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French giant Veolia cut down to size for abusing Palestinian rights

French giant Veolia cut down to size for abusing Palestinian rights

26 August 2011

France is refusing to address corporate complicity in the occupation of Palestine.

The French corporation Veolia once appeared unassailable; today it is ailing. It is faced not only with the global economic crisis but also the growing impact of the boycott, divestment and sanctions (BDS) campaign against its involvement with Israeli apartheid infrastructure and transport projects. A recent merger between Veolia’s transport division and a subsidiary of the main French state investment fund indicates French industry and government have united to find a simple solution to Veolia’s problems: let the taxpayers finance Veolia’s income losses — and its complicity with Israeli war crimes and human rights abuses against the Palestinian people.

On 4 August, Veolia management held a conference call with major financial analysts to defend the company’s latest figures. It wasn’t an easy task. Veolia’s management was forced to gloss over the terrible financial situation of the group that has forced it to draw up sharp cost reduction plans, initiate a complete restructuring of management, plan the pullout from more than forty countries and search for more investors to cover a high debt.

Veolia has lost more than 50 percent of its share value since March 2011, according to tear sheet data from The Financial Times (“Marketdata: Veolia Environnement Ve SA,” accessed 25 August 2011).

However, among the underlying financial data discussed — €67 million ($96 million) in net loss during the first half of this year; €15 billion ($21.6 billion) net debts; €250 million ($360 million) yearly cost reduction — one number did not come up: the massive financial damage the company has faced at the hands of the BDS movement. Since the beginning of the Palestinian-led campaign in 2005, Veolia has lost contracts worth more than €10 billion ($14 billion) following high profile campaigns.

Veolia’s chief financial officer Pierre-Antoine Riolacci had to admit that its municipal services are suffering a downturn in some countries “in particular with pressure on the downside, namely in the UK where things are rather difficult.”

Ignoring London loss

Surely the CFO had heard the news from across the English Channel the day before the conference call, where Veolia had failed to be selected for a £300 million ($493 million) contract by Ealing Council in London following a determined campaign by the local branch of the Palestine Solidarity Campaign.

The worldwide campaign against Veolia was initiated in response to the company’s five percent stake in the consortium that is constructing the light rail project that links West Jerusalem with illegal Israeli settlements in occupied East Jerusalem and the surrounding West Bank, thereby cementing Israeli colonization and creating the necessary infrastructure for its further expansion. Moreover, Veolia holds a thirty-year contract for the operation of its first line, due to open later this month. Veolia and its subsidiaries also operate bus services, waste management and a landfill all deep within the occupied West Bank, and all for the use of Israeli settlers. All of these projects contribute to war crimes, as defined by the Fourth Geneva Convention and the Rome Statute of the International Criminal Court.

Refusal to withdraw from Israel

Despite its apparent desperation to reduce costs, Veolia has yet to implement the most effective cost reduction strategy it could: including Israel in the list of countries it plans to withdraw from. Rather than divesting from Israeli colonization of Palestinian land, Veolia is turning to the French state for financial assistance, involving public money in operations abetting Israeli war crimes.

This spring Veolia Transport merged with Transdev into a newly created company Veolia Transdev (“Veolia Transdev: Creation of the world’s leading private-sector company in sustainable mobility,” press statement, 3 March 2011).

Transdev was a subsidiary of the French Caisse des Dépôts (CDC), a public investment authority that manages public funds and is overseen by the French parliament. The CDC is now a 50 percent partner in the newly created Veolia Transdev transport company. According to Veolia’s Pierre-Antoine Riolacci, the entrance of Transdev intp the group has allowed Veolia to “cut back our debt by €159 million [$229 million].” The degree to which Veolia Transdev has come under the protection of the French state is evident in the fact that during the conference call, Veolia Transdev issues were directly dealt with by the CDC’s chief executive Jerome Gallot.

On its website, CDC boasts that it exists to “serve the general interest and the economic development” of France. But pumping French tax money into Veolia to make up for its financial troubles, thus allowing it to push forward projects that serve illegal Israeli population transfers into occupied Palestinian territory, is unlikely to help attain either goal. Moreover, the Jerusalem light rail project contradicts French government policy that East Jerusalem should be the capital of a future Palestinian state. Promoting the project in 2005, then Israeli Prime Minister Ariel Sharon stated, “This [light rail] should be done … to strengthen Jerusalem, construct it, expand it and sustain it for eternity as the capital of the Jewish people and the united capital of the state of Israel.”

