Don't Burst the Bubble

Everyone from American investors to individual house-hunters in Ramallah wants to perpetuate the illusion of stability in the West Bank.

Billboards declaring "She wants a house," showing a smiling, optimistic-looking Westernized couple, decorate the streets of Ramallah. The only thing left to do is to race over to the nearest branch of the Bank of Palestine and ask for a home loan. Simple? That's how it's seemed for the past four or five years when banks, directed by the Palestinian Authority, have conducted an aggressive campaign designed to encourage people to borrow money so as to fulfill their consumerist dreams - purchasing a house, or a wide-screen television, or a new car, or furnishings and new ceramic floor tiles from Italy. The Palestine Monetary Authority required banks to allocate a portion of their capital to loans. Western, especially American, development organizations appeared on the scene and delivered the consumerist message: Take out a mortgage. And people took the hint.

And so the topic of the day is not the Israeli military raids on Kafr Qaddum - the village that during the past nine months has joined in the demonstrations against the plunder of lands for the benefit of Israeli Jews. Not even Palestinian prisoners, especially the hunger strikers whose various fates receive considerable space in Palestinian newspapers, dominate conversation. No. The most urgent, troubling topic is debts owed by each family to banks, the fear of legal entanglements and foreclosure, and the loss of money invested in an apartment that has yet to be built.

UN Secretary-General Ban Ki-moon, second from right, looking at a model for new city near Ramallah.
UN Secretary-General Ban Ki-moon, second from right, looking at a model for a new city near Ramallah.Eskinder Debebe / UN

Bassam Zakarneh, head of the union of public-sector employees, announced on Thursday that March salaries would not be paid on time. Once again, financial support promised by various countries, including Arab ones, as compensation for an economy that is hamstrung by a foreign occupier, is not being given in full. The Palestine Monetary Authority quickly issued a directive to banks: Do not make any deductions from the accounts of public-sector employees until they receive their wages. Nonetheless, many remain worried. When they took out loans for various consumer binges they banked on the assumption of steady employment. But over the past year the PA has continually had to rely on the dubious method of mass deferment of wages.

International support

In 2008, everything still looked rosy. There was a stable government in the West Bank, a prime minister with a head for finance, a supportive international community, and the Gaza Strip seemed to drown in its hardships. At this point the Affordable Mortgage and Loan Company was established. The acronym, in English, spells out the Arabic word for hope, "amal."

It was the CEO of a reputable American agency, the Overseas Private Investment Corporation, that announced the establishment of AMAL. OPIC, it's worth noting, defines itself as "the U.S. government's development finance institution that mobilizes private capital to help solve critical development challenges in less developed countries, and in doing so advances U.S. foreign policy." OPIC disbursed guarantees of up to $250 million for the project. The Palestine Investment Fund, the International Finance Corporation - a member of the World Bank Group, and the Bank of Palestine provided $75 million in financing. In addition, the U.K.'s Department for International Development provided up to $20 million in support of AMAL. The message: Build your house today, and pay back your loans and own it fully after 25 years.

In 2011, Palestinian banks loaned West Bank residents $2.396 billion, according to data compiled by economist Raja Khalidi. That is about a billion dollars more than the sum loaned by banks in 2006 (in 2011, the banks loaned the PA about $1.2 billion, as compared to about half a billion dollars in 2006 ). The real rate of per capita growth, as measured in terms of gross domestic product, is about 2 percent a year, says Khalidi - less than a sixth of the rate of growth of private debt.

One Ramallah resident, "F.," is no longer part of a young couple like the one that appears on the billboards, but he also wanted a home. More precisely, an apartment. Following a prolonged exile he returned to the country after the PA was established in 1994. About a year ago, F. bought an apartment in one of the new residential neighborhoods built in recent years on Ramallah's northern outskirts. Proud of his study room and the hilly view, while also irritated about delays in the projected timetable, he points to the shutter in the porch. It is operated by an electric switch.

"I said to the engineers," he tells me, "what's this nonsense about? Do you really think we live in a normal, stable reality, where electricity flows regularly and reliably? That there will no longer be Israeli army encroachments whose most immediate result is power cuts?"

F.'s statement hits the mark exactly. Like the electric shutter, the whole American-inspired loan plan designed by the PA relies on an illusion of stability. People are simultaneously tempted by the illusion and also frightened that it will be shattered - in other words, that the status quo will be harmed. And the status quo, lest anyone has forgotten, is life enveloped within Israeli domination, enclaves of Palestinian pseudo-sovereignty, and the continued trampling and appropriation of land outside of the enclaves. Private individuals who need housing, small business owners worried about their investments, owners of large companies who thirst for more profits, banks, local and foreign NGOs, Palestinian security officers, PA big shots and American investors - everyone has a stake and an interest in this bloated bubble staying intact for as long as it can, without bursting.