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Bulletin 2: The Settlements - Economic Cost to Israel |
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Written by Shir Hever
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Wednesday, 17 August 2005 |
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Page 2 of 5
Introduction
This bulletin, the second in the socioeconomic bulletin project of the Alternative Information Center, will discuss the cost to Israel for occupying the Occupied Palestinian Territories (OPT) to Israel. This topic is the subject of a new book by Shlomo Swirski, The Price of Occupation (1), which will be discussed here. To complete the picture, a future bulletin will discuss the implications and significance of the occupation to the economy of the Palestinians in the OPT.
Objecting to Paying the Price In his recent book The Price of Occupation, Israeli sociologist Dr. Shlomo Swirski engages in a comprehensive study: calculating the cumulative cost of Israel?s occupation of the OPT ? to the Israeli economy ? since 1967.
The El-Aksa Intifada which begun in October 2000 propagated one of the deepest economic recessions in Israeli history. A decrease in working wages, a rise in unemployment and an overall increase in poverty rates accompanied the outbreak of violence in Palestine. As a result, a new perspective emerged in mainstream Israeli discourse. More people concluded that the resources invested in the occupation, including the subsidization of illegal settlements, have become a heavy burden for the Israeli population. Though failing to adequately support its own population, Israel continues to spend a great deal of money and effort to maintain its control of the Palestinian population and promote the well-being of the illegal settlements in the OPT.(2)
Swirsky?s book continues the recent trend in Israel of writing about the adverse effect of the occupation and the high costs of the settlements. Ariel Rubinstein,(3) Arie Arnon,(4) Dan Ben-David,(5) Eitan Berglas,(6) and Haim Ben-Shachar(7) are among the celebrated Israeli economists who began stressing the economic burden of the occupation on the Israeli economy, even before the second Intifada. These economists (Arnon not included) tend to hold right-wing economic perspectives. Due to their objection to the occupation, however, they associate themselves with the Israeli moderate left.
The surge of research on the economic costs of the occupation includes research by Dror Tsaban,(8) an extensive research project conducted by the Haaretz newspaper,(9) a paper by Naor Gamliel (10) and research by the Adva Center.(11) Swirski summarizes some of these studies in an attempt to provide a wide perspective on the subject.
These studies, including Swriski?s, suggest that the costs of the occupation apply to Israeli society as a whole, as a form of foregone utility from lost venues of investment. Further on, we will discuss the bearers of these costs in greater detail.
Vanity and Humility
The title of Swirski?s book in English is The Price of Occupation, but the literal translation of it from Hebrew is The Price of Vanity. Swirski does not claim that the occupation itself damaged the Israeli economy, but rather that the damage accrues from the decisions and policies that shaped it. In an interview to Globes newspaper, Swirski stated that Israel?s decision to suppress the economic development of the Palestinians was the major contributor to the accumulative cost of the occupation. This was the central mistake that made the occupation so expensive.(12)
Swirski begins his book with the admission that the cost (both economic and social) borne by the Palestinians during the ongoing occupation has been far more severe and pervasive than the costs borne by the Israeli public. After this disclaimer, Swirski continues to focus his research on the sacrifices forced on Israelis by their government and the settlers to fund and maintain the grand project of the occupation.
This disclaimer remains an important part of Swirski?s narrative. Swirski does not view the Palestinians as passive victims of Israel?s aggressiveness, but as active agents resisting their occupier. As Swirski demonstrates, the occupation actually created many economic gains for Israel following 1967, but since the outbreak of the first Intifada it has become an economic burden. The Palestinian resistance has made the occupation unprofitable to Israel. Swirski?s presentation is comprehensive.
He presents a wide range of research, with often-conflicting conclusions. Furthermore, The Price of Occupation attempts to remain as objective as possible, presenting the material and allowing the readers to draw their own individual conclusions based on the presented data. His book therefore makes no predictions for the future.
