Regular visitors to the West Bank will be familiar with the large red signs warning that Israelis are forbidden to enter Area A, the part under full Palestinian control according to the Oslo Accords, and that doing so is a crime.
What these signs really mean is that entry is forbidden to Israeli Jews. Israeli Arabs can enter West Bank cities to shop, import goods and invest in Palestinian real estate.
In one place, however, the absence of the red sign is notable – immediately after the Jalameh (aka Gilboa) checkpoint in the northern West Bank, which Israeli Arabs drive through each Saturday to shop in the nearby city of Jenin. According to the Jenin Chamber of Commerce, Israeli Arabs make up 75 percent of customer at local markets.
Two weeks ago – during Ramadan, a time of significantly higher purchases of food, clothing and gifts for Muslims – the Jalameh and Rihan checkpoints were closed against the backdrop of heightened security tensions, denying Arab Israelis of the opportunity to shop in Palestinian cities.
Last Saturday, the checkpoints were reopened. Israeli media reports linked this with the decision not to impose a total closure of all crossing at the West Bank and Gaza borders during the intermediate days of the week-long Passover holiday, with the goal of allowing Palestinian workers to continue entering Israel.
Yet perhaps because people were afraid to go to a city where there are daily reports of gunfights between Israeli soldiers and armed Palestinians, just 2,000 cars passed through the Jalameh checkpoint that day, compared to 6,500 to 7,000 on a normal Saturday and the 10,000 typical of a Saturday during Ramadan.
Amar Abu Bakr, the head of Jenin’s chamber of commerce, hopes the city’s economy will slowly recover.
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“The halt in people from the Galilee coming to Jenin was a severe blow for the local economy,” he says. “It could have been even worse if it had happened ahead of Eid al-Fitr in early May. I hope that now the checkpoint has been reopened, things will get back on course.”
‘Large families buy in bulk’
A source in the defense establishment says that during a normal Ramadan, Arab Israelis spend 120 million shekels ($37 million) on shopping in Jenin, meaning the losses from the week-long closure of the checkpoints added up to around 30 million shekels. Most visitors to Jenin’s markets come from the Galilee area, where around half of Israeli Arabs reside.
What makes the city attractive to them is clear. It s just a 30 to 40 minutes drive from Nazareth and its surrounding towns, and many say there’s no other market like it in either Israel or the West Bank in terms of both the variety of goods available and the low prices. For instance, a kilogram of rice costs only six shekels in Jenin, compared to 10 at Israeli supermarkets.
“Large families buy in bulk here,” says an Arab woman from the Galilee who goes shopping in Jenin every few weeks. “There are people who buy 12 kilograms of rice on every trip.”
In Ramadan, the price difference is especially noticeable, she says, because the meals after the fast are festive ones in which a lot of effort is invested, so people buy more expensive foods than they usually might – for instance, almonds, raisins, pine nuts and dried fruit. In Israel, a kilogram of pine nuts costs 140 to 150 shekels. In Jenin, it costs 85 shekels.
“In Jenin, you can find food products and brands from the Arab world which you can’t find in Israel, another reason making the city an attractive place to shop,” the woman says. “Most of the markets are cheap food markets, but here and there you can also find some regular stores carrying brand names,” she says.
According to economist and accountant Ziyad Abou Habla, the director of the Economic Council of for Arab Society Development, the ability to shop in Jenin is important, especially for more poorer of Israeli Arab society. “50 percent of Arab families in Israel live beneath the poverty line,” he says. “The difference between the Palestinian and Israeli economies in terms of prices makes the Palestinian one an alternative for meeting the consumer needs of members of Arab society, particularly for people living under the poverty line in Israel. But middle-class people also go shopping in the West Bank, and for them, it’s not just a matter of economics. The same nation lives on both sides of the Green Line” – the pre-1967 borders of Israel – “and there are many relatives on the other side. During the month of Ramadan, many people go there to break their fast, visiting relatives in Ramallah or Tul Karm or going to some restaurant.”
Recent security tensions have threatened the economic situation in areas controlled by the Palestinian Authority, as well as in Israel, where Arab citizens are more vulnerable. Jews might stop buying at markets located in shopping centers along the pre-1967 border, such as in Husan, near Betar Ilit, or the village of Barta’a, half of which is in the West Bank, the other in Israel. But the larger markets are located in the center of West Bank cities, and it is Arab Israelis who still venture there.
Recent years have seen a strengthening of economic ties between Palestinians on both sides of the pre-1967 border. Freedom of movement from Israel to the West Bank allows Israeli Arabs to buy cheaper products or services like car repair and dental work for much less money. It also enables the work of businesspeople who deal with imports or who invest in real estate in Palestinian cities.
