Canada’s economic assistance to the OPT: ideology, politics, and flawed responses

ABSTRACT

While Canada has been providing development assistance to the Palestinians in the Occupied Palestinian Territories (OPT) since 1993, its economic development assistance program took shape in 2007 after the formation of the Palestinian technocratic government. Even though the Canadian government had access to substantial analysis regarding the most significant impediments to the economic development of the OPT, its chosen areas of focus were informed more by its ideology, politics towards the region, and a belief in maintaining a viable economy until such time that efforts to work out the political issues related to illegal settlements, access and movement, borders, and the final formation of a Palestinian state bear fruit. As demonstrated, Canada’s actions, along with that of other donors, have allowed for Israel to continue undertaking actions that have a significant economic cost for Palestinians and that make adequate economic development impossible and a long-term viable Palestinian economy less likely.

RÉSUMÉ

Alors que le Canada fournit une aide au développement aux Palestiniens vivant dans les territoires occupés de Palestine (TPO) depuis 1993, son programme d'aide au développement économique a pris forme en 2007 après la formation du gouvernement technocratique palestinien. Même si le gouvernement canadien a eu accès à une analyse substantielle concernant les obstacles les plus importants au développement économique des TPO, les domaines sur lesquels il s'est concentré ont été davantage orientés par son idéologie, sa politique envers la région et sa conviction qu'il fallait maintenir une économie viable jusqu'à ce que les efforts pour résoudre les problèmes politiques en rapport avec les colonies illégales, l'accès et les déplacements, les frontières et la formation finale d'un État palestinien portent leurs fruits. Comme cela a été démontré, les actions du Canada, ainsi que celles d'autres donateurs, ont permis à Israël de continuer à entreprendre des actions qui ont un coût économique considérable pour les Palestiniens, et qui rendent impossible un développement économique approprié, et moins probable une économie palestinienne viable à long terme.

KEYWORDS:

• West Bank and Gaza
• economic development
• Canada
• international aid
• Israel
• access and movement

Introduction

In December 1967, Moshe Carmel, then Israeli Transportation Minister, was quoted as saying “[i]f we sit 20 years, the world will get used to our being in those territories” (Aderet, 2017). This “sitting” metaphor can also be applied to donor assistance to the Occupied Palestinian Territories (OPT). As the analysis herein demonstrates, the lack of donor action regarding the most important barriers to the economic development of the OPT has allowed the legitimization of Israel’s harmful actions and policies, inaction on these issues, diversion of blame, and an overwhelmingly misguided focus on Palestinian behavior and policies.

Canada’s development assistance for and foreign policy actions towards the OPT is no exception. As is demonstrated below, while Canada’s economic development program in the OPT continues to focus heavily on helping Palestinian businesses build trade networks and capacity to access markets outside the OPT, this approach seems to be disconnected from the realities on the ground. It also seems to be questionable given that (a) 90 percent of Palestinian businesses are micro and small without the ability to attain economies of scale and compete internationally (The World Bank, 2007), (b) the Palestinian economy is inundated with Israeli products, (c) businesses do not have the incentive to invest and ramp up production given the risks associated with Israel’s actions and its inconsistent treatment of imports of raw materials and export of Palestinian products, and (d) the support offered, be it financial or political, does not deal with the real causes of the economic de-development of the OPT.

This paper offers analysis of Canada’s economic development aid to the Palestinians.¹ To understand what Canada was funding into, it starts with a review of the recent economic history of the OPT and the most important hinderances to its economic development. The facts associated with the inherent obstacles placed on the Palestinian economy by Israel’s rule make Palestinian economic success under any conceptual or theoretical framework seem impossible. This includes the dominant neoliberal paradigm adopted by key actors like the World Bank and the International Monetary Fund (IMF) when designing or recommending policy, and Canada itself when it comes to the implementation of programing (Dagher, 2014).² With this analysis completed and with a clearer understanding of the causes of the economic development problem, the attention then turns to Canada’s historical and current economic development programing in the OPT. Finally, the disconnect between Canada’s economic development program in the OPT and the causes of the limited economic development or even the de-development of the OPT is analyzed.

Recent economic history and current reality in the OPT

Land and agriculture have been key productive factors for the Palestinian economy for centuries. The formation of the State of Israel had a significant impact on Palestinian land ownership, land access, access to fresh water, agricultural productivity, economic activity, and thus the structure of the Palestinian economy (Al-Shalalfeh, Napier, & Scandrett, 2018; Badran, 1980; Grinberg, 2014; Kubursi, 2001; Temper, 2009).

