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Money, Power and their Discontents in the Occupied West Bank

The costs of business have proven perilously high for the Palestinian people

Colin Powers
Colin Powers

The morbid symptoms of an eternal interregnum invest politics and profit seeking alike in occupied Palestine today.

This morbidity is most apparent in the Palestinian Authority (PA), the pseudo-state endowed with limited governing powers inside discrete fragments of the West Bank.

Self-styled as the bridgehead of Palestine’s long-awaited emancipation, the PA has materially functioned as a mechanism of national dissolution for the better part of two decades. Deputized by Israel and the international community to serve as warden for its own people—a reality made plain in the budget share the Authority allocates towards domestic security—its leadership protects a status quo promising only creeping dispossession. Devoid of meaningful democracy and steered by an octogenarian autocrat who has not faced an election since 2005, the ironies manifest in this government of, for, and by the Palestinian people are both perverse and devastating.

If less overtly, the same morbidity permeates the economy in the occupied West Bank as well. Nested within Israel in perpetuum though in such a manner as to be deprived of the benefits of union, the capitalism that reigns over these Palestinian lands expresses the broader tendencies of our failing (post)modernity in extremis.

Like the markets of so many other countries today, the West Bank’s too are structured by monopolies, biased towards speculative non-tradables like finance and real estate, and deeply exploitative of labor. Generating subsistence wages and precious few jobs, the local whims of the animal spirits have, in fact, now condemned three generations (going on four) to a shared obsolescence. Spiraling inequality, poverty, and alienation threaten to tear asunder what remains of the social fabric at any moment, with credit-financed consumerism representing one of the final threads holding the fraying cloth together.

The Architects of a Political Economy

To understand how and why the crises sketched above came to be, one need first appreciate that the contemporary Palestinian economy has been compromised, structurally and ab initio, by dint of legal and institutional arrangements agreed to at the inception of the two state solution. The effects of these arrangements—and of Israel’s unilateral violations of them—are explained at length here, here, and here.

While indeed bollocksed from the start, the West Bank’s developmental outlook has nevertheless been rendered even worse by the actions of a vanguard of liberal policymakers. In terms of composition, this vanguard—which has maintained control over the PA's economic policy space for nearly twenty years—is comprised of three conciliatory factions:

(i) native bureaucrats trained and previously employed by DC’s international financial institutions (i.e. the World Bank, International Monetary Fund, etc.)

(ii) foreign advisors dispatched by outside partners such as the World Bank, the UK’s Department for International Development, the United States Agency for International Development (USAid), and privately-run contractor firms like Chemonics International

(iii) the proxies of domestic business interests (if not the principals themselves).

Insulated from popular or institutional oversight and liberated from any constitutional or legal obligations pertaining to full employment or social welfare, the PA's liberal vanguard has been free to build state and market in the occupied territories largely at its own discretion. Though commonly branded as apolitical custodian-statesmen, the members of their select clique have done so while bound by underlying ideological commitments—and by a neoliberal understanding of economic development. Unsurprisingly, the systems they have assembled primarily serve to advance the particular needs of a small fraction of the capitalist class, the majority of whom hail from the Palestinian diaspora.

The policy community’s servicing, promotion, and subsidization of Palestine’s capitalist diaspora has taken many forms and transpired across a number of different fora, as is traced in great detail in parts two and three of our Genealogy series.

To offer a brief summation, Palestine’s diaspora (and its heirs) have been the privileged if not exclusive beneficiaries of many legislative, administrative, and regulatory decisions taken by the PA. Most saliently, their coterie has been boosted by investment promotion laws and reforms to the tax code; by public procurement processes and the granting of exclusive import and distribution licenses; by the privatization of public utilities and the deregulation of capital markets; by (dubious) sovereign debt strategies; and by policies related to the development of domestic credit, insurance, and mortgage markets.

Concurrently, these same individuals have also been looked after by Palestine’s (internationally financed) aid industrial complex, which underwrites much of the economic activity in the contemporary West Bank. Specifically, this complex has provided diaspora interests with preferential (and concessionary) loans, seed investment, investment insurance, and with an assortment of grants extended by institutions such as the International Finance Corporation—member of the World Bank group—and the US International Development Finance Corporation. When it comes to profiting off external relationships, one need note as well that a handful of these returning expats have enjoyed commercial ties of different sorts with high status political and economic figures on the other side of the green line.1 Given the extent of Israel’s influence, these ties function to buttress competitive advantages already held over domestic counterparts significantly.

