Hamas’ victory in the Palestinian parliamentary election has raised concerns over economic stability in Israel, with many analysts fearing that a long-stalled peace process could culminate into a freeze of economic activity between the Jewish State and its Palestinian neighbors.
The Palestinian Authority is Israel’s second largest trade partner with over 3 million Palestinians consuming mainly Israeli products and depending on services provided by Israeli companies. In addition, despite the Israeli economy’s lessening dependence on cheap Palestinian labors, thousands of Palestinians from the Gaza Strip and the West Bank enter Israel each day to earn a living.
Hamas’s effective control of the Palestinian parliament with 70 seats out of 132 representing the Islamist group, the Palestinian Authority could be coerced into cutting strong economic ties with Israel.
“There is no doubt that from an ideological point of view, Hamas is committed to cutting all ties with Israel, and this includes economic ties,” said Dr Elissa Rubin-Peled, a specialist in international political economy at the Interdisciplinary Center Herzliya.
“From an ideological point of view a Muslim government is committed to favor trade with Muslims, and certainly not with an ‘enemy state’ like Israel. The clearest example is Iran which has a limited number of foreign investors,” Peled said.
“I think that Hamas will be more pragmatic however. Although it is difficult to answer this question but I do not rule out the possibility that a Hamas-led Palestinian government will continue trade with Israel,” she added.
The Palestinian Authority is pushing for reopening border crossings with Israel and allows Palestinians to seek work in Israel and in Jewish settlements. Would Hamas allow them to work in a state they do not recognize?
The minute a party rises to power it is obliged to face reality and has the responsibility to ensure people earn a living. This is all the more true for a party that won democratic elections on platform of fighting poverty and corruption.
What impact will Hamas’s victory have on Israel’s economy?
Foreign investors are influenced by the political situation here. What do they know about Israel? That there is a hi-tech industry but bombs go off every now and then. The minute those responsible for these bombs rise to power, the situation becomes unattractive to investors. On the long term the Palestinian election will have a negative effect on the economy.
The Palestinians live in poverty. Some believe that poverty breeds hatred and terror. How would the election result impinge on the economic situation in the Palestinian territories?
Hamas won the election because it is less corrupt and more socialist than Fatah. Hamas has an independent social welfare system providing services that the Palestinian Authority cannot afford. We do not like the source of their funds which serve not only for terror activities but also for medicine, food and education.
The Palestinians voted for Hamas because of the endemic corruption in the Authority, the large sums of money that disappeared, the millions stolen by Arafat, and the lack of law and order.
There is no doubt that Hamas will fight corruption and develop a social security net for the Palestinians. But from a managerial and economic perspective Hamas lacks the needed experience to run state affairs, and I am not sure they can do this. Management and economy are not important as far as Hamas are concerned.