Leaked documents show PA outsourced Palestinian land and rights to Turkish firm

19 September 2012

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Israeli President Shimon Peres, Turkish President Abdullah Gul and Palestinian Authority President Mahmoud Abbas at the Ankara Forum for Economic Cooperation, November 2007.

(Hakan Goktepe / abacapress.com)

In a Palestinian Authority (PA) administrative courthouse, in the far north of the occupied West Bank, one family has taken on the authority’s intention to build an industrial zone on their farmland in Jalameh, a village just outside Jenin.

However, according to Daoud Darawi, the family’s lawyer, their case actually represents many more families, and perhaps has implications beyond the area of Jenin.

The concession agreement between Turkish foreign developers and the PA’s Palestinian Industrial Estate and Free Zone Authority, leaked exclusively to The Electronic Intifada, reveals that the industrial zone in Jenin will come under the full control of the foreign power funding the project. If the plan goes forward, this agreement may well set a dangerous precedent for predatory industrialists and multinational companies in the occupied West Bank and Gaza Strip.

The land in question lies in the Marj Ibn Amer Valley, and is valuable for two — seemingly conflicting — reasons: its strategic positioning for export trade and its fruitful fertility. If converted to industrial use, it will be lost to agriculture forever. Like many Palestinians, farmers in the Marj Ibn Amer Valley have lost their land before — but until now, it has always been to Israel.

Now farmers must resist theft from their own so-called government that intends to use it to create an industrial zone beyond the reach of Palestinian law and on which no Palestinian will have a right to set foot without the permission of the foreign corporation controlling it.

PA encouragement of private industry, free trade

Plans for industrial zones first appeared on the PA’s agenda during the Israeli-Palestinian negotiations in the early 1990s and were a component of the PA’s encouragement of private enterprise in the wake of the Oslo Accords (“A re-evaluation of the border industrial estates concept,” IPCRI, December 1998).

Free trade zones have been encouraged and supported by third party powers, especially the United States, Germany, Turkey and Japan.

Work on Jenin’s industrial zone began in earnest in 1996 when the Global North Industrial Company, a private Palestinian firm specializing in industrialization, began to buy plots of land from the farmers in the Marj Ibn Amer valley.

Land expropriation

Some families sold their land, yielding 500 dunams in total (one dunam is the equivalent of 1,000 square meters), but five families refused to sell. In response, in 2000 the PA expropriated all of the land — amounting to 933 dunams — in the name of “public use,” transferring it to the newly created Palestinian Industrial Estate and Free Zone Authority commonly known by its initials PIEFZA (see Appendix A).

However, the PA failed to properly announce their expropriation of the land in the official Awaqa’e gazette in which, by law, notice of such decisions must be published. “This was the first law they broke,” says Darawi.

Soon after the land swipe was declared, the second intifada broke out. Jenin was at the epicenter of violence and destruction by Israeli forces during the uprising, and PA plans for developing the zone were shelved.

In 2007, after relative calm returned to the West Bank, political rhetoric that harkened back to the Oslo period and talk of an “economic peace” resurfaced. Muhammad Mustafa, chairman and CEO of the PA-owned holding company, the Palestine Investment Fund, and economic advisor to the Ramallah-based Palestinian Authority’s Prime Minister Salam Fayyad and President Mahmoud Abbas, publicly announced the renewal of industrial zone efforts (“PIF’s Director General Confirms the Revival of Jenin Industrial Zone Project”).

Notably, this revival would feature a key reshuffling of who was involved in the project.

Joint industrial zones are a natural product of the neoliberal economic policies that the PA enthusiastically adopted after the second intifada. In theory, they promote private sector growth by removing government interference and encouraging investor-friendly markets.

As Nedal al-Jabare, the marketing director of PIEFZA pointed out to this writer, “Our job is to change the bad image of investing in Palestine.” Like most advocates for “economic peace,” al-Jabare believes that through private investment, economic development will lead Palestinians to a peaceful relationship with Israel.

The exceptionally fertile Marj Ibn Amer valley hugs the 1949 armistice line, the internationally-recognized boundary between the lands occupied by Israel in 1948, and the West Bank, occupied in 1967. The boundary does not announce itself; rather, a discreet fence separates Israel from the West Bank.

The vision is clear for industrial planners who seek to catapult Palestine’s economy onto the global market and for multinational firms who wish to establish a hub in the Middle East. In a promotional slideshow provided by Jenin’s governor’s office, a simply-sketched map illustrates how planners hope to integrate the industrial zone into the global market: the valley lies on an envisioned trade route that connects Amman, Jordan to Haifa, Israel’s largest international seaport.

Outsourcing Palestine

Part of appeasing financiers’ anxieties about investing in an area under military occupation is marketing these zones as islands of peace — places where Israel will not impose closures or strict inspections — the kinds of measures that have impeded Palestinian economic development for years.

