Israel’s Arabs want more industrial zones

This article originally appeared on The Media Line.

Moded Yunis, the mayor of the Arab Israeli town of Ar’ara in northern Israel, recently offered 20 jobs in nursery schools in the town. Although not particularly well-paying, more than 250 women in the town of 23,000 in northern Israel applied.

“Because of the lack of jobs, some women leave their homes at 5 am and travel hours to southern Israel to work,” Yunis told The Media Line, saying the town had opened special day care centers with longer hours to accommodate them. “It is very frustrating for anyone who graduated college and then can’t find a job.”

The lower employment levels, along with lower municipal budgets showcase a pattern of consistent discrimination against Israel’s Arab minority. The Mossawa Center, the Advocacy Center for Arab Citizens in Israel, says that about 60 percent of Israel’s Arabs are poor, and 65 percent live below the poverty line.

Mossawa invited Yunis and other mayors to a conference at Israel’s Knesset, also hosted by long-time Arab parliamentarian Ahmed Tibi focusing on the need for more industrial zones in the Arab sector. While Arabs are more than 20 percent of Israel’s populations, just 3.5 percent of all areas designated for light and heavy industry are in Arab towns. These industrial zones bring both money and jobs to the areas where they are located.

“We want to get concrete answers for the Ministry of Finance and Ministry of Industry to budget for new industrial zones,” Jafar Farah, the director of Mossawa told The Media Line. “There is no possibility of economic independence without this.”

Participation in the labor force is significantly lower in the Arab sector than the Jewish one, especially among women. More than 60 percent of Jewish women work outside the home, while among Arab citizens of Israel it is half of that.

Part of the reason is that Arab women prefer to work closer to home, both because of traditional modesty concerns, and because there are fewer day care facilities in Arab towns. Building industrial zones would solve some of these problems.

“The socioeconomic situation of many Arabs is very difficult,” Knesset member Ahmed Tibi who chaired the session told The Media Line. “The government must fight poverty with a holistic plan to improve the existing infrastructure in Arab towns.”

Israeli government officials who spoke at the government session said the government has invested tens of millions of dollars in the Arab sector and has plans for more.

“In the last decade the government has invested $140 million in the non-Jewish sector over the past decade,” Yigal Tsarfati of the Ministry of Finance told the session. “There are 55 industrial zones in non-Jewish areas and we are planning more. There is no doubt that an industrial zone is an important way to move the economy forward.”

Some of the Arab parliamentarians said that appealing to the Israeli government had not worked for decades and there was little chance it would work now.

“We have to start a public campaign, going out into the streets and holding protests,” Arab MK Ayman Odeh told the session.

Israeli officials agree there is a problem. In a recent report, State Comptroller Yosef Shapira said that efforts to integrate Arab citizens into the workforce were “broken, ineffective and deficient.” He also said that goals set by the government itself were not being met.

Building industrial zones is a long-term project but has already proven that it works. In the town of Nazareth, Israeli Jewish industrialist Stef Wertheimer has built an industrial zone that has both Arab and Jewish companies and has created more than 1000 jobs over the past few years.

The West Bank and Gaza: Give economics a chance

In the wake of this summer’s war between Israel and Hamas, it is evident that neither party achieved its military or political objectives. And while a cease-fire is currently in place, fundamental steps to resolve the conflict aren’t on the agenda. Given a history of costly and recurrent armed conflict, it is clear that both parties are in need of a paradigm shift.  

Perhaps it is time to give economics a chance. Both Israelis and Palestinians would be well served by aggressive efforts in economic development of the West Bank and Gaza. This idea is not new. In 2013, U.S. Secretary of State John Kerry proposed a plan to invest $4 billion in the West Bank. Currently, a sparkling, privately developed Palestinian new town called Rawabi, replete with amphitheater, piazzas and multiplex theater, is about to open in the West Bank. Israeli social-impact entrepreneurs are seeking to bring venture capital and high-tech success to the West Bank. Discussions are also underway for an economic federation encompassing Israel, the Palestinian Authority and Jordan that would bolster trade, tourism, economic development and energy deployment for the benefit of all three parties.  