In 1993 and 1995, hopes for a future viable Palestinian economy and for a separate Palestinian state were raised by the signing of the first and second Oslo Accords between the Israeli government, under the leadership of Yitzhak Rabin, and the Palestine Liberation Organization (PLO), under the leadership of Yasser Arafat. These accords established the Palestinian Authority (PA) and defined the areas of control of the PA in the West Bank and Gaza (the OPT henceforth). The West Bank was divided into three administrative divisions: Area A under the administrative control of the PA regarding civil and security matters, Area B under the administrative control of the PA regarding civil matters and of Israel regarding security matters, and Area C under administrative and security control of Israel. Moreover, under the Oslo Accords, while the status of the divided city of Jerusalem was to be determined as a final settlement issue once there was a pending agreed solution to the conflict, Israel was able to maintain security and administrative control over the divided city, including East Jerusalem. The Oslo Accords also legitimized Israel’s control over all access points in and out of the OPT and in and out of all three administrative areas.

Not only did the Oslo Accords advance Israel’s cause and provide a cover for the Israeli occupation (Khalidi & Samour, 2011)³, but the manner in which they were implemented also contributed to a significant impediment to the economic development of the OPT. The drawing of Area C had the largest impact. According to several studies, including one done by the World Bank in 2013, Area C covers more than 60 percent of the West Bank and contains most of the West Bank’s natural resources, including water (The World Bank, 2013). This area is also riddled with ever-expanding illegal Israeli settlements, over 70 percent of it is off-limits to Palestinians, and 29 percent of it is heavily restricted (United Nations Office for the Coordination of Humanitarian Affairs in the occupied Palestinian territory, 2011a). This has had a significant impact on the economic development of the West Bank since Area C represents the West Bank’s only contiguous land. Moreover, given that Area C surrounds Areas A and B, it is the only land that connects Areas A and B in the West Bank. Any large-scale infrastructure project that is expected to benefit the West Bank and its residents has to pass through Area C. However, with Israel refusing construction permits inside Area C, the approval of any small or grand scale Palestinian housing, livelihood or infrastructure project is highly unlikely (Hague, 2016). This puts a severe impediment on small and large-scale economic projects.

Israel is also accused of demolishing a high number of Palestinian homes and livelihood infrastructure while refusing to issue construction permits to Palestinians in this area (United Nations Office for the Coordination of Humanitarian Affairs in the occupied Palestinian territory, 2011a, 2015). According to Roy (2001), between 1993 and 2000, the Israeli government had already confiscated tens of thousands of acres of Palestinian land for road building and the establishment of illegal Israeli settlements. Along with the increased number of settlements, Israel established a strict system of movement and access and a severe system of repressing dissent (Abu-Lughod, 1982). By 2003, Israel had imposed between 25 and 30 checkpoints and a significant number of unmanned roadblocks in the Gaza Strip (The World Bank, 2003). A more recent study by Btselem, an Israeli human rights organization, notes that Israel has, as of January 2019, seized close to 500,000 acres of land in the West Bank.⁴ The number of settlers in the OPT has also increased from 1500 in 1972 to 427,800 in 2018.⁵

With a selective issuance of construction permits that has mostly favored settlers (Hague, 2016; United Nations Office for the Coordination of Humanitarian Affairs in the occupied Palestinian territory, 2011a, 2015), the geography of the West Bank has changed significantly. Over 98 percent of Palestinian permit requests have been rejected in Area C and building permits for Palestinians in Jerusalem have been severely constrained with only seven percent of permits going to Palestinians, a group that forms nearly 40 percent of the population.⁶ These settlers live in housing structures that range from well-developed housing communities to hilltop outposts. Of the more than 200 settlements, 131 are officially recognized by the Government of Israel.⁷ Some settlements are established on agricultural or “undeveloped” lands, but many are established in Palestinian-dominated cities (like Hebron and East Jerusalem) following the forced dispossession of Palestinian homes and structures.⁸ Meanwhile, the State of Israel has also built hundreds of kilometers of Israeli-settler-only bypass roads that have made much of the Palestinian farmlands off-limit to Palestinians (Meron, 2017) and walls or other gate-like structures to limit Palestinian access to settler areas (see below). A more recent example from March 2020 is that of the action of Israel’s government and military in Jaloud village south of Nablus, a major Palestinian city, where Israel has demolished land, confiscated 2500 acres of Palestinian owned farmland, and re-zoned 85 percent of the village’s farmland, about 1500 acres, as a closed military zone for the protection of illegal Israeli settlers in the Shevout Rachile and Shilo, Aadi Aad, Kodish, Keda and Ahya settlements (Almeghari, 2020).