Even before its partial ownership of Veolia Transdev, CDC was involved in the light rail project through its subsidiary Egis Rail, which won a contract in 2008 to assist with managing the project. The current role of Egis Rail is unclear.

Private companies have long been heavily involved in Israeli violations of Palestinian human rights, such as building and maintaining the illegal settlement infrastructure, and the wall built on Israeli-occupied Palestinian land in the West Bank. But by investing in Veolia, the French government is bucking a recent European trend of governments to start ensuring public enterprises and institutions are not complicit with Israeli violations of international law.

The German government recently responded to public pressure by taking steps to end the state-owned company Deutsche Bahn’s involvement in the construction of a train line from Jerusalem to Tel Aviv passing through the occupied West Bank. Explaining its intervention, the German transport ministry pointed to the “potentially illegal” nature of the project and the fact that it is inconsistent with government policy toward Israel and the Palestinians (“Letter from German government to Die Linke parliamentarian concerning A1 train project,” 10 May 2011). The German foreign ministry has admirably published an alert on its website warning German companies about the potential legal consequences of Israeli projects in the occupied West Bank (“West Bank, Economy”).

Precedents set by other European capitals

The Norwegian government took a precedent-setting step when it excluded Elbit Systems from its investment portfolio. Elbit is an Israeli arms company involved in the construction of Israel’s illegal wall in the West Bank. It subsequently also excluded Africa Israel and Danya Cebus, two companies which build illegal Israeli-only settlements in the West Bank (“Norwegian government pension fund excludes more Israeli companies,” 23 August 2010).

The British government also took a stand on the issue when, in 2009, the foreign ministry pulled out of a deal to rent office space for its embassy in a building owned by Lev Leviev, the Israeli diamond tycoon who owns Africa Israel and finances development of illegal settlements in the West Bank. The British government also withdrew export licenses to Israel from UK arms companies that provided the Israeli military with weapons or components that have been used during the winter 2008-09 attacks on the Gaza Strip (“Israel arms licenses revoked by Britain,” The Huffington Post, 13 July 2009).

In September 2009, the Spanish government excluded Ariel university from a state-sponsored architecture competition after having become aware that it was located in an illegal settlement.

The French government, however, has so far failed to take action to end such complicity. By doing so, France is not only undermining important precedents set by its allies. It also violates its obligations under international law and the voluntary commitments it has made regarding good governance and corporate social responsibility.

France must honor obligations

When the International Court of Justice ruled on the illegality of Israel’s apartheid wall and related infrastructure in the occupied West Bank, it also ruled that third party states are obliged not to aid or assist the maintenance of the unlawful situation created by Israel or infringements of the right to Palestinian self-determination. Two companies owned by the French state fund CDC — Veolia and Egis Rail — are involved with and profit from such unlawful acts. This calls France’s commitment to international law into question.

In June, the United Nations Human Rights Council approved its new Guiding Principles for the implementation of the Protect, Respect and Remedy Framework, designed to help states and businesses understand their duty to prevent corporate abuse of human rights and their obligations under international law (“Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework,” 21 March 2011).

According to these principles, “states should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the state … [including by] denying access to public support and services for a business enterprise that is involved with gross human rights abuses and refuses to cooperate in addressing the situation.”

Involvement in the light rail project also violates the Organization for Economic Cooperation and Development’s guidelines on multinational companies. Considering that Paris is the seat of the OECD, this is particularly ironic (“OECD Guidelines for Multinational Enterprises,” 2008 [PDF]).

The OECD guidelines call for companies to “respect the human rights of those affected by their activities consistent with the host government’s international obligations and commitments.” Israel’s settlements and associated infrastructure violate several key international law treaties, including the Fourth Geneva Convention, the International Covenant on Economic, Social and Cultural Rights and the International Covenant on Civil and Political Rights, all of which have been ratified by Israel and France.

The French government has become a shareholder in Veolia in full knowledge of that company’s role in supporting Israeli occupation and colonization of Palestinian land. The principal victims of this French policy are the Palestinian people. However, this development should also be of concern to all those who believe in the importance of a functioning system of international law and the implementation of human rights standards. The French people, whose taxes have financed the Veolia Transdev merger, should be especially concerned.