Buoyed and protected thusly, the oligarchs of post-Oslo Palestine have, in partnership with the PA’s quasi-sovereign wealth fund (the Palestine Investment Fund), come to constitute what a British diplomat observing the business environment of Jordan in the 1960s once evocatively described as a “commercial junta.” In terms of market behavior, their grouping operates as a cartel in that constituent members tend to avoid conflict with one another by dividing rather than competing over sectors of the economy (with some notable exceptions).2

Elite bonhomie has actually been enhanced in recent years, as Adam Hanieh first discerned, through the wider financialization of the economy, a process which began in earnest during the tenure of Salam Fayyad. Facilitating criss-crossing investments and board memberships, increased equity trading in particular has served to stitch together previously disparate elements of the moneyed classes to a degree never before seen. Through the activist interventions undertaken by the Palestine Investment Fund and the public pension fund on the Palestine Securities Exchange, financialization has also intensified the binds between political and economic grandees. Indeed, with senior government officials now recruited from the executive suites of the major corporations almost without exception, private businessmen steering the decisions of the Palestine Investment Fund, and a transmission line in place to usher policymakers who make good to cushy posts in the private sector, one can hardly draw a meaningful distinction between state and capital in the West Bank at the highest levels. Acting as a class in and for themselves, a syncretic public-private elect has achieved a form of hegemony that is effectively incontestable.

Economies evincing levels of vertical and horizontal integration analogous to the West Bank’s—formations marked by intertwined (public and private) monopolies and unitary state-commercial elites—have, at least in certain circumstance, allowed the market to be harnessed for strategic purposes, be they domestic or international in nature.

Curiously, however, in the case of the West Bank, market integration has yielded no discernible strategic utility. To the contrary, in fact, it can be shown to have fomented social hardship, expedited dedevelopment, and to have undermined the struggle for national emancipation.

The Social Cost of Elite Prosperity

To assess the social damage incurred through oligarchy, one ought begin with changes introduced to the functional distribution of income in the occupied Palestinian territories (oPt) during the past twenty-five years.

As is documented and explained in Ibrahim Shikaki's brilliant dissertation, the distribution of income in post-Oslo Palestine has been starkly and consistently skewed towards capital from 1995 onward. This skewing has implied a commensurate (and therefore significant) decline in the labor share of income over the same period. Moreover, by virtue of the fact that these distributional shifts have transpired within consistently low growth environments, their aggregate effect has been to decrease workers’ standard of living and to disarticulate corporate profit rates from economic expansion. Put simply, business earnings under the PA's watch have been neither coextensive with, nor causal of, a rising tide, but realized instead through squeezing labor—through forcing Palestinian workers to bear the burden of an occupation-derived crisis of growth almost exclusively.

The empirical validity of these claims is observable in the confluence of three stylized facts of the contemporary West Bank economy: (i) significant profit taking on the behalf of junta-controlled assets; (ii) flatlining growth (as revealed in real GDP per capita figures); and (iii) real wages stagnating at levels considerably below the levels of the early 1990s.3

Beyond inducing these wider changes to class relations, elite gains are also implicated in social pathology through their more acute impacts on the West Bank's jobs crisis. This follows from the non-labor intensive nature of oligarch business activities.

Indeed, from our diagrams of PADICO's, APIC's, and the PIF’s operations, it can be seen that the earnings of the big fish overwhelmingly concentrate in banking, finance, real estate and construction, and commercial activities (wholesale and retail). With the exception of construction, none of these sectors generate much in the way of jobs. The jobs generated through construction, moreover, tend to be precarious and to pay a smaller wage than is available on building projects inside Israel.

By consequence, the successes achieved by the West Bank’s returning magnates have done little to improve a desperate labor market. Their prosperity has, in fact, been contemporaneous with skyhigh unemployment and underemployment rates—rates that would be even higher were the labor force participation rate not so low. It has also done little to mitigate the growing ranks lost to the informal economy each year: as of 2016, survey data gathered by the Palestinian Central Bureau of Statistics established that 34.3% of those employed in the West Bank worked in the economy’s informal sector.

Worse than that, it could even be argued that the financial segment of the capitalist class directly exploits the West Bank's jobs and wage crises through aggressive campaigns to build and expand consumer credit markets. This argument finds some affirmation in the massive spread of debtor relations witnessed throughout Palestinian society in recent years. Extracting a pound of flesh from families whose incomes fail to cover basic needs, the profits realized through household lending in particular have come at the painful expense of communities previously organized around solidarity and collectivity. The social repercussions of these debts, like the repercussions of pervasive joblessness, cannot be overstated.