In order to secure this safe image in Jenin’s industrial zone, the PA cut loose the Global North Industrial Company, a Palestinian company, from the deal, and brought in a foreign sponsor, Turkey, in 2009. But the concession agreement makes it clear that as early as 2006, the PA and the government of Turkey were in conversation about transferring the responsibilities of the industrial zone from the Global North Industrial Company to a Turkish one, the Tobb-Bis Industrial Parks Management Company (see Appendix A).

A 2010 WikiLeaks cable from the US Embassy in Tel Aviv suggests that Israel was happy with — and may well have encouraged — the move to outsource the industrial zone.

The cable states that that Major General Eitan Dangot, the Coordinator of Government Activity in the Territories (COGAT) — effectively Israel’s military ruler of the occupied West Bank and Gaza Strip — applauded Prime Minister Salam Fayyad’s “Willingness to pull the plug on an ineffective Palestinian effort to invest in the Jenin area and turn the project over to a Turkish investor with a good track record” (“COGAT Dangot on peace process, West Bank and Gaza,” 18 February 2010).

After Turkey became the principal administrator of the industrial zone, Israel became more pliable in releasing certain necessary provisions for the development of the site. Significantly, it reclassified the land from “Area C” to “Area B,” thereby giving the PA a greater amount of control under the provisions of the 1993 Oslo Accords, and agreed to provide water directly to the site (see Appendix B).

A state that had been regarded as friendly to both Israel and the Palestinians, Turkey has marketed its ambitions as “reinforcing mutual trust among parties.” These dealings occurred before the public breakdown in relations between Turkey and Israel over Israel’s lethal attack on the Mavi Marmara in May 2010.

For several years, however, Turkey had been looking for an entry onto the landscape of Israeli and Palestinian markets. In April 2005, when Turkey hosted the Ankara Forum for Economic Cooperation, Israeli President Shimon Peres and Mahmoud Abbas met in the name of tri-partite cooperation (“Ankara forum for economic cooperation between Palestine, Israel and Turkey meeting held,” 27 April 2005).

A month following the meeting of this harmonious trinity, the Turkish International Cooperation and Development Agency (TIKA) opened a branch in Ramallah in order to “accelerate Turkey’s development assistance” (“Turkey’s political relations with the Palestinian National Authority,” Republic of Turkey’s Ministry of Foreign Affairs).

In return for its involvement in Jenin’s industrial zone, Turkey will be able to establish its own firms in the zone, gaining unfettered access to the region’s markets.

Prime opportunities for private sector

The concession agreement is between PIEFZA and Tobbs-Bis Industrial Parks Management Company. This fairly young Turkish company was established in 2005 in partnership with TEPAV, the Economic Policy Research Foundation of Turkey, a not-for-profit Turkish organization that has worked closely with the government of Turkey. TEPAV is charged with researching and proposing policy recommendations that are purportedly designed to “pave the way for Turkey’s integration into the EU and global marketplace.”

Güven Sak, the Turkish signatory of the concession agreement, is both the coordinator of Tobb-Bis’ Palestine Project and the managing director of TEPAV.

Documents authored by Sak on behalf of TEPAV see the joint industrial zone projects in Palestine as prime opportunities for Turkey’s “private sector development” in the greater region. Sak has argued that Turkey “cannot wait for a comprehensive peace treaty” before seeking to develop its private sector in the larger region (“The challenge of developing private sector in the Middle East,” 2 May 2008 [PDF]).

Likewise, Tobb-Bis, a private company specializing in industrial development, articulates similar aims in bringing the region under Turkey’s industrial umbrella: “In today’s context of increased globalization and competition from low-cost producers, competitive positioning of the Turkish companies require them to look for alternative operations locations for both having access to new markets and lowering production cost” (sic) (Tobb-Bis company profile, March 2010 [PDF]).

Esen Çağlar, a policy analyst with TEPAV who has coordinated feasibility studies on the project for Tobb-Bis, explained in a telephone interview with The Electronic Intifada that the development strategy is to market the zones to medium-size Turkish companies in order to establish “the critical mass of companies to show the rest of the world that industrial zones work in Palestine.”

PA subservient to foreign investors

For the PA’s part, it has removed each and every roadblock to Turkish investors. For instance, in compliance with the PA’s general investment promotion strategy, the contract stipulates that goods imported and exported will be exempt from tax and customs duties (see Appendix A).

However, what is most critical is that the contract gives full jurisdiction to the Turkish development company, leaving the Palestinian Authority — its legislature and judiciary — subservient to the foreign company (Appendix A).

The agreement states: “The PNA [Palestinian National Authority] recognizes the inviolability of the Zone and its internal security which will be under the sole control of the [Development Company]. No official or agent of the PNA or other person exercising any public, municipal, judicial, administrative, executive or legislative authority shall enter the zone to perform any duty therein except PIEFZA employee [sic] … and other officials whose work is necessary for the smooth operation of the zone.”

With this virtually unlimited jurisdiction, as the agreement goes on to stipulate, the Turkish development company may “determine and implement procedures and regulations within the zone that will promote and secure the efficient operations” of the investors including establishing its own security force. The contract is valid for a period of 49 years at which point it can then be renewed for the same duration.