While the Oslo Accords established the administrative responsibilities of the PA and the Government of Israel in the OPT, it did little to curtail an Israeli policy of closure limiting Palestinian movement, which got worse right after the first Oslo Accord was signed in 1993 (Wildeman, 2015). According to Roy (2001), Israel practiced three types of closures: general, total and internal. General closure limits the movement of goods, services and people between the West Bank and Gaza and between the OPT, Israel and the rest of the world. Total closure refers to the ban of all movement following a security incident. Finally, internal closure restricts the movement between Palestinian areas in the West Bank through several blockades and checkpoints, a situation that directly resulted from the Oslo Accords’ division of the West Bank into Areas A, B and C. Area C is where the settlements have primarily been built. The separation of Palestinians lands within the OPT has intensified since the building of the separation wall in Palestinian areas of the West Bank in 2002, which also destroyed 10 percent of the most fertile land in the West Bank and separated Palestinians from their land and from each other (United Nations Conference on Trade and Development (UNCTAD), 2016).

Table

	Methods of Closure in the West Bank 2005–2018
	Checkpoint	Partial Checkpoint	Road Gate	Roadblock	Earth mound	Earth wall	Trench	Road Barrier	Total
Apr-2005	57	7	51	118	282	35	55	0	605
Jan-2006	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	471
Apr-2007	72	13	92	59	209	16	12	74	547
Apr-2008	71	17	84	72	238	33	17	75	607
Jun-2009	68	23	105	69	203	50	21	75	614
Jun-2010	64	25	112	66	162	20	10	45	504
Aug-2011	60	26	105	59	194	22	8	45	519
Dec-2012	59	28	116	62	185	24	8	50	532
Sep-2014	60	25	105	61	147	26	9	57	490
Dec-2015	70	26	111	77	179	22	8	50	543
Mar-2017	44	52	124	72	180	30	7	63	572
Jul-2018	66	74	165	96	149	31	12	67	660

Source: OCHA Reports on West Bank Access and Closures. Reports were gathered from the following website: https://www.ochaopt.org/location/west-bank.

The closure system has led to fluctuating employment levels, especially during the frequent times when Palestinians were not able to enter Israel to work, and unreliable and fluctuating trade and production levels (Roy, 2001). These closures have effectively closed off most of the trading done inside the West Bank, and between the West Bank and Gaza (Roy, 2001; United Nations Office for the Coordination of Humanitarian Affairs in the occupied Palestinian territory, 2017). They have also curtailed exports from the OPT to Israel and the international market (The World Bank, 2013). With Israel imposing its own ad hoc holding period for Palestinian exports, 10 days for products originating from the West Bank and 30 days for those originating from Gaza, Palestinian exports quickly became, and continue to remain, uncompetitive (The World Bank, 2008b, 2017). This was in addition to the limitations placed by an impossibly stringent Israeli system of required labeling, certification and standards (The World Bank, 2007). However, during all this time, imports of Israeli products into the OPT continued unabated (Roy, 2001; The World Bank, 2017). Owing to these challenges, by the 2000s the business environment became non-conducive to large businesses and thus the Palestinian economy lost some of its large enterprises and transformed into one made up of slightly over 80,000 private enterprises that employed an average of about four people per enterprise and about another 80,000 micro family business enterprises (Abdelkarim & Alawneh, 2009). This decrease in the size of Palestinian enterprises meant a decrease in the ability and potential to attain economies of scale, compete internationally, and benefit from export-led growth (The World Bank, 2007).

These closures also contributed to the non-feasibility of the Paris Protocol that was agreed upon in 1994 between the PLO and Israel, and which was criticized by many for ignoring the colonization and ensuing suffering of the Palestinian people (Ibrahim & Beaudet, 2012). This protocol, officially named the Protocol on Economic Relations, established a customs agreement on the free movement of goods and people between Israel and the OPT (Elkhafif, Misyef, & Elagraa, 2014). It also allowed the PA to impose taxes on imports. However, given Israel’s control over all entry points in and out of the OPT, the agreement stipulated that Israel would gather the import taxes and transfer the revenue onto the PA (Elkhafif et al., 2014).

An improper implementation of the Protocol has also significantly impaired the OPT’s economic development and stability. According to Mason (2013), given that the Protocol was not legally binding, Israel either ignored it or used several clauses to impose its own standards. With the unequal economic relations between the two and Israel’s lack of commitment to the Protocol, the anticipated benefits did not materialize and the Protocol, with the exception of the tax transfer aspect, was suspended in 2000 following the outbreak of the Second Intifada. Still, the tax transfers have been inconsistent in value and timeline (Elkhafif et al., 2014). Israel has often used this revenue stream to punish the PA for political decisions (Elkhafif et al., 2014). UNCTAD (2019) has highlighted at least four times when Israel withheld the transfer of these revenues (2002, 2006, 2011 and 2014) for political reasons. This has led to a significant cost to the Palestinian economy since these transfers have at times represented the majority of the PA’s source of funds, reaching 75 percent in 2015 (UNCTAD, 2015, 2019). It has also led to a very limited policy space for the PA to develop programing for Palestinian development, inconsistent funding for public expenditures, and significant economic dependence on Israel (UNCTAD, 2016).

