Economics take a back seat, but are still present at Camp David
Israeli Prime Minister Ehud Barak and Palestinian President Yasser Arafat traveled to the U.S. presidential retreat of Camp Cavid in early July, in a high stakes gamble aimed at concluding the stalled final status between their two nations.
Barak’s decision to go to the summit has already caused him severe damage back home, as three key coalition parties resigned the government, slashing his parliamentary support from 68 to 42 Knesset members and leaving him dependent on non-coalition members for his political survival.
At the moment, a wide gap separates each side’s negotiating position, and neither is hinting at any sign of flexibility. Failure to reaching an agreement may prompt Arafat to unilaterally declaring Palestinian statehood, which most probably would trigger an Israeli response, such as annexing portions of the West Bank. This almost certainly would send the area into turmoil.
A deterioration of the political situation would inevitably have a negative impact on both the Palestinian and Israeli economies, with consequences much sharper on the Palestinian side because of its dependence on Israel. For instance, in the fourth quarter of 1999, 139,000 Palestinians were working in Israel and the Jewish settlements in the territores, accounting for one-quarter of all Palestinian jobs. In the event of an upsurge in hostility, Israel would immediately close its borders and enforce strict restrictions on Palestinian labor.
Positive developments in the peace process will further enhance Israel’s growth prospects, which at the moment are considered healthy. Revised forecasts show that the country’s economy is expected to expand by 4.5 percent in the years 2000-2001, following two years of moderate 2.2 percent growth. In fact, GDP could increase by 5 to 6 percent if deals for the sale of Chromatis and Lucent are factored into the GDP. Monetary policy is expected to be relaxed gradually, from the Bank of Israel’s tight grasp, and, although price pressure may rise toward the end of the year, inflation is not expected to exceed 4 percent. Moreover, unemployment, which presently stands at 8.9 percent, is expected to fall to 8.5 percent later this year and to 8.1 percent by 2001.
The coming few days are expected to be crucial. With U.S. President Clinton’s term ending in several months, Camp David will likely be the final forum in which bilateral negotiations enjoy the American leader’s determined support.
And if they reach an agreement, Arafat and Barak still face significant hurdles in selling the deal to their domestic constituencies. Any agreement would be subject to referendums in Israel and among all Palestinians—at home and abroad.
Albawaba.com - (MEBG)
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