Çağlar emphasized the importance of Tobb-Bis’ jurisdiction in the zone in order to attract Turkish (and global) investors. “The idea is to create a secure, predictable and safe atmosphere,” he said.

From this, it is clear that the Palestinian Authority vis-a-vis PIEFZA has handed over the land and labor of its own people to a foreign power, in a move that violates even its own laws established in 1998 to regulate industrial estates and free zones.

Undermining Farmers

The PA’s law regarding industrial estates and industrial free zones, state clearly that the developer of an industrial estate must be a corporation or company registered in Palestine (Appendix C, article 22). However, from the Concession Agreement, it appears that Tobb-Bis is in fact registered in Turkey (although Çağlar asserted it was registered in Ramallah in 2006) (Appendix A).

Ayat Hamdan, a researcher with Bisan Center for Research and Development in Ramallah, sees these projects as normalizing relations with Israel for the sake of “economic peace” instead of forging a political solution and end to the occupation. Bisan has followed the progress of the PA’s industrial plans since 2009, significantly raising public awareness of the industrial designs and their damaging consequences.

Hamdan emphasizes that she is not opposed to industry in general but fears this zone will displace already working farmers. “These farmers will not have the necessary skills to work in the industrial zones,” said Hamdan.

Çağlar explained that one of TEPAV’s strategies to get around the West Bank’s “high reservation rate” is to target the “unskilled labor” sector of the population. It is clear that disenfranchised farmers may well be preyed upon and exploited.

In an effort to gain popular support for the industrial zones, PIEFZA and PA officials have promised massive job creation. Israeli consultants have estimated the zones will create 200,000 to 500,000 new jobs and could refocus 30 percent of Palestinians businesses to service the zones’ needs.

However, Sam Bahour, a Palestinian businessman and economic analyst, has argued that the industrial zones will, at best, provide menial labor-intensive jobs that are still dependent on foreign money (“Economic prison zones,” MERIP, 19 November 2010).

Furthermore, Bahour fears the implications of the anticipated impact of the zones on the tenuous Palestinian economy.

“One can see a continuation of Israel’s scheme to re-engineer the Palestinian economy away from its agricultural and tourism bases toward an economy that is dependent on Israeli public services and good will,” Bahour added.

Darawi’s lawsuit on behalf of families whose land has been taken will argue that there is no “public good” being served by these industrial zones: “No one in Palestine will benefit from this; only the businessmen and private investors will.”

Setting a disturbing precedent

The lack of regulations evident in the concession agreement with Turkey suggest the Jenin industrial zone may very well emulate industrial parks in Jordan and Egypt.

Indeed, as one PA official in Jenin, who spoke on condition of anonymity, told The Electronic Intifada, “It has worked in Jordan, so why not here?”

Whether or not these Qualified Industrial Zones (QIZs) have “worked” is debatable. As has been documented and reported elsewhere, the cheap and unregulated labor offered by QIZs in Jordan have been exploited by international corporations like Walmart, GAP and Gloria Vanderbilt (“US-Jordan free trade agreement: Descends into human trafficking and involuntary servitude,” National Labor Committee, May 2006 [PDF]).

The non-unionized workers labor in horrific conditions and have reported being beaten, sexually harassed and denied food. At times, workers clocked 72-hour shifts and received no more than two cents an hour — a violation of Jordan’s minimum wage policy in the free trade zones.

Furthermore, while the QIZs in Jordan and Egypt were also promoted as a means to stimulate local economy, studies conducted by Bisan revealed that both have failed to support the economies of the two countries.

This is the “success story” that al-Jabare lauds while opponents like Darawi and Hamdan reject and resist through information campaigns as well as the current lawsuit.

The agreement is designed to facilitate the “smooth” and “efficient” business operations that work to the advantage of what it calls the “Beneficiaries” — those local or foreign companies established in the zone. There is a stark absence of any reference to labor rights, worker safety or wages. Thus, there is no jurisdiction for trade unions, the Ministry of Labor or any other body to monitor conditions for workers.

Furthermore, while there is an explicitly stated expectation that Tobb-Bis development company will give preference to Palestinian workers, there is an accompanying loophole relieving it of that duty that states, “Unless prohibited by any considerations.”

Today, the land in question remains undisturbed. The flat, bright green and water-rich valley continues to be cultivated by family farmers who tend to their plots, growing vegetables and legumes.

The Palestinian Authority’s move to surrender that land to a foreign development company — whether under the guise of “economic peace” or “development” — runs counter to Palestinians’ battle to remain fastened to their land in the face of colonization and foreign land theft.

Indeed, the industrial zone in Jenin represents a culmination of the PA’s neoliberal policies that have neglected and devalued Palestine’s productive, agricultural and manufacturing sectors and seen Palestine become reliant on foreign aid for subsistence.

In the West Bank courtroom, where the PA stands with a Turkish development company and against a family of farmers, it becomes compellingly clear that the PA’s allegiance to a neoliberal ideology is betraying Palestinians.

Charlotte Silver is a journalist based in occupied Palestine and San Francisco. Follow her on Twitter: @CharESilver.