The following citation from a UN report (UNCTAD, 2019) clearly summarizes the resulting contributions of the Protocol:

The expected gains and outcomes from the Paris Protocol were counterproductive, given that the ensuing trade framework and economic policies of Israel do not serve the interests of the Palestinian economy. Add to that the closure policy of Israel and restrictions on the movement of people and goods, and a range of security and military measures imposed on the Occupied Palestinian Territory, which have led to accumulating economic losses to the Palestinian people (p. vi).

The Second Intifada, or the al-Aqsa Intifada (2000–2006), had a significant impact on the social, health and economic situation of Palestinians living in the OPT. The Second Intifada affected the OPT’s domestic production, investments and exports. During stretches of the Second Intifada, up to 200,000 Palestinian workers were blocked from going back to their jobs in Israel, trade between Israel and the OPT was crushed, if not eliminated in some areas, and Palestinian production was hampered by security issues given the significant limitations on access and movement inside the West Bank (Mason, 2013; The World Bank, 2007). Moreover, it is estimated that Israel’s military actions on the OPT inflicted $650 million in damages to physical infrastructure (buildings, land, roads, schools, hospitals, utilities, etc.) in an already poor region (Ajluni, 2003) that had suffered economically from de-development in the 1990s (Wildeman, 2015) and decades prior (Roy, 1987, 1999). According to Ajluni (2003), the unemployment rate in the West Bank increased from 11 percent in 2000 to 41 percent in 2002 and that of Gaza increased to more than 64 percent during the same period. The curfews and restrictions in Gaza meant that Palestinians inside Gaza were not allowed to cross major checkpoints at heightened times of security without international staff and only certain humanitarian goods were allowed through the Karni crossing with Israel (The World Bank, 2003). Moreover, at one point nearly all Gazan Palestinians lost their jobs in Israel (The World Bank, 2003). The closures and restrictions on people and goods significantly increased the rate of poverty in Gaza, one that exceeded 75 percent in 2003 (The World Bank, 2003). According to the World Bank (2008a), the Second Intifada changed the Palestinian economy from one based on investment and productivity to one supported by consumption from the public and private sector and by significant aid flows.

In 2005, Israel’s withdrawal of settlement, settlers, and military positions from the Gaza Strip ushered in another phase of economic decline in Gaza, and additional barriers. Israel’s creation of a “buffer” zone along the Gaza-Egypt border destroyed significant Palestinian property (Mari, 2005). Moreover, the withdrawal was accompanied by new restrictions on the airspace above Gaza (which at one point had a functioning Palestinian airport), the creation of a maritime no-go zone starting at 3 nautical miles off Gaza’s Mediterranean coastline instead of the agreed upon 20 miles in the 1994 Agreement on the Gaza Strip and the Jericho Area (UNCTAD, 2016), the creation of a 300 meter wide no-go zone along the Gaza-Israel border, the establishment of only two official crossing points from Gaza into Israel (one which allows for the movement of people (Erez) and the other for the movement of goods (Karni)⁹), and the creation of an area adjacent to the no-go zone that is within the military reach of the Israeli Defence Force. Owing to all of these restrictions, Israel has maintained significant control over Gaza and Gazans have since faced significant humanitarian crises, significant infrastructural problems, and economic collapse (United Nations Office for the Coordination of Humanitarian Affairs in the occupied Palestinian territory, 2011b). As such, Israel’s control of access and movement into Gaza and of what is allowed in and out of Gaza has led to a protracted economic siege.

In May 2006, the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) released a report that detailed the extreme territorial fragmentation of the West Bank and the resulting impact on the Palestinian Economy (United Nations Office for the Coordination of Humanitarian Affairs in the occupied Palestinian territory, 2006). In this report, OCHA (2006) notes that,

[t]rade routes from the northern West Bank to Nablus and further to the south or into the Jordan Valley have been severed for northern residents. Vendors of perishable products such as vegetables and fruit have no access to markets … Goods travelling north from Hebron and Bethlehem use longer and poorer quality roads. They also need to cross the unpredictable checkpoints east of Jerusalem where delays cause substantial costs. Markets in East Jerusalem are being severed from the rest of the West Bank. The regulations imposed by Israel are tight and require goods crossing into East Jerusalem be the same as those crossing into Israel (p. 2).

