34
Developing an Israeli Grand Strategy toward
a Peaceful Two-State Solution
While transport system development requires a Master
Plan of a vertical and horizontal road network, specific
"designated roads" which will require special arrangements
for use by Israeli road-users (e.g. route 443 which is the main
road linking Jerusalem and the West Bank) and vice versa,
special arrangements for use of Palestinians on "designated
Israeli roads", also need to be considered. Thus, the Israeli
as well as the Palestinian road and railway network shall
facilitate movement between Israel and the PA/Palestine, as
well as the movement of one side via the road and railway
infrastructure of the other. This can be accomplished mainly
by creating agreed ways for traffic passage, as an important
means to permit for economic cooperation, trade creation,
the expansion of tourism facilities and good neighborly
relations. In addition, since the Palestinians will continue to
rely on Israel’s air and seaports, “dedicated port areas” for
efficient handling of Palestinian goods in existing seaports
can be introduced, allowing Palestinian presence and
problem-solving capacity in the ports of entry.
Communications
Identified as priority sector for development, Palestinians’ high-
tech has so far developed under challenging technological
conditions with insufficient internet coverage and speed.
The Principles Agreement on the Allocation of Spectrum
on the 2100 MHz band was signed by the GoI and the PA
in November 2015 after long years of negotiations. The
agreement allows Palestinian cell phone providers to provide
3G services and allows Wataniya Company to provide 2G
services in Gaza (OQ, 2016). The next steps should focus
on the timely implementation and delivery of the 3G/2G
Agreement, with additional moves to leverage the agreement
for the benefit of a strong Palestinian high-tech sector.
The fact that Israel has gained a globally leading position
in high-tech provides a most important potential advantage
for the coordinated Palestinian development of high-tech
capacities in cooperation with Israeli entrepreneurs. Whereas
such cooperation is being pursued, it is hampered by the
Palestinian anti-normalization movement, which in this way
causes damage to vested Palestinian interests. With youth
unemployment at around 30 percent in the West Bank and
close to 60 percent in Gaza; and with almost one in three
university graduates unemployed in WBG (IMF, 2016), the
high-tech sector is particularly important for generating
employment opportunities for the young and the educated.
Crossing Points
The crossing points positioned between Israel and the West
Bank, the West Bank and Jordan and between Israel and the
Gaza strip will continue to prove crucial for port access and
trade facilitation. The Israeli government recently announced
a two-year, 300 million NIS plan to upgrade West Bank
crossings, in a bid to make the checkpoints more efficient
and more secure. The upgrade is expected to include
doubling of scanning capacity, construction of dedicated
conveyor for aggregates (e.g. at Jalameh crossing) as
well as extension of cargo-handling area where necessary.
This is a highly important development, which is in line
with significant improvements in the ability of technological
devices such as scanners and electronic container seals to
mitigate security and customs leakage concerns. In Gaza,
it was recently revealed in the media that Israel intends to
resume operation of a cargo terminal at the Erez crossing
in order to alleviate existing congestion in Kerem Shalom,
the only remaining goods-handling crossing between Israel
and Gaza. In the longer term, the end goal should be for all
international standards to be upheld at the official crossing
including TIR standards.
20
and containerization in air, land
and sea transport.
The crossings between Israel and the West bank are
particularly important for movement of labor purposes.
Palestinian employment in the Israeli economy (Israel
and settlements) has expanded to over 100,000 workers,
including those without legal permits. These workers’
income equals some 13% of Palestinian GDP.
21
The issue
of Palestinian employment by Israelis is complex in the
sense that it generates both positive and negative economic
consequences: on the one hand, according to Quartet
estimates, if not for jobs in Israel and Israeli settlements,
formal unemployment in the West Bank would be around
35%, which is comparable to Gaza rates. On the other hand,
Palestinian low-wage labor in Israel is not a substitute for a
viable long term solution and it does not generate productive
growth in the Palestinian Territory because it downgrades
Palestinian human capital towards lower skills jobs which is
not congruent with advancing longer-term independent needs
(OQ, 2016). Another complexity is its effect on wages, with
average daily wage for workers employed in Israel being
more than double that of West Bank workers, this helps in
raising wages in PA as a response, but also raises in turn
Palestinian production costs hindering its competitiveness.
22
Currently, 11.8 percent of Palestinians from the West Bank
are employed in Israel and in settlements. As for work permit
quotas, Israel has granted 68,500 permits for Palestinians
to work in Israel and this quota was increased by 7,000 in
March 2016 (IMF to AHLC, 2016).
Since much of the commercial activity concentrates at the
crossing points, the need to increase business interactions
between Israelis and Palestinians, encouraging access to
potential markets and consumers is not absent from Israeli
policy thinking. In recent months, the Israeli Ministry for
Regional Cooperation inaugurated the opening of a regional
meeting center at Sha’ar Efraim crossing (located west of
Tulkarem under the authority of the Ministry of Defense),
described as “a unique option of place of meeting Palestinians
and Israelis without need for permits”.
23
While the idea and its
objective are important and positive, the Palestinians generally
20 The Customs Convention on the International Transport of Goods.
21 Discussion with Bank of Israel representative, April 2016.
22 Ibid.
23 Regional Meeting Center Concept Note, Ministry of Regional
Cooperation, December 2015.