It will be up to campaigners in France and all around the globe to stop governmental buy-ins to illegal operations of private or state enterprises. It will be their task to ensure that the Transdev deal will not be enough to shield Veolia from the impact of the BDS movement’s demand for accountability. The group is in financial trouble and its CFO has admitted that Veoila is losing municipal service contracts in cities and regions that have seen meticulous grassroots campaigning. In December, Veolia will present the full list of countries which it is leaving (“Veolia to leave 37 countries as loss spurs quicker revamp,” Bloomberg, 4 August 2011).

This might be another chance for the company to show that it has learned that failure to respect human rights and the Palestinians’ right to self-determination comes with a price.

Maren Mantovani is coordinator for international relations with Stop the Wall, the Palestinian Grassroots Anti-Apartheid Wall Campaign.

Michael Deas is Europe coordinator for the Palestinian Boycott, Divestment and Sanctions National Committee (BNC).

I am having lots of problem with Mr. Cole these days , his blind support of Obama is really something  Iwas not expecting from a man like him. But when it comes to Israel, he has very good and intelligent observations.



What lies Behind Netanyahu’s Bluster on ’1967 Borders’

Posted on 05/24/2011 by Juan

Prime Minister Binyamin Netanyahu’s high dudgeon over the world community’s demand that Israel return more or less to ’1967 borders’ plays to two audiences, his domestic constituency among far rightwing ‘Greater Israel’ parties intent on usurping Palestinian land, and his American constituency among the third or so of US Jews who oppose trading land for peace.

For the rest of us in the US, being yoked to Netanyahu’s angry expansionism is like being forced to date Charlie Sheen. It won’t do our own reputation any good, and it won’t rescue him from his self-destructiveness.

The ’1967′ borders are actually those that obtained before Israel launched its 1967 ‘Six-Day War’ on Syria, Jordan and Egypt. (There is no doubt that Israel launched this war, and that its aggressiveness with Syria in the previous six months contributed mightily to the tensions that led to it.)

The reason Israel has to go back to 1967 borders is that the annexation of territory from a neighbor through warfare is illegal according to the United Nations Charter, which is a treaty to which Israel and the United States are both signatories. ‘Greater Israel’ apologists attempt to get out of this difficulty by saying that countries used to conquer land away from their neighbors all the time. This is a bogus argument, since countries used to do a lot of things, including sponsor the slave trade; Britain even insisted on China allowing the sale of opium in the early 19th century. The world changed when World War II ended and the countries of the world established the United Nations to forestall any recrudescence of Axis techniques of conquest and rule. If Israel does not believe in the UN Charter, it should renounce its UN membership.

It is not just the UN Charter. The Hague Agreement of 1907 and the Geneva Convention of 1949 forbid a power occupying enemy territory in war time from annexing it or in any way changing the life ways of its people.

Another bogus argument the Greater Israel expansionists trot out is that the UN Charter only forbids the acquisition of territory from other countries, and the Palestinians did not have a country, and so they are fair game. This argument is morally despicable, since the Israelis made the Palestinians stateless, thwarting the intention of the League of Nations that Palestine become a state; and now they are using the abjectness and statelessness as an argument that Palestinians can be stolen from at will. But the argument is also incorrect. Both the League of Nations and the UN made it perfectly clear that they intended that the Palestinians have a state in the future, so in preventing this from happening the Israelis are defying international law. The 1947 UN Partition Plan, the legitimacy of which the Israeli government says it recognizes, awarded Gaza and the West Bank to the Palestinians. So it is not true that these territories are no-man’s land or that there is no legal framework for their people’s existence, such that anyone could enslave them or expropriate them at will.

Netanyahu’s argument for not going back to 1967 borders is that it is inconvenient. He says that the 1967 borders are indefensible. This assertion is a logical fallacy, known as special pleading. You can’t launch a war and annex your neighbor’s territory because you fear that your own presents security challenges. Lots of countries are unhappy with their borders. Saddam Hussein annexed Kuwait in 1990 in part because he felt that the British had erred in not giving modern Iraq a deep water port, which made Iraq ‘indefensible’ and put it at an economic disadvantage. Pakistan believes that its failure to secure the headwaters of the Indus Valley rivers in Kashmir in 1947 puts it at a permanent disadvantage vis-a-vis India and makes the country overly vulnerable (‘indefensible’). Netanyahu’s immoral argument that a country just has to take by main force whatever it feels will make it more secure is astonishing and is a standing danger to world peace if it were taken seriously by other countries.