As such, trade within the OPT had been significantly curtailed. As the Word Bank (2007) notes,

[r]estrictions that bar Palestinians from major roadways and transit routes within the West Bank, non-transparent permit systems, the construction of the separation barrier, and formal and informal procedures which act as barriers to commerce between Gaza and the West Bank, have made domestic commerce, outside of a business’ municipal area, unpredictable, expensive and inefficient (p. 13).

The situation became more dire after Hamas, an organization that features on many countries’ list of terrorist entities, including the United States and Canada, won the January 2006 Palestinian legislative election and formed a PA government with Haniyeh as Prime Minister of the Palestinian Legislative Council in March 2006. The international community took swift action to limit any direct assistance to the PA, reconfigured projects to ensure that no benefits would be provided to Hamas, declared a moratorium on any new development projects, and shifted all funding to humanitarian assistance. Israel, for its part, withheld all tax revenues and transfers to the PA and increased control on access and movement. These actions caused an unprecedented fiscal crisis, the economy contracted resulting in a real per capita Gross Domestic Product (GDP) at 40 percent below its 1999 level, the unemployment rate increased to 40 percent, and the poverty rate increased to 65 percent (Abdelkarim & Alawneh, 2009). From a structural perspective, the sanctions imposed by Israel and the international community changed the composition of the Palestinian economy: Investment and productivity decreased and the public sector, aid and remittances formed the largest contributors to GDP (Abdelkarim & Alawneh, 2009). Unfortunately, limits on access and movement and the unpredictability of the imports of inputs and the exports of goods led to the fragmentation of the Palestinian economy (The World Bank, 2007) and an outflow of financial resources, expertise, skills, and knowledge from the OPT (Abdelkarim & Alawneh, 2009).

In 2007, Hamas succeeded in taking control of the Gaza Strip following a United States-backed change of leadership in the PA, led by the PA President Mahmoud Abbas, from the Fatah political party (Rose, 2008). Following these events, Israel tightened its control on the Gaza Strip and undertook three extremely destructive military operations, in 2008, 2012 and 2014. The 2008 Israeli military operation erased 60 percent of Gaza’s capital stock and the 2014 operation erased 85 percent of the remaining the business capital and investment (UNCTAD, 2018). These military operations and the resulting reconstruction demands, the desire of donors to provide humanitarian assistance, electricity shortages due mostly to the blockade of Gaza, the selective Israeli approval of goods to be imported into Gaza, and the depletion of Gaza’s only drinking water aquifer have led to massive de-development of Gaza (UNCTAD, 2018). According to UNCTAD (2018), “[t]he blockade, now in its eleventh year, eviscerated Gaza’s economy and productive base and reduced the Strip to a humanitarian case of profound aid-dependency” (p. 8).

The cumulative effects of these historical events, internal Palestinian strife, along with current Israeli actions have led to the de-development of the OPT. According to a report written by UNCTAD in 2016, the OPT’s GDP turned negative in 2014 for the first time since the 2006 crisis (UNCTAD, 2016). The same report refers to the direct link between the confiscation of Palestinian land and natural resources, Israeli movement and access restrictions on Palestinians, as well as the influx of Israeli products into the OPT and the de-agriculturalization and de-industrialization of the OPT (UNCTAD, 2016). This influx of Israeli products is amplified by the fact that Israel rarely provided permits for Palestinian products/activities that directly competed with Israeli products, and permits to import new and updated equipment essential for enterprise advancement were also difficult to obtain from Israeli authorities (The World Bank, 2007). In 2019, UNCTAD (2019) noted that between 2000 and 2017, the OPT faced an estimated $47.7 billion economic loss related to the occupation.

This significant emphasis on the economically debilitating Israeli actions as the main causes of the OPT’s economic de-development cannot be overstated. Even in 2007, the World Bank (2007) noted that “[t]he closures have made it nearly impossible for Palestinian enterprises to meet delivery schedules and have dramatically raised costs, effectively excluding most Palestinian producers from the world economy” (p. i). In the same report, the World Bank noted that the Palestinian firms are unlikely to be able to attain economies of scale since Palestinian firms are unable to access local and international markets due to closures, high levels of associated uncertainties, and high costs of transportation. While the report noted some structural issues related to the PA’s economic policies, it clearly stated that,

shrinking market access and the lack of free movement are the main constraints to growth for Palestinian enterprises … Unfortunately, the growing settlements and movement restrictions imposed by Israeli authorities for security reasons overshadow all other elements of the investment climate (The World Bank, 2007, p. ii).

