—functioned to moderate his movement, embedding it within a conservative axis that, on the American end, was also fundamentally hostile to Palestinian nationalism.

As concerns our current subject matter, these relationships also positioned a handful of businessmen to capitalize on the many opportunities soon to come online with the advance of the peace process.

A Genealogy of Oligarchy Part II

Footnotes

1. For more on this topic, see the works of Toufic Haddad, Markus Bouillon, Benoit Faucon, Tariq Dana, Khalil Nakhleh, and Yezid Sayigh.
2. Jordan acquired the West Bank and Jerusalem during the nakba. It is alleged by some that this acquisition was the result of a deal negotiated between its King Abdullah and Golda Meir.
3. These limits did not apply to Omar Aggad to the same extent, as he managed to acquire Saudi citizenship.
4. For more on Fatah’s ideological character, see Gilbert Achcar’s Eastern Cauldron: Islam, Afghanistan, Palestine, and Iraq in a Marxist Mirror and Yezid Sayigh’s Armed Struggle and the Search for State: The Palestinian National Movement 1949-1993.
5. See Toufic Haddad, Palestine Ltd.: Neoliberalism and Nationalism in the Occupied Territory, pp.46-47.