Economics and Political Survival: The Experience of the Palestinian Leadership under Yasser Arafat, 1994-2004

By Cheong, Damien | Melbourne Journal of Politics, Annual 2009 | Go to article overview

Economics and Political Survival: The Experience of the Palestinian Leadership under Yasser Arafat, 1994-2004


Cheong, Damien, Melbourne Journal of Politics


Introduction

The Islamic Resistance Movement's (HAMAS) surprise electoral victory at the 2006 Palestinian Legislative Council (PLC) elections ended Fatah's monopoly of power in the Palestinian political arena. Since the signing of the Oslo Accords in 1996, Fatah had effectively held the reigns of Palestinian leadership as a result of its majority in the PLC (the Palestinian parliament) and its control of the Presidency of the Palestinian Authority. Fatah's electoral loss could therefore be considered a loss of political legitimacy as it was clear that Palestinians were unwilling to leave leadership matters solely in the hands of the movement. This change in voting behaviour was attributable to several factors of which governance inadequacies on the part of the Arafat administration (1994-2004) were a major causal factor. Public dissatisfaction stemmed from the view that the leadership's polices increased rather than relieved the already severe economic, social and security conditions in the territories. (1)

The Palestinian leadership was not oblivious to its changing political fortunes. In an apparent attempt to seek absolution, Arafat admitted in a speech to the PLC on 18 August 2004 that: "We must rectify our practices... There have been wrong and unacceptable practices. No one is free of mistakes, beginning with myself. Whoever considers himself a prophet, I tell him even prophets made mistakes. I say this, brothers, because there have been erroneous and unacceptable practices by some institutions. Some people misused their positions. Moreover, they abused their posts. The process of building was not followed up as it should have been. There were not sufficient efforts to enhance the supremacy of the law, activate the judicial system, and entrench the principle of accountability." (2) Among the most noteworthy of "wrong and unacceptable practices" was the leadership's management of economic affairs. Numerous scandals involving corruption, self-aggrandizement, theft of public funds and other malpractices plagued both the PA and the Palestinian leadership, and severely discredited Arafat's administration both domestically and internationally. However, instead of carrying out meaningful reforms to improve its handling of economic affairs, the leadership sought to stymie them. In doing so, the Palestinian leadership, as this article will argue, paved the way for its electoral defeat in 2006.

In support of this argument, this article will briefly examine the economic conditions in the West Bank and Gaza Strip prior to the signing of the Oslo accords to give the reader an idea of the challenges facing the Palestinian leadership when it assumed control of the territories from Israel. Next, it will look at the impact of the Oslo Accords on the economic conditions in the territories to demonstrate that although envisaged to facilitate improvements, the Accords actually worsened the situation. The Palestinian leadership's economic strategy and polices will then be examined in order to evaluate their successes and failures. In light that reforms were needed to rectify economic mismanagement, the article will explore how the Palestinian leadership avoided reforms by leveraging the Al-aqsa Intifada.

The Economic Situation of the Territories before Oslo (3)

Israel's strategy towards economic development in the territories was couched in political as well as economic considerations, which were ultimately designed to favour the Jewish state. (4) According to Larry L. Fabian:

   Every Israeli cabinet since 1967, while insisting that there will
   be no return to the June 1967 borders, has decided not to decide
   the political future of the West Bank and the Gaza Strip. But
   government policy, including economic policy, was grounded in three
   understandings. Israel would not formally annex the territories.
   Israel would not withdraw from them. And Israel would not allow
   them to become a net budget burden. … 

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