This same report ends with a list of recommendations and the following statement: “[r]e-establishing free movement and access, while maintaining Israeli security, is the sine qua non for a viable Palestinian economy. Without a concerted political effort to re-open markets and lower transaction costs, the Palestinian private sector is bound to fail” (The World Bank, 2007, p. 30).

Canada’s economic aid program in the OPT

Canada first began providing assistance in support of the Oslo Peace Process in 1993. However, its development program to the OPT officially began in 1998. Up to that point, its funding support had largely been dedicated to UNRWA and to support for the political process of peacebuilding, where Canada was the gavel-holder of the Refugee Working Group. As Viveash also writes in this compilation volume, Oslo began to fail with the assassination of Israeli PM Yitzhak Rabin in 1995 and subsequent election of Benjamin Netanyahu in 1996. From 1998 until 2002, Canada spent only $841,196 (about $1.18 million in today’s terms) in aid assistance on projects aimed at improving economic activity in the OPT.¹⁰ These included initiatives to help improve olive oil production, start small businesses, provide support to the postal services, provide support to a trades (woodworking) center in Gaza, provide support for the development of cold storage capacity in Gaza, provide support to the flour mill in Gaza, and provide support to transportation and storage initiatives at the then-functioning Gaza airport. Overall, from 1998 until 2006, Canada provided assistance, albeit limited in value, to the development and support of micro enterprises.

Following the formation of the Hamas government in 2006, Canada shifted its support to humanitarian aid. These projects, implemented mostly by various United Nations agencies and large Canadian non-governmental organizations, allowed Canada to help Palestinian farmers avoid becoming food insecure by providing them with necessary inputs to maintain their herds and farming activity. Given the dire need for emergency food aid and livelihood assistance, Canada maintained this humanitarian approach even after the formation of the technocratic government in 2007 and Hamas’s takeover of Gaza.

Analysts and development officers working on the Canadian government’s West Bank and Gaza development program were keenly aware of the realities on the ground in the OPT. Even the World Bank, a neoliberal entity that promotes trade, free market, and a technocratic approach to development that requires the separation of politics from policy, provided analyses to Canadian officials at the bi-annual Ad Hoc Liaison Committee (AHLC) meetings¹¹ on Palestinian aid noting that none of these solutions were likely to provide relief from the core causes of the economic crises in the OPT, causes that it significantly associates with Israel’s actions and politically-motivated decisions (as noted earlier). With Canadian field officers stationed in Ramallah, locally engaged staff to assist in the analysis and the implementation of Canada’s development program, constant briefings from OCHA and other United Nations agencies on the ground, regular field visits, daily media monitoring (including of Arab media), and constant use of World Bank, IMF and United Nations official documents as references in their analysis and reporting, the staff were made acutely aware of the barriers to development in the OPT. This information was often passed on to upper management and the political level. As such, those working in the Canadian assistance program as well as their public servant and political bosses had access, and were exposed to, the same information that was presented herein.¹² So, in other words, Canadian officials were aware of the hurdles and their impact on the OPT’s economic development, as described in the previous section of this article.

While Canada’s programing benefitted from analyses that were put forward by the development program’s analysts and field staff in Ramallah, Canada, at least in the 2000s and early 2010s when the author was involved in programing activities in the OPT as an analyst for the West Bank and Gaza and Palestinian Refugees program in the Government of Canada, was guided much more by the analysis and suggestions of the Americans and the World Bank than by Government of Canada analysts. From 2007 onwards, Canada also began focusing its analysis and aid programing on justice sector reform and private sector development with a commitment of up to CDN$250 million over five years. According to an internal evaluation completed by the Government of Canada’s Development Evaluation Division, from 2008 to 2013, Canada ended up disbursing CDN$272.6 million, CDN$22.6 million more than the committed amount, with 63 percent of the total ultimately going to humanitarian aid, about 17 percent (CDN$46.6 million) going to justice sector reform, and 16 percent (CDN$43.6 million) going to private sector development (Development Evaluation Division, 2015). The choice of sectors to be engaged in was heavily influenced by the World Bank-led Palestinian Recovery and Development Plan (PRDP) and the advice of the Americans, especially that of General Keith Dayton, the head of the Office of the United States Security Coordinator (Wildeman, 2018). Given Canadian government’s then focus on fragile states and its policy towards programing there, Canada’s program staff believed that OPT’s fragility could be lessened by investing in economic development, good governance, security and stability.