The Developmental Cost of Elite Prosperity

The oligarchs’ relationship to Palestinian dedevelopment, meanwhile, derives from nothing so sinister. Rather, it is simply the product of capital adopting orthodox business practices in an economic context structurally compromised by a military occupation and, to a lesser degree, by Palestine’s peripherality vis-a-vis regional and global circuits of production and finance.

The contextual effects imposed on Palestinian economic life through the Israeli occupation and the two agreements upon which the peace process was built—the Oslo Accords and the Protocol on Economic Relations between the Government of the State of Israel and the P.L.O.—are deftly discussed by Hiba Husseini and Raja Khalidi here. For the purposes of our arguments, one ought note that the occupation, broadly defined, functions to:

(a) systematically impede Palestinian land and infrastructure development

(b) preclude Palestinian industrial and agricultural development through means submerged (a customs union designed to serve the needs of the Israeli economy) and overt (the imposition of an import ban blocking Palestine’s access to critical materials and capital equipment)

(c) obstruct internal Palestinian commercial activities via a vast network of checkpoints, military installations, and settler-only access roads4

(d) redirect sizable portions (roughly 70%, by Shir Hever's count) of the international aid sent to Palestine back into the Israeli economy through the former’s trade deficit with the latter

(e) render Palestinian consumer markets a dumping ground for Israel’s farmers, importers, and producers

(f) undermine export-oriented firms in Palestine through imposing quotas and controls limiting access to the Israeli market and a matrix of border checks designed to interrupt the shipment of goods abroad (To give a sense for the effects of these checks, it takes longer for a truck shipment of goods to travel from Nablus to Haifa than it does for an equivalent shipment to travel from Nanjing to Haifa.)

In assigning unconditional primacy to the profit motive in conditions such as these, the activities of the West Bank’s oligarchs necessarily lead to developmental stunting. At the level of greatest abstraction, this is because profitability in these circumstances can only be found in activities and sectors that are compatible, if not synergistic, with the Israeli occupation and Israel's settler-colonial project more broadly. As the occupation has aimed, from its inception, to “[permit] personal prosperity but forcibly [restrain] communal development”5 on the part of the Palestinians, the guidance of market rationalities in the oPt inevitably steers towards dead-ends.

That this fraction of the West Bank's capitalist class has indeed played into and profited from such Israeli designs can be verified through recalling where its members have invested, operated, and accumulated capital during the post-Oslo period.

As was laid out in the maps of PADICO, APIC, and the PIF's respective empires that we provided earlier, in terms of market capitalization and annual earnings, elite holdings today quite clearly center in one of three spaces:

(1) Banking and Finance; (2) The Built Environment of Area A; (3) Import-based Commerce.

Technically speaking, the dedevelopmental effects of this collective portfolio is most easily discerned through a consideration of opportunity costs. One such cost concerns the implicit disinvestment from export-oriented activities and from productive sectors of the economy like manufacturing and agriculture.

To understand why this kind of disinvestment is problematic, one need recognize that expansions to export-based income have served as one of the most reliable engines of economic growth throughout the post-war world. In powering technological transference, meanwhile, one need also note that upgrading the sophistication and diversity of manufacturing outputs has often presented as sure a path to sustainable, long-term development as any other.

In view of the above, the effects of the oligarchs' disinvestment decisions are likely coming into focus. After all, in so much as we have shown that their commercial junta constitutes the national economy for all effects and purposes, it is the case that their investment (and disinvestment) decisions are tantamount to Palestine’s writ large. By consequence, the elite's (profit-informed) neglect of productive pursuits implies, ipso facto, the wilting of Palestinian manufacturing and agriculture. This wilting, in turn, implies medium to long-term underdevelopment, and ensures a prolonged stay in the lower-middle income trap for the Palestinian people.

As the developmental profile sketched in graphic form above displays, the national outlook for the West Bank—an outlook determined by the decisions of its oligarchs—emits one distress signal after another. Showing a generalized disinvestment from productive sectors, declining performance in terms of manufacturing value-added per capita, a relative decline in terms of medium and high-valued added production, dangerous biases towards consumption, and gross trade imbalances, those visuals portray an economy drifting forward without anything under the hood.

The Political Cost of Elite Prosperity

The ascendance of diasporic capital has affected the politics of Palestine's struggle with Israel as well. Herein, one need begin with the business class' enduring entanglements with the United States and the petroeconomies of the Gulf.

Specific to the former, many elements of the West Bank elite—principally, the Khoury family through the CCC-Bechtel relationship, and the Masri family through the Astra-US Department of Defense relationship—have long tapped into profit veins opened through the destructive vagaries of the American military.

As for the latter, the commercial operations of all these prominent expats continue to center in Saudi Arabia, the UAE, Kuwait, and Qatar, size of their Palestinian assets and investments not withstanding.