Aljazeera English reports on Netanyahu’s rejection of 1967 borders and anything like them:

International law forbids Israel to colonize the West Bank– not only the UN Charter but also the Geneva Conventions of 1948.

But beyond the specious character of Netanyahu’s rhetoric (according to which it would have been perfectly all right for George W. Bush to annex Iraq to the United States), the fact is that the whole tiff over ’1967 borders’ is a smokescreen for Israeli expansionism. The settler movement could put down settlements in much of the sparsely populated south of Israel proper with no problem. Instead, they insist on taking Palestinian land. They are not colonizing the West Bank only to make it more ‘secure’ (they are making it less so), but rather out of greed, ambition, and expansionism. It is not about defense, it is about offense.

(Courtesy the BBC)

The Likud Party led by Netanyahu does not believe in allowing the Palestinians to have a state, and does not believe in withdrawing from the Occupied Territories. This obstinate stance and commitment to undermining the international rule of law is why there is no point in ‘engaging’ the Likud with ‘ compromises.’ Netanyahu led the charege against the Oslo Peace process pursued by then PM Yitzhak Rabin in the early 1990s, and when Rabin was assassinated and Netanyahu came briefly to power he did whatever he could to destroy the peace process. He admitted this obstructionism on tape:

Netanyahu rudely lectured President Obama in front of the cameras that the Palestinian desire to see some of the refugees expelled from their homes by the Israelis in 1948 ‘isn’t going to happen’ and he urged Obama to frankly tell the Palestinians that it isn’t going to happen. But he may as well also have instructed Obama to tell the Palestinians that the two state solution is dead.

Israel by now has not only planted colonies all over the West Bank and moved hundreds of thousands of people in, but it has secretly withdrawn residency rights from 140,000 Palestinians. The ‘separation barrier’ removed another 12 percent of Palestinian territory. No one can look at a map of Gaza and the West Bank as they actually exist and see a viable state that could protect the rights of its citizens (the point of a state). Israel keeps announcing new settlements or expansions of existing ones on Palestinian territory.

Netanyahu is saying ‘no’ to peace, ‘no’ to negotiations, ‘no’ to dignity and rights for Palestinians for generations to come.

Ben Franklin said that ‘Experience keeps a dear school, but fools will learn in no other.’ Netanyahu’s children and grandchildren and great grandchildren will one day regret that he slapped away the hand of help and the good will of Barack Obama in favor of a stubborn and greedy Israeli expansionism.

The most likely outcome of Israel’s present course is a one state solution, achieved over decades, with much heartbreak and violence and ruined lives in the meantime. The Jews of Israel will likely end up like the Maronite Christians of Lebanon. France created Lebanon in 1920 for a then Christian majority, but Christian out-migration and rapid Muslim population growth reduced the Maronites to only about 22 percent of the population today if we count children. Likewise, Israeli Jews have already lost their majority among first-graders in what was Mandate Palestine in favor of Palestinians and Palestinian-Israelis. Current demographic trends will likely produce an Israel that is a third Arab by 2030 and that is not even counting the Occupied Territories. The instability in the Arab world and the Greater Middle East, which is growing, could well over time increase Jewish out-migration (out of sheer nervousness) so that it outstrips in-migration of Jews. I can’t see a way for Israel to escape this demographic and geopolitical fate and remain viable as a nation-state. Plans on the Israeli right to denaturalize and expel the 1.5 million Palestinian-Israelis are unrealistic and do not reckon with the likely backlash from the Arab world, which won’t remain weak and abject forever. (We can already see glimmerings of a new, more assertive Egypt).

The course Netanyahu is charting will harm the United States in so many ways they are hard to count. But he is also digging the grave of his own vision of a Jewish state.

So, the whole charade of “peace process” was nothing other than giving Israel a little bit of legitimacy and let them fool the world that US and Israel actually believe in peace.
How sad is that the Clinton who doesn’t wait a day to stand for the “Iranian’s right and call for democracy in Iran”, stands one more time on the side of the criminals.

The United States Stands Alone with Israel in the UNSC

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Susan RiceOr How Honest is the Honest Broker?