Canada’s official documents often began with an analysis or reference to the debilitating effects of the restrictions on access and movement, the significant dependence of the PA’s policy space on Israel (including the reliance on revenue transfers), the ever increasing number of Israeli settlements, the debilitating blockade of Gaza, and the impact of the internal Palestinian conflict. The suggested solutions always included the opening up of the Palestinian economy, increasing Palestinian exports, improving the business environment in the OPT, and improving the PA’s policy towards micro, small and medium enterprises. For example, one of the Canadian economic development projects was intended to help the Palestinian Ministry of Economy enhance the business enabling environment of micro, small and medium enterprises. The work that was expected to be done was based on improving ministerial services for the micro, small and medium enterprises. Another Canadian project, Export Development in the West Bank, was expected to help improve the export potential of Palestinian businesses by connecting them with potential international customers and helping them learn more about product requirements when exporting.¹³ Yet, while investing in the business enabling environment and the potential for exports is crucial, according to the World Bank, the OPT does not suffer from significant challenges in this regard and, even with continuous improvements in the Palestinian business environment, only limited successes could then be achieved given the continued debilitating effects of restrictions on access and movement, the unequal trade between Israel and the OPT, and Israeli trade hinderances (International Monetary Fund, 2009; The World Bank, 2007, 2008b, 2013). They were solutions offered for a present that did not exist, and broke a cardinal rule by not applying strong analysis when designing aid for a conflict situation (Wildeman, 2018).

Canada’s economic programing was focused on advancing enterprise development and export competitiveness and promotion. This approach was very much in line with Canada’s orthodoxy of a neoliberal approach to development (Dagher, 2014). Apart from its contribution to the World Bank’s PRDP Trust Fund (CAD$15 million), by 2018, Canada had provided CAD$7.7 million to improving the framework conditions for Palestinian businesses, CAD$5.5 million for export development in the West Bank, and CAD$2.15 million for capacity development for facilitating trade. These initiatives’ long-term outcomes of increasing economic activity, trade and economic growth did not, and could not, have materialized given the reality on the ground. For that to happen, Canada would have had to primarily work on the impediments caused by Israel’s actions as detailed in the discussion on the economic history and reality of the OPT. That is, for an export-oriented and business led growth to occur, first the political realities undermining them would need to be addressed. Yet, Canada chose to focus instead on spending on economic development for a context that did not actually exist. It is still unclear how Canada still believes that it can fulfill its aim, “to increase economic opportunities and prosperity for Palestinians, especially women and youth [, including through efforts] to reduce barriers to entrepreneurship, employment, and employability.”¹⁴

While Canada’s economic development program is with the Palestinians and thus engaging them was and continues to be necessary, under the OPT’s unique circumstances and the occupation-related actions of Israel, Canada had several opportunities to also truly and effectively engage Israel on issues related to access and movement for the economic growth to take place. This is especially important to note given the fact that Canada was and continues to be a close ally of Israel (Swan, in this special issue). Yet, Canada’s foreign policy arm has either been unwilling or unable to influence Israel’s policy and military actions that have had a negative impact on the development of the OPT, even when it continuously expresses its support for the Middle East Peace Process. Canada has been a steadfast supporter of Israel and, in its verbal support of the Middle East Peace Process, has since at least the mid-2000s, not actively worked on or stood up against the illegal Israeli settlements and human rights abuses (Wildeman, 2018). This inaction seems to be aligned with the fact that Canada never once referred “to there being an occupation, settlers, settlements or colonisation in 1000 pages of [official] reporting on their overseas aid” dating back to 1998 (Wildeman, 2018, p. 18). Finally, Canada’s steadfast support of Israel has given Canada the opportunity to postpone taking actions on important issues like settlements and access and movement until such time as the resolution of the final status of Palestine takes place, an approach that has undermined Canada’s commitment to a two-state solution.

Conclusion: implications

Canada’s economic development program for the OPT has not, does not, and will not change the sine qua non for a viable Palestinian economy. The evidence presented herein indicates that regardless of one’s approach, or theoretical and ideological frame, achieving Canada’s suggested results of economic growth and decreasing poverty appear impossible under Israel’s rule and ongoing colonialization of the OPT. Following the analysis presented earlier, economic development in the OPT cannot be achieved without significantly reducing access and movement restrictions, reversing the confiscation of land, reversing agricultural destruction, re-opening markets and lowering transaction costs (Tartir & Wildeman, 2013). Canada’s economic assistance program to the OPT, and its foreign policy towards Israel and the OPT, fail in this regard. Unfortunately, this failure limits the OPT’s economic development prospects. Moreover, by being silent on Israeli actions that are leading to the de-development of the OPT (as argued earlier) and by injecting funds into an economy that is inundated by Israeli products, Canada is likely contributing to the continuing Israeli control over the OPT and its de-development. While political aspects of third party actors are not part of the development agenda of a donor, no area, country or territory can develop without the integration of politics, especially if such an area, country or territory is under considerable strain from the political action of said powerful third party.

