David's Harp Three Intifadas and You’re Out

A Third Intifada is an event waiting to happen among the Palestinians, and Prime Minister Benjamin Netanyahu seems incapable of doing what it takes to avert it.

David Rosenberg
David Rosenberg
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David Rosenberg
David Rosenberg

Are we on the verge of a Third Intifada? The upsurge in violence over the last few days in response to the death of the Palestinian detainee Arafat Jaradat and to the shooting of a Kfar Kusra resident probably by settlers has touched off a wavelet of protests that are now being portrayed as a possible precursor to large-scale rebellion.

The science of predicting revolutions and other political upheavals has a worse track record than economics has on predicting recessions and depressions. The Middle East looked ripe for revolution at the end of 2010 when the street vendor Mohamed Bouazizi set himself ablaze in the Tunisian town of Sidi Bouzid. But it also looked just as ready five or 10 years ago, and when the time finally came, it’s not clear why the Libyan leader went down while in Algeria next door, the government is still in power. For that matter, it’s not clear why the Palestinians in Gaza and the West Bank didn’t themselves rise up.

One reason that has been plausibly offered for why neither the Algerians nor the Palestinians joined the Arab Spring is that they both share recent memories of violent rebellions that went badly wrong, causing death and destruction and gaining little in return. The Palestinians had their Second Intifada and Algeria had its bloody conflict with the Islamic Salvation Front in the 1990s.

Even if that is the case, neither Israel nor the Algerian government should assume those bitter memories will contain discontent populations forever. A generation is reaching adulthood that has no direct memories of the suffering their parents’ generation endured, but they do have a lot of grievances and no place to express them short of violence.

Recipe for explosive souffle

Never mind who is at fault for the peace process grinding to a halt – and the blame is easy enough to divvy up between all the parties involved – the ordinary Palestinian has every reason to be angry. The occupation is approaching its half-century mark with no end in sight and the Palestinians leadership is corrupt and ineffectual. Combine that with a lot of young men with little to do with their time and few economic prospects and you have two critical ingredients waiting to rise up into a violent, explosive soufflé.

Regarding the latter ingredient, an International Monetary Fund survey of the Palestinian labor market published in December offers some disturbing numbers. The unemployment rate in the West Bank is edging up after several years of decline, reaching about 20% in the middle of last year. Among youth age 15 to 24, the rate is 30% and is climbing, too. Palestinian wages after inflation fell 8% from 2008 to 2011.

Just to absorb all the new people entering the West Bank and Gaza labor market – some quarter of a million between now and 2015 – the Palestinian economy has to grow by 4.5% a year, the IMF estimates. It thinks that growth will exceed that minimum in the coming years, but that may be optimistic. The Israeli economy is slowing and any uptick in violence would quickly shut off access to employment in Israel and the settlements, and increase the number of checkpoints and other barriers to movement, any and all of which would slash growth. In any case, the Palestinian Authority governing apparatus, a major driver of the economy, is in deep financial trouble.

If a Third Intifada doesn’t break out soon, it is certainly an event waiting to happen.

Suddenly at risk

The next question is, if a Third Intifada in one form or another does break out, is the Israel economy and business in a position to cope with it?

Despite the experience of the Second Intifada, which helped push Israel into its worst recession ever, it’s tempting to discount the possible impact of a third one. The gyrations across the Middle East over the least two years – a phenomenon still called the Arab Spring, though it is hard to see what remains of the metaphor for the dawn of a new and better era – had no discernible effect on Israel’s economic performance over those years. The economy grew by leaps and bounds in 2011, the first year of the Arab Spring, and foreign direct investment surged to $11.4 billion.

If last year’s numbers were less impressive – economic growth has been slacking off and foreign direct investment reached just $7.5 billion in the first nine months of 2012 – we have only the government’s economic mismanagement and the slowdown in Europe to blame. The Arab Spring’s only direct impact on the economy was Egypt’s cutting off the supply of natural gas, which was painful but hardly devastating. Even with Egypt and Sinai in disarray and civil war raging in Syria, businesses and investors haven’t judged Israel to be at significantly greater risk than when Mubarak and Assad were in charge.

Businesses and investors have long become inured to Israel’s security uncertainty. But a Third Intifada, even a relatively non-violent one as many Palestinian activists are promising, is something different. It’s closer to home and by its very nature it won’t be short, sharp like the Second Lebanon War and our periodic incursions into Gaza.

It will be a lengthy affair that brings the media coverage that has been distracted by the Arab Spring back to the West Bank and put the Palestinian issue into the public eye again. It will give new life to the boycott movement and force us to spend more on security at a time when the government has to make big spending cuts.

Cynically speaking, the Netanyahu government could have its cake and eat it too by fostering economic growth in the West Bank while ignoring any political accommodation with the Palestinian Authority. That wouldn’t address the Palestinians’ political ambitions, but it could buy quiet until the next election, which is about the longest time span Netanyahu seems able of contemplating.

The government was supposed to be making a small gesture in that direction this week by belatedly transferring $100 million of tax money due the Palestinian Authority. But because of security paranoia – the fear that any serious easing of the security regime will give free rein to terror – and because his core constituency of settlers wants no such thing as Palestinian prosperity, Netanyahu is incapable of doing more.

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