Palestinians Need their own Vision 2030

Gone are the days when national interests were tied to land and resources as the vehicle of economic growth

A week after Israel and Saudi Arabia signed an MOU for the establishment of a seven-nation, cross-border, ship-to-rail transit network, Saudi media reported that Riyadh has suspended normalization talks with the Jewish state. Despite the setback, Saudi Arabia is likely sleepwalking toward peace with Israel. The Middle East and Gulf region is changing — and so should Palestinians.

Gone are the days when national interests were tied to land and resources as the vehicle of economic growth. Nations today compete for a share in the knowledge-based global economy, trade, and services. Competition forces governments to nurture human resources, prevent brain drain, attract foreign talent and capital, and build a secure, stable, and fair market conducive for economic growth.

In Arab countries, the first to endorse this model was Lebanon’s Prime Minister Rafic Hariri, in 1993. Hezbollah assassinated him in 2005, per a UN tribunal. The Lebanese economy has been in free fall for the past few years.

Hariri’s idea impressed Dubai’s ruler Sheikh Muhammad Bin Rashed, who endorsed it. It did wonders. Since then, the United Arab Emirates (UAE) has been leading the way to weaning its economy off oil rent and relying on services instead.

In addition to stability and the rule of law, the Emirati model also requires minimizing conflicts and maximizing ties with other nations, especially in bilateral trade.

The UAE is the third-biggest Middle Eastern economy after Saudi Arabia and Turkey, tied with Israel. It was only a matter of time before the UAE sued for peace with the Jewish State. In August 2020, together with Bahrain, the UAE signed the Abraham Accords that inaugurated official ties with Israel. In two years, bilateral trade between the UAE and Israel jumped to $2.5 billion.

The Emirati economic model has, for its part, impressed Saudi Crown Prince Mohammed Bin Salman, also known by the acronym MBS.

Saudi Arabia has a population of 32 million, 63 percent of which are under 30. To maintain social stability, the Saudi economy must produce jobs to match, but even with its enormous revenue, the oil sector alone cannot employ all these Saudis. The non-oil sector must step up.

The Saudi crown prince has therefore unleashed his Vision 2030. Between 2015 and 2023, the share of non-oil contribution to the Saudi economy has increased from 9% to 19%.

In July, the International Monetary Fund (IMF) reported that Saudi Arabia was the fastest growing G20 economy in 2022. “Overall growth reached 8.7%, reflecting a 4.8% non-oil GDP growth driven by robust private consumption and non-oil private investment, including giga projects.”

The report added that non-oil growth momentum continued in 2023 and that “unemployment rate was at a historical low,” at “4.8% by end-2022,” with “youth unemployment halved to 16.8% [and] female participation in the labor force reaching 36% in 2022, exceeding the 30% target set under the authorities’ Vision 2030 reform agenda.”

Like the UAE and Bahrain before it, Saudi economic expansion will require more trade partners: Enter Israel.

Arab animosity toward Israel has been based on Palestinian loss of land. Starting with the Camp David Accord in 1979, and the Fes Plan in 1981 and 1982, re-endorsed as the Arab Peace Initiative in Beirut in 2002 and again at the Arab League Summit in Jeddah in May, Arabs have imagined that a better Palestinian future is incumbent on a land-for-peace arrangement with Israel.

But judging by the economic model of the UAE, Bahrain, Saudi Arabia, and other countries, land has stopped serving as an instrument of wealth generation. For example, the territory of Singapore, an economic miracle, is double the size of the Gaza Strip, with twice the population. The economy of Singapore, however, is among the best in the word. Gaza’s economy is among the worst.

Like land, sovereignty is not a prerequisite for economic prosperity anymore. Self-governed territories, such as Catalunya in Spain and Scotland and Wales in the United Kingdom, are thriving. From time to time, these territories hold referendums for independence.

Palestinians have yet to factor in the heavy cost that “resistance” is inflicting on their economy. According to the IMF, “following the post-pandemic rebound in 2021, growth nearly halved to 3.9% in 2022 and is expected to further decline to 3% in 2023.” Early “signs of asset quality deterioration are emerging, and continued vigilance is required in view of rising interest rates and accumulating domestic [Palestinian Authority] arrears.” Soon, Palestinians might suffer a loss of deposits, similar to what happened in Lebanon, given the exposure of their banks to unsustainable public debt.

For a better future, Palestinians need their own Vision 2030, regardless of when Saudi Arabia normalizes relations with Israel.

Instead of insisting on governing the mostly arid and sparsely populated Area C in the West Bank, Palestinians should build capacity in territory they already govern — Area A, B and the Gaza Strip. Capacity means the rule of law, the development of human resources and infrastructure, and joining Israel and the world in global economic growth multipliers, such as IMEC.

Since the outbreak of the Arab-Israeli conflict, almost a century ago, many Arabs — starting with Palestinians in 1936 — put the economy at the service of their conflict with Israel. Now is the time for the Arabs and Palestinians to put peace with Israel at the service of their economy and prosperity.

This article first appeared in The Messenger.