Since most of this business is conducted using cash, there are no precise figures on the extent of investments or Arab purchases made by Israeli Arabs in the West Bank. However, a study published in 2018 by the Palestine Monetary Authority, the Palestinian equivalent of the Bank of Israel, products amounting to 3 billion shekels (920 million dollars) are purchased by Israeli Arabs in the West Bank each year. The study was based on a survey conducted among Israeli Arabs, in which 50 percent or respondents said cheaper prices in the West Bank made them go shopping there. A further reason mentioned by respondents was that one can use cash freely in the West Bank, in contrast to Israel, where there are limits on cash transactions.
Jenin is the Palestinian shopping capital, and according to a source in the defense establishment, Arabs from Israel spend 850 million shekels a year there. The main shopping street in Jenin is Abu-Bakr Street, where most markets are open-air. A new shopping center, the City Center Jenin, recently opened there, spanning seven floors, each with an area of 2,500 square meters (27,000 square feet). An adjacent street has an area selling building materials, flooring and plumbing goods, an attractive location for contractors building in Israel.
Nablus is another popular destination, but visits there focus more on hotel stays than on shopping. Ramallah is considered the most expensive city, but it too is a destination for leisure purposes. “In addition to retail shopping, there are thousands of Arab-Israeli businesses in Palestinian cities,” says economist Yitzhak Gal, a research fellow at Mitvim – the Israeli Institute for Regional Foreign Policies who researches Middle Eastern economics. “The Palestinian economy has been in deep freeze for a long time. Two factors work in its favor: the work of Palestinian laborers in Israel, and activity involving Israeli Arabs. Before the coronavirus crisis, each one of them accounted for 15-20 percent of the Palestinian GDP per capita. During the lockdowns there was a great slump, larger than in Israel, and then you could see the impact of severing business ties with Israeli Arabs on the Palestinian economy.”
According to the Palestinian Central Bureau of Statistics, the turnover of all retail and wholesale activity within the Palestinian GDP declined from $700 million in the second quarter of 2019 to $470 million in the second quarter of 2020. The The Palestinian economy has not fully recovered from the coronavirus crisis. GDP in the last quarter of 2021 stood at $3.2 billion, $100 million less than the last quarter in 2019.
According to a source in the defense establishment, the fact that the crossing at Jalameh was closed for a year and a half over the pandemic is one of the driving forces for the recent series of deadly attacks against Israelis. This source says that “over that period, Jenin withdrew inwards, with attendant unemployment, anarchy and crime. There is a clear balance here. When economic ceases activity on this scale, especially in locations where Hamas and Islamic Jihad have such a large influence, this is a warning sign of trouble to come, and unfortunately, it did come.”
Buying in the West Bank, selling in Israel
Prof. Aziz Haidar of the Van Leer Jerusalem Institute published a book in 2021 about the new Arab-Palestinian middle class living in Israel. He says in his book that the 1967 conquest of the territories contributed to the rise of an Arab middle class in Israel, along with other processes. “The acquisition of higher learning, integration into the labor market and the opening of businesses were three processes that led to the growth and expansion of the Arab middle class in Israel since 1967,” says Haidar. “Commerce is a massive factor in the Arab economy. For years, merchants within the Green Line bought products in the West Bank cheaply, subsequently selling them in Israel. On the other hand, salaried Israelis went to buy products in the territories. They saved money, which helped in raising a middle class.”
However, he says, the Palestinian middle class, especially the younger generation, tends to shop more in malls and stores owned by Israeli Jews, mainly out of a desire to buy brand names. “At least 20-25 percent of the Israeli-Arab middle class do their shopping at malls and in Israeli chains,” he says.
As’ad Shibli, a former high school principal in the Bedouin village of Shibli, near Mount Tabor, goes to Jenin regularly, meeting many of his former students there. “I shop there once a month,” he says. “Anything I can buy in Israel, I can get there for 30 percent less, sometimes even cheaper. Jenin is not just a refugee camp you hear about in the news. There are also villas and affluent neighborhoods there. Two months ago I went to a neighborhood near Jalameh, where someone had a swimming pool under his house. But the refugee camp there is like a third-world slum. That’s where problems come from.”
Thabet Abu Ras, co-executive director of Abraham Initiatives, a Jewish-Arab NGO advocating and equality between Jews and Arabs in Israel. He lives in Kalansua, in Israel, and shops regularly in Tul Karm, a West Bank city. “I enjoy shopping in Tul Karm more than I do in Netanya,” he says. “In Netanya, I find quite different prices, sometimes finding products that are culturally incompatible. When I go to a market in Tul Karm, I find exactly what I want as an Arab, that is my culture and my food – and the prices are lower. When I need to iron clothes, I go there too. Economy cannot be dissociated from culture. That’s why Israeli Arabs stream to West Bank cities, particularly ones that are close to the Green Line.”