While these entanglements—and the local influence they afford to external parties—have negatively affected Palestinian governance and its fight for self-determination for some time, their corrosive impact is now poised to grow by degrees of magnitude. This is due to the UAE (and Bahrain) having recently normalized relations with Israel entirely, Saudi Arabia making moves in that direction as well, and the United States having dropped any pretense of opposition as regards the realization of Greater Israel.

By virtue of these shifts in regional politics, the dominance established by the West Bank's commercial elite has come to constitute a straitjacket for the national project. As is by this stage beyond dispute, after all, whatever hope may still remain for Palestine hinges upon its leadership and people bucking all the bad faith patrons of the peace process and pressing forward with a bold campaign of self-reliance and struggle. In view of these men's relations with the Gulf and the Pentagon, however, it strikes as fanciful that they, the biggest players in the Palestinian economy, might support such a strategic pivot, as to do so would be to court personal ruin. This being the case, it can be expected that their fraction of capital will stand in the way of the changes that need be adoptedand the form of politics that need be mobilizedin order to fend off the national erasure haunting Palestine's immediate future. The parochial hegemony of these menand the prosperity it affordstherefore represents an unambiguous strategic liability.

All of which connects to a broader, final point regarding the business elite’s impact on sumud—the practice and tradition of collective steadfastness in the face of oppression that has steeled the Palestinian people through many decades of struggle.

Sumud was politicized to its greatest degree during the First Intifada, when it was instantiated through an historic campaign of civil disobedience and economic resistance. Sustained and directed through a network of grassroots leaders, those years saw sprawling health, distribution, and food production systems built and maintained just as well-disciplined strikes and boycotts were initiated as means for putting direct pressure on the Israeli economy and state. On balance, such campaigns achieved greater leverage than had any other Palestinian campaign against Israel.

The profit-seeking undertaken by elements of the West Bank’s high leverage business interests undermine the political and social conditions upon which sumud depends. Their neglect of productive sectors has combined with the policy community’s general dismissal of state interventionism to render an economic delinking from Israel logistically impossible. The supply lines are simply too deeply intertwined.

Their introduction of credit markets and the conjoining spread of consumerism, meanwhile, have weakened the sinews of togetherness upon which any struggle must build. As debts and credit scores come to mediate political temperaments and men such as Bashar Masri aggressively sell the idea that a middle class life of comfort constitutes an act of defiance and national resistance, the prospects of collective action wither ever further away. The price of profits, then, are high indeed.


Changes to the political economy of the West Bank introduced over the previous thirty years have acquired a stubborn path dependence. The commercial junta discussed in this article constitute one of the legacies of these changes, and represent an enormous social, developmental, and strategic challenge for those hoping to achieve justice and emancipation in Palestine.

Fulfillment of a long-standing Israeli policy, the West Bank’s oligarchs have enjoyed a prosperity coextensive with the deepening subjugation of the Palestinian people. Whether the men comprising its membership harbor a sense of earnest patriotism or not, the structures they have built and gained from make the thoughts held in their hearts moot. Absent a commitment to subordinate the profit motive to the social and strategic needs of the nation, their gains seem certain only to worsen Palestine’s plight.


  1. A consultancy named Yurta International Trade and Projects, run by Danny Rothschild and Gadi Zohar, two former heads of the Israeli Civil Administration—the branch of the Israeli Defense Forces responsible for the occupied territories—often served as a link between junta members and the Israeli state/business community.
  2. The telecommunications sector represents the biggest exception to this rule, where the Masri’s Paltel has engaged in extremely cynical practices in attempting to block Ooredo’s establishment of a foothold.
  3. Real wages in the West Bank in 2016 were approximately 27% less than they were in 1995. See: Heiner Flassbeck, Patrick Kaczmarcyzk, Michael Paetz, "Macroeconomic Structure, Financial Markets, and the Financing of Government Activities: Lessons for Palestine", Report: Palestine Economic Policy Research Institute (2018).
  4. See: Jack Alimahomed-Wilson and Spencer Louis Potiker, “The Logistics of Occupation: Israel’s Colonial Suppression of Palestine’s Good Movement Infrastructure”, Journal of Labor and Society 20:4, 2017.
  5. Mohammed Shadid, “Israeli Policy Towards Economic Development in the West Bank and Gaza”, in George T. Abed (ed.) The Palestinian Economy: Studies in Development Under Prolonged Occupation.


Issue One

Colin Powers

Colin received his PhD from Johns Hopkins School of Advanced International Studies in 2020. He is a two-time Fulbright Fellow.