Breaking Down the Costs The Price of Occupation (and other sources) proves how impossible it is to separate the cost of the settlements from the cost of the occupation itself. Military outposts and forts created to defend the settlements become sources of oppression and subjugation of the local Palestinian population, and where the Israeli army exercises more control, lands are being confiscated to build additional settlements. Therefore, the engine of expenditure is almost self-propelling: civil expenses lead to military expenses and vice versa.(13) An inherent flaw in research of this type is that necessary data from the Israeli army and the Ministry of Defense is unavailable.
This data, which is essential to a comprehensive analysis, remains withheld under the pretext of national security. Swirski claims that he is unable to estimate the final cost of the occupation because of this.(14) The only recourse is therefore to make do with the available data, itemize the bill and make a list of expenses vs. income. The pieces of the occupation cost puzzle include fragments that must be collected together. Trying to aggregate these numbers is risky ? it requires an extrapolation of data from a few years to a long period and should only be considered as an approximation of the true cost. Nevertheless, it is important to make the attempt and offer a figure that can serve as a rough estimate and basis for future debates.
Swirski notes that initially, Israel made a profit from occupying the OPT. The profit came from many sources. Exploiting the low wages paid to Palestinians, taxes imposed on the Palestinians without service provision in return, forcing Palestinians to pay for the ?security costs? of controlling their movement, monopoly over imports and exports to the OPT, land expropriation and confiscating monies intended for the Palestinians are only a partial list of the sources of Israel?s profits.(15) In his interview for Globes, Swirski said that his best current estimate for the cost of the occupation is NIS 100 billion (about US$ 23 billion).(16)
This figure, however, does not appear in his book. The calculation offered in this bulletin will show a much higher price.
The Hidden Facts
One of the central hurdles in estimating the total cost of the occupation is the difficulty in obtaining related data, which is systematically concealed by the Israeli government. After the Oslo agreements, Israel began to secretly funnel millions of NIS every year to the settlement through the Ministry of Domestic Affairs. These transfers sometimes reached NIS 66 million annually. In 2004, the sum transferred to the settlements by the ministry was identical to the total sum allocated to impoverished municipalities within the Green Line. A rebelling minister of Domestic Affairs leaked this process to the press. Half of it was called ?Oslo Grants? and half was called ?Intifada Grants?. Ironically, even government ministers cannot access the actual data of the cost of the occupation, as is evident from the experience of several ministers who tried to collect this data and failed.(17)
The clandestine manner of fund transfers has two reasons. One is to avoid a public outrage at the favoritism that settlers enjoy. The second is that the special subsidies given to the settlements encourage people to move to the settlements and thus violate the Fourth Geneva Convention that forbids the transfer of civilian population to an occupied territory. To hide the extent of incentives that the government creates for would-be settlers, the subsidies are distributed into countless special budgets, one-time grants, ad-hoc funds and so on to create a financial maze that can only be navigated with great difficulty.
Careful Calculation
Calculating the actual costs of the occupation to Israel requires a great deal of extrapolation. Often, only data for one year or a few years is available, at the prices concurrent to that period. Thus, the first step of the calculation is to present this figure in the prices of December 2003, as Swirski listed them.(19)
The next step is to estimate the accumulated cost for the entire period of the occupation. The cost for one year is assumed to apply to the entire period from 1970 until today (under the assumption that the costs between 1967 and 1969 were relatively negligible). The annual cost is adjusted to fit the changes in the settlements population.(20) As there are no accurate reports on the settler population between 1970 and 1975, the calculation will factor an estimated average population of 1600 settlers, half the amount listed for 1976. It is assumed that the settler population grows steadily and that there were no settlers prior to the occupation.(21) The focus of this article is Israeli society, leaving the discussion of the Palestinian losses to a future article. Despite all the care that a researcher can take, estimates will only refer to money costs, leaving the personal tragedies outside the discussion. The calculations to follow will not even attempt to quantify personal hardships, pain and humiliation caused directly or indirectly by the violence that characterizes the Israeli occupation of the OPT. Now we are ready to follow in Swirski?s footsteps, and try to carefully re-calculate the cost of the occupation.
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