In what appears to be as close to a consensus as the world community can ever hope to achieve, the United States reluctantly stood its ground on behalf of Israel and on February 18, 2011 vetoed a resolution on the Israeli settlements  in the West Bank and East Jerusalem that was supported by all 14 of the other members of the UN Security Council. The resolution was also sponsored by 130 member countries before being presented to the Council. In the face of such near unanimity the United States might have been expected to some respect for the views of every leading government in the world, including all of its closest European allies, to have had the good grace to at least abstain from the vote.

Indeed, such an obstructive use of the veto builds a case for its elimination, or at least the placement of restrictions on its use. Why should an overwhelming majority of member countries be held hostage to the geopolitical whims of Washington, or in some other situation, an outlier member trying to shield itself or its ally from a Security Council decision enjoying overwhelming support. Of course this American veto is not some idiosyncratic whim, but is an expression of the sorry pro-Israeli realities of domestic politics, suggesting that it is Israel that is the real holder of the veto in this situation, and the U.S. Congress and the Israeli Lobby are merely designated as the enforcers.

Susan Rice, the American chief representative in the Security Council, appeared to admit as much when she lamely explained that the casting the veto on this text “should not be misunderstood to mean support for settlement construction,” adding that, on the contrary, the United States “rejects in the strongest terms the legitimacy of continued Israeli settlement activity.” Why then? The formal answer given is that the United States, agreeing with Israel, believes that only in the context of direct negotiations can the issue of settlements be addressed alongside other unresolved matters such as refugees, borders, and the status of Jerusalem. This seems absurdly arrogant, and geopolitically humiliating. If the 14 other members of the Security Council believe that Israeli should be censured for continuing to build unlawful settlements, and that no negotiations can proceed until it ceases, then it would seem that a united front would be the most effective posture to resumed negotiations. This is especially so here as it is a no brainer to realize that every additional settlement unit authorized and constructed makes it less likely that a truly independent and viable Palestinian state can ever be brought into being, and that there exists the slightest intention on the Israeli side to do so.

In view of this feverish Israeli effort to create still more facts on the ground, for the Israelis to contend that negotiations should resume without preconditions, is to hope that the Palestinian Authority will play the fool forever. After all for more than 43 years the Israelis have been whittling away at the substance of the two state consensus embodied in unanimous Security Council Resolution 242 (1967), contending at every phase of the faux peace process that an agreement must incorporate ‘subsequent developments,’ that is, unlawful settlements, ethnic cleansing. In the end, the Israelis may turn out to have been more clever by half, creating an irresistible momentum toward the establishment of a single secular democratic state of Palestine that upholds human rights for both peoples and brings to an end the Zionist project of an exclusive ‘Jewish state.’ With great historic irony, such an outcome would seem to complete the circle of fire ignited by Lord Balfour’s secret 1917 promise to the Zionist movement of ‘a Jewish homeland’ in historic Palestine, a process that caused a Palestinian catastrophe along the way and brought war and bloodshed to the region.

The disingenuousness of the Israeli position was confirmed by the recent publication of the Palestine Papers that showed beyond a shadow of a doubt that even when the Palestinian Authorities caved in on such crucial issues as Jerusalem, settlements, and refugees, their Israeli counterparts, including the supposedly more moderate predecessors to the Netanyahu leadership, displayed no interest in reaching even an agreement so heavily weighted in Tel Aviv’s favor. What seems inescapable from any careful reading of these negotiating positions behind closed doors during the prior decade is that the public negotiations are a sham designed to buy time for Israel to complete its illegal dirty work of de facto annexation in the West Bank, a position it has long adopted in the form of Israeli de jure annexation of the entire expanded city of Jerusalem in defiance of the will of the international community and the understanding of international law, objectively considered. To contend that stopping the unlawful encroachments of continuing settlement activity on occupied Palestinian territory, an assessment that even the United States does not question substantively, is an inappropriate Palestinian demand seems so excessive as to humiliate any Palestinian representatives that stooped so low as to accept it. Equally so, is the Israeli claim that this demand has not been made in the past, which to the extent accurate, is not an argument against freezing further settlement activity, but a disturbing comment on Palestinian complacency in relation to their failure to insist upon respect for their rights under international law.

