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PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I’m Paul Jay. We’re in Jerusalem. We’re joined again now by Shir Hever. He’s an economist with the Alternative Information Center in Jerusalem. He’s the author of the book The Political Economy of Israel’s Occupation. So talk about the economics of the two-state solution. Is there any real desire within the Israeli elite, and then you can say the population, to have a two-state solution? Or is this all just a stalling operation?

SHIR HEVER, ECONOMIST, ALTERNATIVE INFORMATION CENTER: What we have now is one state. There is one government, a sovereign government, who controls the entire area of Israel, the West Bank, Golan Heights, and also the Gaza Strip�completely under the Israeli control in terms of the economics. So when you have one economic unity already, those who speak about two-state solution have to, of course, clarify, first of all, what they mean in terms of how the economic situation will be in this two-state solution. Palestinians often�those who support the two-state solution among Palestinians call for a viable Palestinian state. That means creating sources of local income and employment for the Palestinian state to try to catch up with 43 years of arrested development, of de-development, by the Israeli occupation forces. So this is a project of epic scale. And even if you assume�and it is correct to assume�that Israel is responsible for making that investment, it’s Israel’s responsibility to compensate the Palestinians for 43 years of military occupation, then the question arises: is that even possible?

JAY: Well, let’s assume Israel, whether it should or shouldn’t, won’t do that. But there’s certainly plenty of wealth in the Arab world, especially in the Emirates and the oil-rich countries, and there’s plenty of money in the Arab world to help facilitate economic development in an independent Palestine, if there was to be such a thing.

HEVER: But why should they? Why should they pay for the crimes of another country?

JAY: ‘Cause they claim to care about the Palestinians.

HEVER: Well, they claim to. In reality, the actual assistance, especially political assistance, that these countries give to the Palestinians is very limited, and it comes mostly in the form of charity. And I’m not saying that this charity is not important. Palestinians live in conditions where they need food aid to survive, to sustain themselves. So I’m not diminishing from that in any way.

JAY: But wouldn’t it be in Israel’s economic interests? One would think that the more viable the economy was in Palestinian [sic], the less the security concerns there would be.

HEVER: Of course. That is a very valid argument, that a strong Palestinian state would mean also more security for Israel. But I think if we want to talk about the economic realities of the situation, we should think about one economic sphere, and we should talk about how to achieve justice and more equal redistribution of wealth within that economic sphere. There is really no reason why Palestinians in the West Bank have to ship their goods to be exported to countries like Jordan, or all the way to the Gaza Strip to a seaport that may be built there eventually, when they can ship it closer, to seaports in Haifa or Ashdod, and ship it from there. But, of course, under the current situation, if they try to do that, they have to pay a lot of taxes to Israel, they have to use a lot of Israeli companies, and they end up getting a very small margin of profit, while Israeli companies profit on their backs. So what we actually are talking about is how to create a just economic system, not about how to create two separate economic systems. The idea of separation is wrong politically, but also wrong economically.

JAY: Yes, two-state solution is wrong economically as well as politically, essentially, is what you’re saying.

HEVER: Yeah, I’m saying that�it’s not my choice. I’m an Israeli citizen, and the Palestinians are the ones who are going to decide their future, and they’re going to decide whether they prefer two states or one state.

JAY: But I think it’s pretty clear that in the current Israel, it’s hard to even fathom Israel giving a vote and equal rights to all the Palestinians outside of Israel. The Palestinians inside Israel don’t really have equal rights. They’re not going to start giving it to people in the West Bank and Gaza.

HEVER: Right.

JAY: So if�.

HEVER: You can say the very same argument about South Africa in 1992, where also you could say 99 percent of the white population would not give up apartheid and would not give equal rights to the black people. But what’s interesting is that in South Africa, one week after apartheid fell, one year after apartheid fell, you will be hard-pressed to find white people who would support apartheid anymore, and suddenly everybody was always against apartheid.

JAY: But everyone we’re talking to here is so�I mean, people who want some kind of justice with the Palestinians, who would like to see a one-state that would include Palestinians, or would like to see a two-state, at the very least, that would give rights, everyone’s so depressed and in despair. They don’t see anything happening here. I mean, but let me ask my basic question, which is: is there an economic motive for the Israeli government or elite not to have a two-state solution or to have one? I mean, what would make more economic sense?

HEVER: Well, people obviously don’t want to give up control, and right now there is a system where all the customs and all the taxes are centralized by one government. The value-added tax is�it’s set by Israel and collected by Israel; the customs, again, collected and controlled by Israel. So that gives Israel a lot of advantages. Also the currency: only Israeli currency is used, which gives Israel a strong advantage�they can print a currency, they can determine its value. Obviously they have an interest in keeping that control in their hands. And so you could hear [inaudible] proposals. Let’s give the Palestinians a state, but they’ll have to use our currency, but they’ll have to use our tax system, but they will be under a kind of a free-trade zone, which in reality would mean they will be completely subject to Israeli economic policies. So there is an economic interest in the one-state solution. There is also an economic interest for the two-state solution, because that would mean that although Palestinians will remain completely controlled under the Israeli economic regime and it will be completely dependent on the Israeli economy, they would not be Israeli citizens, and as such would not receive all the benefits, such as minimum wage law, such as pension plans, such as health care, which would make it a lot cheaper for Israeli companies to exploit them. So they will become consumers of Israeli products. They are already consumers of Israeli products. They would become the cheap labor for Palestinian companies. They’re already the cheap labor of Israeli companies. But they will not get any share of the benefits.

JAY: And most of the two-state models that are being talked about are this type of�.

HEVER: Yes, this is the two-state solution that is offered. Of course, all of these proposals also talk about eventually Palestinians having their own sources of income, trade agreements directly with third countries that don’t go through Israel, and of course that is important and I do support that very much. But creating these things would take time. And as long as Israel has the upper hand in everything, it’ll be very difficult to ensure that Palestinians really have the ability to negotiate on their own behalf.

JAY: Okay. In the next segment of our interview, let’s talk a little bit more about President Obama and his recent argument with Netanyahu, and a little bit more about the politics of occupation in Israel. Please join us for the next segment of our interview with Shir Hever.

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