Gulf States ready to invest $50 billion to boost Palestinian economy. Abbas says no. What about $5 billion?

JERUSALEM – Business leaders in both Israel and the United Arab Emirates have “great excitement” at the financial implications of this new peace deal. But there could be positive opportunities for Palestinian businessmen and workers, as well.

That’s the intriguing observation of Danny Ayalon, Israel’s former deputy foreign minister, and a member of the ALL ISRAEL NEWS advisory board.

In a three-part interview, Ayalon discussed with me the “great synergy” and “great compatibility” between the Israeli and Emirati economies and the high potential for a far more robust form of normalization than Israel saw following the peace treaty with Egypt in 1979 and Jordan in 1994.

But the most interesting part of our conversation, I felt, was discussing the possibility of Israel and the Gulf states creating an investment and development fund to create factories, business and jobs – lots of them – for Palestinians.

As part of President Donald Trump’s “Vision For Peace,” the U.S. and Gulf states have already committed some $50 billion to help create a vibrant, thriving private sector-based Palestinian economy.

The plan proposes creating 1 million private sector jobs, thus dramatically reducing unemployment in the West Bank and Gaza – if the Palestinian leadership agrees to a final peace deal with Israel.

This was discussed during the "Peace To Prosperity" workshop held in Bahrain in 2019, and attended by senior finance officials from the U.S. and many Arab countries.

Since Palestinian Authority President Mahmoud Abbas and his inner circle remain adamantly opposed to engaging in peace talks with Israel, Ayalon and I discussed the idea of taking just 10 percent of the committed funds and investing them in Area C, the section of the West Bank that is currently fully controlled by Israel.

Could a model be created in Area C – with Gulf resources and Israeli and Palestinian entrepreneurship – that Palestinians in Area A and B might be attracted to as well? This is one of the questions I posed to Ayalon.

Here are excerpts from part two of our conversation:

AMBASSADOR AYALON: Joel, there is great excitement on both sides –the Israeli business community, but also the Emirates business community. I can tell you just from my own private experience that in the last few days I have received so many feelers and requests to engage with them and we are going to. Unfortunately, because of the corona[virus] we cannot really be flying yet, but Zoom is the medium that we are using now. There is great excitement, great curiosity and everybody here understands and also in the Emirates that there is a great synergy, great compatibility between the two economies and also the peoples….This is something which is very unique, [unlike the peace deals with] Egypt and Jordan, with whom we had long bitter conflict, including disputes on borders. This is not the case [with the UAE]. We have never been an enemy of the UAE – quite the contrary – and we can do great things.

ROSENBERG: Do you think this will be more of a full normalization than we have seen with Egypt and Jordan? Do you think that this peace deal could potentially serve as a model of future peace treaties?

AYALON: Absolutely, absolutely. I think that the region will see the benefits for the people of the UAE, the benefits for the people of Israel, and they will very much like to join. The only reason that they [other Arab states] have not joined so far was the veto by the Palestinians. I think now, when President Trump changed the paradigm, no longer do the Palestinians hold a veto. So, all these countries, whether it’s the UAE or Oman or Bahrain or Sudan and Morocco and many others – they realize well, they should take care of their own interests. So, their people are better off in education, in medicine, in just standard of living. Why should they subject their own interests to some interests of the Palestinians, whose only interest is to destroy a country – Israel – and not to build one.

ROSENBERG: And to clarify, I believe this is true, but you can give me your own perspective of course, which is what I want. I’m beginning separate out the Palestinian leadership under Mahmoud Abbas and his inner circle, and many in the Palestinian society. Mahmoud Abbas seems like he wants to go into history as someone who never surrendered any of the maximalist claims for the Palestinian mission. But there are many people – certainly the polls tell us, and anecdotally I think we see – there are some who agree with Abbas on that [maximalist approach], but there are others who are saying, “I think we would like the $50 billion of investment that the Gulf states have offered to build factories, build water desalinization plants, build electrical plants, build infrastructure, create a million new jobs, bring unemployment down.” So, I think we are seeing divisions within Palestinian society. Do you agree with that and do you think that there are Palestinian businesses that in theory could work together with Israeli businesses and the UAE?

AYALON: Absolutely Joel. And, you know, businessmen are the most rational people. They really think straight and without any strings attached. They really want to benefit and once they benefit, they want to benefit the people around them – whether it’s employees, whether it’s partners, and of course [this leads to] more taxes to the governments so infrastructure can be built. Business-to-business is the best foundation to build upon great, great relations – personal relations and country-to-country relationships. There are great Palestinian business leaders who would love to do things together with Israel, and now if we bring the element of the UAE and Gulf countries, you know, with their riches and their liquidity, so we can have a real, I would say, triangle where Israeli know-how and UAE finances can make projects in the Palestinian Authority , supply employment to the Palestinian Authority and benefit all Palestinian people. I hope this will be the case. The only reason now it’s not happening is because of the ban from the Palestinian Authority. If you talk to businessmen in the Palestinian Authority, they would love to have that model.

ROSENBERG: Can you see a scenario in which Israel should encourage perhaps maybe the $50 billion is not ready, but what if the Gulf states put $5 billion, just 10 percent into just doing development between Israelis and Palestinians in Area C – the section of the West Bank or Judea and Samaria that is controlled by Israel? What if we started to create a model of what could happen [in Area C], and what could happen in the rest of Palestinian society? I think Israel has the right, in theory, to help build more factories and development [with] Palestinian labor, creativity, ingenuity. Is that legally permissible and would that be a good idea?

AYALON: That would be a very, very good idea….In Area C of the Judea and Samaria – the West Bank – there is freedom for innovation and for entrepreneurial projects. We can do great, great things. And here is where the Palestinians can be proud people as they should be. [They are] very competent people, very advanced, so they can really take control of their own lives. They can really manage their own destiny by just giving them the basic tools, which is employment, projects, technology.

Here is part one of my interview with former Israeli Ambassador Danny Ayalon.