In the context of this latest incident in the Security Council, the Palestinian Authority deserves praise for holding firm, and not folding under U.S. pressure, which was strongly applied, including reported warnings from President Obama by phone to President Mahmoud Abbas of adverse ‘repercussions’ if the text calling for an end to illegal settlement building was brought before the Security Council for a vote. Obviously, the United States Government realized its predicament. It did not want to be so isolated and embarrassed in this way, finding itself caught between its international exposure as willing to support even the most unreasonable Israeli defiance of the UN and its domestic vulnerability to a pro-Israeli backlash in the event that it failed to do Israel’s bidding in this matter of largely symbolic importance.

We should not forget that had the Security Council resolution been adopted, there is not the slightest prospect that Israel would have curtailed, let alone frozen, its settlement plans. Israel has defied a near unanimous vote (with, hardly a surprise, the U.S. judge casting the lone negative vote among the 15 judges) of the World Court in 2004 on the unlawfulness of the settlement wall. Here, an American dissent could not bring Israel in from the cold of its refusal to abide by this ruling as thankfully there is no veto power in judicial settings. In that instance of the wall, Israel wasted no time denouncing the advisory opinion of the highest UN judicial body, declaring its refusal to obey this clear finding that the wall built on occupied Palestinian territory should be dismantled forthwith and Palestinians compensated for any harm done.  Instead, despite brave nonviolent Palestinian resistance, work continues to this day on finishing the wall.

With respect to the settlements it is no wonder that American diplomacy wanted to avoid blocking an assertion of unlawfulness that it was on record as agreeing to, a fact awkwardly acknowledged by Ambassador Rice in the debate, knowing that the resolution would not have the slightest behavioral impact on Israel in any event. It should be noticed that as much as Israel defies the UN and international law, it still cashes in its most expensive diplomatic chips to avoid censure whenever possible. I believe that this is an important, although unacknowledged, Israeli recognition of the legitimizing role of international law and the UN.  It is also connected with an increasing Palestinian reliance on soft power, especially its BDS campaign. This partial shift in Palestinian tactics worries Israel. In the last several months Israeli think tanks close to the government refer to as ‘the delegitimation project’ with growing anxiety.  This approach of the Palestinian Global Solidarity Movement is what I have been calling a Legitimacy War. For the last several years it is being waged and won by the Palestinians, joining the struggles of those living under occupation and in exile.

On the PA side there was reported anxiety that withdrawing the resolution in this atmosphere would amount to what was derisively referred to as a possible ‘Goldstone 2,’ a reference to the inexcusable effort by the Palestinian Authority back in October 2009 to have consideration of the Goldstone Report deferred for several months by the Human Rights Council as a prelude to its institutional burial, which has now more or less taken place thanks to American pressures behind the scene. It has even been suggested that had the PA withdrawn the resolution Abbas would have been driven from power by an angry popular backlash among the Palestinian populace. In this sense, the PA was, like the United States, squeezed from both sides: by the Americans and by their own people.

Of course, in the background of this incident at the UN are the tumultuous developments taking place throughout the region, which are all adverse to Israel and all promising in relation to the Palestinian struggle even though many uncertainties exist. It is not only the anti-autocrat upheavals in Tunisia and Egypt, the outcome of which is still not clear from the perspective of genuine regime change as distinct from recasting the role of dictatorial leader, but the wider regional developments. These include the political rise of Hezbollah in Lebanon, Turkish diplomacy that refuses to tow the Washington line, the failure of American interventionary diplomacy in Iraq, and the beleaguered authoritarian governments in the region some of whom are likely to give more active support on behalf of Palestinian goals to shore up their own faltering domestic legitimacy in relation to their own people.

In many ways, the failed Security Council resolution condemning Israeli settlement activity is a rather trivial event in the broader setting of the underlying conflict. At the same time it is a significant show of the play of forces that are operative in Washington and Ramallah, and above all, it is an unseemly display of the influence Israel wields with respect to the Obama Administration. Is it not time that the United States revisited its Declaration of Independence or began to treat the 4th of July as a day of mourning?

Wikileaks: Economic Reasons Behind the Siege on Gaza

Wikileaks: Economic Reasons Behind the Siege on Gaza

Thursday, 10 February 2011 17:20 Shir Hever, JNews
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The ripple effects of the Wikileaks documents are still being felt, but until recently Israeli officials continued to boast that the documents were ‘good for Israel’.


