Integrating the Ghetto Economy
After 1967, Israeli increasingly folded the Palestinian economy into that of Israel, transforming the West Bank and Gaza into dependent, laborexporting enclaves. The first steps were taken soon after the war, primarily at the instigation of the then-Israeli defense minister, Moshe Dayan, who issued permits to Palestinians seeking work in Israel. Dayan's plan was to stabilize the occupation and provide the military with tools to punish Palestinians should they choose to rebel. "If Hebron's electricity grid comes from our [Israeli] central grid and we are able to pull the plug and thus cut them off," Dayan once explained, "this
As former West Bank military officer Shlomo Gazit acknowledged, Israel guided the process of economic integration to maximize benefits for Jewish economic and political interests. "Political considerations" led government ministers "to prefer … the Israeli economy over the needs of the territories," he wrote, and ministers were reluctant to "subordinate, even in the slightest, Israeli (perhaps even Jewish) economic interests for the good of the Arabs living in the territories." The Israeli government did so because it recognized that "its electorate lay entirely" within Israel.[30] Palestinians were drawn into Israel's economy, but only at its bottommost rungs. Some Palestinian enterprises competing with Israelis were denied permits, while others were driven out of business entirely by state-subsidized Jewish industries. As the two economies drew closer together, the effects of unequal competition proved increasingly prejudicial to Palestinian self-sufficiency.[31]
One of the most dramatic consequences was a marked shift in Palestinian employment patterns. In 1982, some 75,000 Palestinians worked for Jewish employers, but by the late 1980s, the number was closer to 100,000, representing almost 30 percent of the Palestinian labor force. "Non-citizen" Arabs, according to two Israeli sociologists, had become the "hewers of wood and the drawers of water" for the Jewish economy, performing the lowest paid, most physically taxing, and least intellectually demanding jobs. Palestinian occupational segregation was "extreme," they said, noting that Palestinians were dramatically "overrepresented at the bottom of the occupational ladder and underrepresented in the higher-status occupations."[32] With few legal rights, Palestinians were non-unionized and open to Jewish exploitation. "Non-citizen Arabs" were "placed at the end of the job queue, … [tended] to hold the least desirable jobs … [and found] work conditions even less negotiable than other subordinate groups," largely due to their "unique legal and political status" as non-citizen wards of Israel.[33] Although some Palestinians initially benefited from Israeli jobs, the economy as a whole developed a long-term and ultimately debilitating dependency.[34] When times turned bad, Palestinian laborers found themselves at the mercy of Israeli employers, border patrols, and economic cycles, while Jewish businessmen found alternative sources of cheap and compliant labor. By 1987, the
Israel's efforts to consolidate its control had locked Palestine securely within the confines of the state. Its borders were sealed, its internal insurgents were crushed, and its bureaucratic, legal, and economic infrastructures were closely tied to those of Israel. Palestine might yet have wrenched itself from ghetto status had it succeeded in convincing Western powers and international institutions to support its cause. If NATO and the UN had behaved with Israel as they had with Serbia, threatening sanctions if Israel did not withdraw, things might have turned out differently. International forces did not pursue this course, however, despite some sympathy for the Palestinian cause and intense Palestinian diplomatic efforts.