According to Abu Ras, “10 new hotels have been built in Nablus in recent years, intended mainly for tourists from Israel. Everything is cheaper. I was there with my wife for two nights, at a nice hotel. It cost 600 shekels for two nights, including breakfast. Then I walked to a Turkish bath, and later to a restaurant with authentic Palestinian food and music. That is my cultural place, something I can’t find in Israel. I do find it there.”
Investing in Nablus and Ramallah
Abu Ras owns an apartment in Nablus. Arab Israeli in West Bank real estate is another trend that began in recent years. In some sense, it is similar to real estate investments overseas that have also sprouted in Israel. A specific trend is investment by Israeli Arabs in Turkish real estate. With prices in Israel increasing wildly, it’s no wonder that Turkey or the West Bank are seen as good alternatives.
Will investors flock?
The price differentials are definitely alluring. A 100-square-meter apartment in an upscale Ramallah neighborhood could cost between 350,000 and 400,000 shekels (around $105,000-120,000). In Jericho, you can buy a 200-sqaure-meter villa with a 750-square-meter yard with a pool for one million shekels. In other cities, prices are even lower. An apartment in Nablus costing 150,000-200,000 shekels could be a reasonable solution for an Arab family from the Galilee whose son is studying medicine at al-Najah University in Nablus, especially since prices in the West Bank are on their way up.
The flow of Israeli Arabs students to campuses in the West Bank is another reason for buying real estate there. Some estimates put the number of Arab-Israeli students there at 9,000, 5,000 of them at the American University in Jenin, in which private residential buildings have been appearing in recent years, meant for renting out to students. Some apartments there have been purchased by Arab Israelis.
Shopping mainly in Jenin
Elias Habib, an architect from Haifa who also deals in real estate, discovered a sign belonging to a Ramallah real estate company called Nabali Fares six months ago. The company is used by Israeli Arabs to buy apartments in the West Bank. The sign was in the Hadar neighborhood in Haifa. This may have been an attempt to expand business by opening an office in Haifa, but it has since closed down. The company did not respond to calls by TheMarker.
According to Habib, the Palestinian real estate market is attractive not just for purchasing apartments, but also for renting them. “Last month I was approached by two female medical students at the Technion, who had started their residency at Hadassah Hospital in Jerusalem,
he says. “Their budget for renting was 3,000-4,000 shekels a month. It was hard to find a good apartment in Jerusalem for that price, but beyond the barrier, in the West Bank, one can find good properties that are significantly cheaper.”
But the Palestinian real estate market could also deter investors because of potential legal problems. Habib says that a few years ago he was interested in purchasing apartments in Ramallah, after he visited the city and saw the accelerated development there, but says he refrained from doing so after a relative warned him of problems regarding property registration.
According to Sami Ali, a resident of Jisr al-Zarqa who advises Palestinian real estate companies, it’s difficult to purchase real estate in the West Bank due to a fear of the takeover of land by Israeli settlers. He says that when it comes to buying an apartment inside a building, an Israeli Arab can register an apartment after undergoing a background check, but the purchase of land by someone other than a Palestinian resident is more complicated. The solution is to buy through a liaison who has Palestinian residency, in whose name the land is officially registered.
“In recent years it has become more popular to buy real estate in the West Bank,” says Ali. “It’s a combination of the short distance – a drive of an hour or two – and the low prices, a third of those in Israel. The greatest demand is for Ramallah, because it has good rental potential. It’s the seat of the government ministries, and of the offices of international organizations and of the representatives of foreign countries, which are less sensitive to rental prices. The international representatives can pay $800-$900 a month for an apartment, as compared to a Palestinian family that will pay $500-$600. In other cities the prices are half or a quarter of that.
“I assume that if the security situation continues to deteriorate, the effect will also be felt in real estate,” Ali says. “When buyers show an interest in an apartment, one of the fears that comes up is regarding the security-diplomatic situation – what will happen if war breaks out or a closure is declared, how will that affect housing prices? The real estate company owners are trying to reassure people and to explain that in case of damage caused by the security situation, there are insurance companies that provide compensation.”
A lot to lose
In light of security incidents in recent weeks, the question is what will happen to Israeli Arabs if the explosive situation worsens. In his book, Haidar describes how the first intifada contributed to the development of retail businesses in Israeli Arab society, when customers stopped shopping at West Bank markets. The book also notes that during the second intifada, when there were serious restrictions on movement, 1,500 new businesses opened over three years in the so-called Little Triangle Area (a concentration of Arab towns in north-central Israel). In other words, there are some people who might profit from closing the border, but clearly many in the Arab community will lose from a deteriorating security situation.
“I remember that period, the closure was total,” says Abu Ras. “Before the second intifada, the Arabs bought a great deal in the West Bank, but now a renewed closure of the West Bank to Arabs is far more significant, because since that time the Palestinian middle class has expanded, and purchases in the West Bank are far more extensive. Therefore, closing the West Bank to Israeli Arabs would be of greater significance now.”