As opposed to the way the Palestinian Authority (PA) was portrayed in leaked cables, leading to scandalous revelations, for a while Israel suffered no such scandal from the documents pertaining to its conduct. Israeli Prime Minister Benjamin Netanyahu even came out in support of the leak of the papers, suggesting that the documents can do no harm to Israel’s foreign policy.

He spoke too soon. More recent cables have provided unflattering revelations about Israel’s policies in the Gaza Strip, quoting Israeli officials spelling out their attempts to keep the Gaza Strip on the brink of humanitarian catastrophe. They have also described howcorruption is rife at the checkpoints through which goods are brought into Gaza.

Yet this information failed to shock. It was already well-known and widely reported by UNbodies, NGOs, scholars and journalists.

One cable, however, does contain some new information and has so far received no coverage at all.

The cable, titled “Shin Bet Talks Gaza Economics,” was written by David R. Burnett, Economic Counselor in the US embassy in Tel Aviv. It describes a briefing given to Embassy officials by senior members of the Israeli Shin Bet*, on how Israel uses the banking system in Gaza to increase the political influence of the Palestinian Authority (PA) in Gaza, by attempting to starve the Hamas government of cash.

The Shin Bet informed the US embassy that banks in Gaza know that they must neither allow Hamas members to open bank accounts nor have salaries deposited into existing accounts. If the banks disobey, they will lose their stamp of approval from the Palestinian Monetary Authority (PMA), a branch of the PA that is under constant pressure by Israel and the US to prevent any dealings with Hamas members. The Shin Bet expressed satisfaction that the Gaza banking system has indeed been cowed into submission.

Meanwhile, the PA is allowed to continue to pay wages to its employees in the Gaza Strip, thus creating a privileged class in Gaza with reliable income as long as they do not cooperate with the Hamas de-facto government.

While the Shin Bet officers gave no evidence that Hamas uses its budget for terrorism, they did give an interesting breakdown of Hamas’s overall budget. However, considering that this is a Shin Bet estimate, one should take the following figures with a grain of salt.

According to the leaked cable, Gaza’s de-facto Hamas government spends an estimated budget of US$290 million annually, on a population of approximately 1.5 million residents.

The PA’s budget is four times bigger, at approximately US$1.24 billion in 2010. The PAprovides services to about 2.4 million residents in the West Bank, as well as covering some of the costs of certain services for Gaza’s residents.

The Shin Bet estimates that Hamas uses US$40 million (13.8% of its budget) for military and security needs, and invests the remainder in administration and civilian projects.

Israel, by comparison, ran a budget of US$96 billion in 2010 (for a population of 7.6 million), and spent 18.6% of it on military and security purposes – so that, ironically, even according to Shin Bet estimates, Israel spends proportionately more on its military than Hamas spends.

The report further elaborates that the circulation of Israeli Shekels (NIS) in Gaza is increasing, while foreign currency supplies are dwindling. This is clearly a direct result of thealmost total ban on exports from Gaza (although Gazan merchants may still import certain products) – yet the Shin Bet kept silent regarding the reason for the shortage in foreign currency.

One wonders why Israeli officials feel more threatened by, say, vegetable exports from the Gaza Strip than by imports of materials into Gaza. What possible security justification can there be to keep Gazans from earning their living by exporting products?

The Shin Bet’s argument – and that of the Israeli government – seems to be that Israel should keep Gaza’s standard of living low, because Hamas somehow gains popularity when Palestinians are able to make a decent living.

However, the Shin Bet did acknowledge in their briefing that Israel’s policy is to maintain the predominance of the Israeli currency in the occupied Palestinian territory (oPt). This admission can perhaps shed light on another, undeclared reason for the ban on exports.

This document demonstrates that the Israeli government is in fact strangling the Gazan economy in order to turn Gaza into a captive market for Israeli products and maintain demand for the Israeli shekel – all in the name of “fighting terrorism.” It also demonstrates that the international community – and especially the US – have allowed this policy to continue.

* The Shin Bet or Shabak, officially called the Israel Security Agency (previously the General Security Service) is Israel’s secret police, and is directly subordinate to the Prime Minister’s Office.

Shir Hever is an Israeli economist and commentator who researches the economic aspects of the Israeli occupation of the Palestinian territories.