Thursday, December 09, 2004

Turning Palestine into an Arab Tiger 

Rami G. Khouri, executive editor of Beirut's "Daily Star" writes about the Palestinian presidential election:

"Many politicians and commentators around the world, especially in the United States, view this process almost totally through the lens of reviving Israeli-Palestinian peace talks and moving toward a negotiated settlement.

"This is a noble and urgent goal that is worth achieving, but such a perspective misses the more important point about the Palestinian presidential election: it represents the birth of modern politics in the Arab world through a credible, legitimate process of contesting power that has not been achieved in any Arab country to date."
Democracy - and the statehood - (probably in that order) will of course both be very positive developments for the Palestinian people, but neither of itself is a magic bullet that will ensure the long-term viable and successful future for the Palestinian nation. In order not to become another sovereign basketcase of which there are already far too many around the world, the future Palestine needs radical economic reform.

Palestinians are widely seen as amongst the best educated and the most entrepreneurial of Arabs. They have long history in the Middle Eastern commerce, and at least until the first Gulf War, Palestinians used to virtually run the oil sheikdoms while the native elites enjoyed the fruits of their underground bounty. It would be an understatement to suggest there is a great hope around the world that the Palestinian people, if given a state of their own, will finally be able to concentrate their enormous energies (in the past wasted in fighting against Israel and their fellow Arabs) on building a better future for their people. I will be the first to admit that
I have written so myself in the past:

"Sovereignty and peace might finally give the Palestinian people a chance to resurrect themselves, and being among the best educated and the most hardworking people of the Middle East, a chance to channel their energies, creativity and passion into making up for the decades of lost time and finally building a normal, decent future for their next generations."
But all that energy and potential of the people will be wasted should the Palestinian state become mired in the economic malaise that strangles the region. It's ironic - and sad - because after all for centuries "Arab" was synonymous not just with "warrior" but also "trader", and the Arab empire was in many ways a commercial empire. Yet the Middle East today is a wasteland of underperforming socialist economies, with even the oil rich nations having arguably wasted all the potential for creating sustained growth on consumption and welfarism. Entrepreneurial spirit can all too easily be crushed by statism - and there's a plenty of that throughout the Middle East.

It's not just an Arab disease, of course, even in the regional context. Jews, who for centuries were caricatured as callous usurers and Shylocks, and in the modern age as greedy capitalists, have disappointed economically when given a state of their own. True, by regional standards Israel is thriving, but by comparison to other developed nations it's a socialist basketcase. What happened? All the greedy capitalists didn't move to Israel, preferring to stay in places where security and economic climates were far more favorable; those who did make Israel their home decided that socialism was a way to go (although that might hopefully be
changing now).

Thomas Sowell is not the only social scientists to have written extensively about the disparity between the economic performance of ethnic groups in diaspora and back in their ancestral homes. Jews and Palestinians are far from the only ones to thrive in foreign countries and underperform at home - you might as well also look at the Armenians, Lebanese, Indians or Chinese. The Irish, of course, provided another example of this phenomenon - quite successful throughout the New Worlds, but their homeland remaining a poverty-stricken backwater. Until recently, that is: for the past two decades Ireland has been introducing some far-reaching economic reforms with the result that this once sick man of the continent is now one of the wealthiest and most dynamic economies in Europe, with for the first time in centuries more people coming in than emigrating. What it shows you is that the willingness to succeed is not enough if the economic structure does not support it.

Palestine can succeed, too, but it cannot just count on the enthusiasm of her people - it positively needs to let them flourish. It would be tragedy if Palestine was to become yet another rigid, corrupt, statist, cronyistic cleptocracy. Palestinians don't just need free elections, they need free market.

Note: Why not check out the work of
Minaret of Freedom Institute?


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