Canada’s assistance to the OPT has been based on a combination of the following factors: (a) an unwillingness to properly engage with the information that was provided regarding the real causes of the problem, and (b) either the lack of political will to do something about it or the alignment with Israel at all cost. This approach and the focus on a neoliberal economic solution with little emphasis on the above-noted impediments under the Conservative era has unfortunately continued under the Liberal government. More specific to Canada, what has been made clear thus far is that, while Canada can continuously blame the situation and the risks for the lack of viable sustainable advancement of its aid projects on the economic front (Development Evaluation Division, 2015), it is essentially Canada’s misguided policies that have resulted in spending money on impossible suggested outcomes. More importantly, it has also meant supporting Israel’s control and illegal actions and the undermining of a long-term viable Palestinian economy.

In closing, as the analysis herein has demonstrated, any assistance that responds to the consequences of a problem can only truly mitigate some of the negative effects of this problem. To eradicate the problem, assistance should be provided to eliminate or minimize the causes of the problem. This is a lesson that the Canadian government’s economic development program for the OPT can benefit from.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Ruby Dagher

Ruby Dagher is an Adjunct Professor at the School of International Development and Global Studies at the University of Ottawa. She has a PhD in Public Policy and Administration with research focused on conflict and development studies. She previously worked at the Middle East Desk for the Canadian International Development Agency, now Global Affairs Canada – Development.

Notes

1 Valuable and detailed work on Canada’s aid program to the OPT in other sectors, including work and/or support for security and justice, has already been done (Bahdi & Kassis, 2016; Ibrahim & Beaudet, 2012; Monaghan, 2016; Monaghan & Santos, 2020; Wildeman, 2015, 2020).

2 The politics of Canada’s choice of sectors to support in the OPT and the reasoning behind these choices is also influenced by domestic political narrative and perceptions.

3 Khalidi and Samour (2011) also demonstrate the link between the Oslo Accords, the belief in the neoliberal ideology by some leaders in the Palestinian Authority, and corruption on the part of some Palestinian politicians and businessmen.

4 Btselem, Settlements, 16 January 2019, https://www.btselem.org/settlements.

5 Data was taken from Peace Now’s website, https://peacenow.org.il/en/settlements-watch/settlements-data/population. This amount does not include the estimated 3500 settlers living in East Jerusalem (OCHA, Humanitarian impact of settlements in Palestinian neighborhoods in East Jerusalem: evictions and displacements, 5 June 2018, https://www.ochaopt.org/content/humanitarian-impact-settlements-palestinian-neighbourhoods-east-jerusalem-evictions-and).

6 Btselem, Settlements, 16 January 2019, https://www.btselem.org/settlements; PeaceNow, Jerusalem Municipal Data Reveals Stark Israeli-Palestinian Discrepancy in Construction Permits in Jerusalem, 9 September 2019, https://peacenow.org.il/en/jerusalem-municipal-data-reveals-stark-israeli-palestinian-discrepancy-in-construction-permits-in-jerusalem.

7 Btselem, Settlements, 16 January 2019, https://www.btselem.org/settlements.

8 Ibid.

9 As an example of the control that Israel exerts on Gaza, the Karni crossing – the only crossing where cargo can be cleared – was closed for the majority of 2006 (The World Bank, 2007).

10 This information is based on work that the author had done while working for the Government of Canada. For further analysis on Canada’s aid, refer to Ibrahim and Beaudet (2012), Monaghan (2016), Monaghan and Santos (Monaghan & Santos, 2020), and Wildeman (2015, 2018, 2020).

11 The AHLC is a committee that was established to coordinate between donors and the PA. The AHLC was established in 1993 and includes the PA, the Government of Israel, the IMF, the Word Bank, the United Nations, and several donors. It is chaired by Norway. (Ibrahim & Beaudet, 2012; Mason, 2013; Wildeman, 2017).

12 This is based on the author’s first-hand knowledge and experience while working for the Government of Canada’s Development Program.

13 Government of Canada, Project Browser, Project profile — Export Development in the West Bank – Evaluation, https://w05.international.gc.ca/projectbrowser-banqueprojets/project-projet/details/z020950001.

14 Canadian international assistance in the West Bank and Gaza, https://www.international.gc.ca/world-monde/issues_development-enjeux_developpement/priorities-priorites/where-ou/west_bank_gaza-cisjordanie_gaza.aspx?lang=eng. Accessed on 31 March 2020.