Download The Portland Trust

The Importance of
Economics in Peacemaking
The Portland Trust
Aim to promote peace and stability between Israelis and Palestinians through economic development.
Founded in 2003 by Sir Ronald Cohen and Sir Harry Solomon. We are a private not-for-profit British foundation.
Offices in London, Ramallah and Tel Aviv.
Key Personnel
Chair: Sir Ronald Cohen (co-founder of Apax Partners)
Vice Chair: Sir Harry Solomon (founder of Hillsdown Holdings plc)
CEO: David Freud (former Vice Chairman of Investment Banking for UBS)
Managing Director Ramallah: Samir Hulileh (former Secretary to the PA Cabinet)
Managing Director Tel Aviv: Eival Gilady (former Head Strategic Planning, IDF)
Partners
We are working closely on initiatives with a range of partners including the British Government, Quartet, EU, World Bank,
Palestinian Investment Fund (PIF), Palestinian Economic Policy Research Institute, Palestinian Mortgage and Housing Corporation,
Clinton Global Initiative, Aspen Institute, OPIC, Chicago 10, RAND, CHF, PlaNet Finance, GTZ, Levant Studies and Consulting
Services, Koret Israel Economic Development Funds, Yad Hanadiv, Palestinian Network for Small and Micro Finance.
The Palestinian Economy
Monthly Portland Trust bulletin reports on Palestinian economy
Key characteristics:
•
Geographically split between
the West Bank and Gaza
•
Diverse service sector,
declining manufacturing and
increasing agricultural sector
•
Highly literate,
entrepreneurial population
•
Highly aid-dependent with
large public sector
Actual
Change
Population
(2007 est.)
4 million
3.3 %
growth
Real GDP
(2007 est.)
$3,901
-14%
(since 1999)
Real GDP per capita
$1,129
- 40%
(since 1999)
Palestinian Employment
Political situation has created economic crisis for Palestinians
West Bank
Gaza
Palestinian
Workforce
692,900
323,00
1,015 million
Unemployment rate
18.6%
32.9%
23.2%
Underemployment rate
10.9%
3.7%
8.6%
Employment rate
Of which:
- Public sector
- Private sector
- Israel and settlements
70.5%
63.4%
68.2%
15.4%
71.7%
12.9%
40.2%
59.8%
0%
22.3%
68.4%
9.3%
Palestinians in Deep Poverty
13%
35%
N/A
(<NIS 1,837 annually for family of 6 for food/
The Gaza Private Sector is at an all time low
•95% of factories closed
• Leading to 32,000 job losses.
– All 600 firms in the local garment and textiles industry have
stopped doing business
– All furniture manufacturers have ceased production
– All metal and engineering workshops, soft drink producers,
chemical factories and paper plants have closed down.
The Portland Trust applies a comprehensive approach,
supporting Palestinians to develop the private sector
Physical infrastructure
Affordable housing
Regional infrastructure
Financial infrastructure
Pensions
Mortgage finance
Trade facilitation
Export support
Upgrading handicraft industry
Political risk insurance
Chamber of Commerce
Finance and entrepreneurship
Loan guarantees
Microfinance
Business training
Housing is historically a leading sector in the
Palestinian economy
•
•
•
•
Substantial decline in
construction sector
activity
Increasing population
Severe shortage of
affordable housing
Increased construction
would stimulate and
revive the Palestinian
economy
Population (2007 est.)
4 million
Population growth (per
annum)
3.3 %
Existing Housing Units (end
2005)
703,201
Current Shortage Housing
Units
30,000
Additional Annual Shortage
5,000
Decline in construction
activity (1999 – 2007)
60 %
PCBS survey results show
demand for new housing by
2017
70% of
Palestinians
The Affordable Housing Programme
A $1 billion Palestinian private sector initiative
• 6 new communities in the West Bank, outside the main cities of
Ramallah (2 sites), Nablus, Jenin, Hebron, Bethlehem
• $100 million infrastructure investment by donor community
• $50 million donor fund for community facilities and green spaces
• $50 million private sector investment for retail, commercial and
industrial areas
• 15,000 new housing units by 2013, construction starting 2008
– Selling price between $38,000 and $70,000
– Affordable housing for working Palestinians on a monthly
income of $800 - $1,700
A Palestinian vision
New sustainable communities
The Affordable Housing Programme has the potential
to stimulate and revive the Palestinian economy
Palestinians in new homes (over 5 years)
90,000
Estimated jobs created (annual)
Construction
Associated Industries
Onsite Services and Retail
11,000
7,000
3,000
1,000
Estimated total jobs created (at end of 5 years)
17,000
Standard economic multiplier effect (US housing)
2
Dependency ratio
6
Estimated number of low-income Palestinians
supported (at end of 5 years)
Total Investment (over 5 years)
Estimated impact on Palestinian GDP
204,000
$1 billion
8% growth
(over 5 years)
Economics in peacemaking: Northern Ireland
Not a parallel but can learn important lessons
Economic initiatives created incentives to spur political progress…
• Equality and fairness legislation introduced
• International mediation around economic issues with Senator Mitchell –
Clinton’s special economic envoy on Northern Ireland
• Trade across conflict borders
Private sector voice and institutions pushed for moderation…
• Northern Irish “Group of 7” led by Sir George Quigley
• Northern Ireland Business Alliance
• CBI - Peace Dividend
• US based firms operate under “MacBride terms” for equal opportunity
Improved economic conditions created the context for sustained peace…
• Inward investment started upon ceasefire – $1.5 billion between 1994 to
2000 from US firms
• Unemployment down from 17% in 1986 to 4.6% in 2006
• Tourism jumped by 20% in the first year following ceasefire (1995)
Northern Ireland
An example of economic disparity creating and sustaining violence
Catholics suffered from unemployment rates more than double that of Protestants
and violence was high; today gap is less than 4 percentage points and
violence is low.
2.40
90%
80%
2.30
70%
2.20
60%
2.10
50%
2.00
40%
1.90
30%
1.80
20%
1.70
10%
1.60
0%
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
Ratio of Catholic to Protestant unemployment
Percentage of total Troubles-related deaths caused by Republicans
Source: Honaker, Unemployment and Violence in Northern Ireland: A Missing Data Model for Ecological Inference (2004)
1999
2001
Middle East Peace Process
Concerted effort by Israeli and Palestinian private sectors is essential
•
•
•
•
Strong private sector voices are important after violence to prevent derailing
of peace process
Israel is not threatened economically
Launch of Israeli-Palestinian Business Council at the World Economic
Forum
Portland Trust to support launch of Israeli-Palestinian Chamber of
Commerce
Negotiating the Final Status Agreement
The private sector will have a key role before, during and after
• Over the last 5 years the Portland Trust have learnt that there are
things that can be done through the private sector.
• Only with the prospect of ongoing prosperity can a political solution
become long-lasting peace
• Israeli/Palestinian private sector must act as a voice for moderation.
• Israeli Government and PA must support private sector, encourage
investment and economic progress
The Portland Trust
42 Portland Place
London W1B 1NB
Azrieli 3
132 Menachem Begin Road
Tel Aviv 67011
P.O. Box Al Bireh 4102
Ramallah Al Masyoun
Website: www.portlandtrust.org