A broad-based initiative for economic development of the West Bank and Gaza could take a page out of the post-World War II U.S. Marshall Plan playbook. The program provided $160 billion (2014 dollars) for the reconstruction of a war-ravaged Europe. The plan included a rebuilding of infrastructure and trade, amelioration of hunger and poverty, creation of economic opportunity and suppression of competing Soviet economic doctrines. The vanquished and disarmed Germany received substantial aid under the Marshall Plan.  

In the wake of the Marshall Plan, Europe witnessed two decades of unprecedented economic growth. The vastly improved economic conditions also resulted in political stability, substantially diminished interest in communism and a rise in Western culture.  

In the Palestinian application, the idea would be to direct concerted foreign investment for purposes of peaceful economic development of the West Bank and Gaza. At the outset, efforts should leverage the $2.7 billion just pledged by the international community for the postwar rebuilding of Gaza. Funding should bolster vocational and higher education to provide young Palestinians with technical job skills. Private investment and job creation could then proceed consistent with accretions to human capital. Subject to strict controls on weaponry and related supplies, roadblocks should be removed in the West Bank and a modern train system built to enable efficient movement of people and goods both within and between the West Bank and Gaza. Ultimately, a new port in Gaza could play a major role in connecting the West Bank, Gaza and Jordan to markets around the globe.  

A critical component of the plan would be the dismantling of Palestinian refugee camps and the resettlement of their inhabitants. The refugees have too long been pawns in the political struggle. Since 1948, those camps have served to reinforce a cycle of abject poverty and to foment terror activity. In their place, industrial parks, education and health campuses, and other for-profit real estate should be developed. Foreign investors should be encouraged to build facilities in those parks. The refugees should benefit from returns to such development and from newfound employment opportunities.  

As security threats fade, borders should be opened to allow trade, movement of population and creation of economic linkages. In this new environment, investment partnerships among Israelis and Palestinians could serve to rebuild grass-roots ties and leverage resources. Beyond economics, social benefits would include increased interaction and reduced demonization among conflict participants. As in Europe, the aim would not only be elevated economic activity, but also a change in fundamental culture. Growing economic opportunity could bring with it the creation of widespread and popular vested interests in entrepreneurship, individual advancement and prosperity, education, legal and human rights, and rejection of competing fundamentalist and confrontational leadership and ideologies.  

Why would such an effort have a chance of success? The encouraging element of such a plan is the limited scale of the effort. In stark contrast to Europe, whose 1950 population was roughly 350 million, the population of the West Bank and Gaza currently numbers only about 4.5 million. That’s just one-quarter the population of the L.A. metro area. Similarly, the land area of the West Bank and Gaza is only half that of L.A. There is little doubt that a concerted global effort could significantly enhance economic opportunity among Palestinians. The scale and size of the Palestinian entity make the prospects of game-changing investment highly promising.

Foreign direct investment has the potential to materially improve the lives of Palestinians in a manner that could be a game-changer for conflict resolution. Investment in the Palestinian sector, however, should be limited to partners who are publicly and unequivocally committed to mutual recognition and peaceful conflict resolution.  

This vision of economic advancement and hope for Palestinians in both the West Bank and Gaza should be presented to all Palestinians. For it to succeed, the Hamas rulers of Gaza, who engender substantial popular support in both Gaza and the West Bank, must accept this vision and act as partners in its implementation. Indeed, it is Hamas who can change the Palestinian vision from the destruction of Israel to the building of a prosperous Palestine. For Israel, the benefits of such a plan could become evident in trade, economic cooperation, creation of a Western-leaning, vested Palestinian middle class and reduced Palestinian support for radical rejectionist ideology.  

Both Palestinians and Israelis have tried the stick. It doesn’t seem to work. It’s time to try the carrot.

Stuart A. Gabriel is professor of finance and Arden Realty Chair at UCLA Anderson School of Management. Rabbi Ed Feinstein is senior rabbi at Valley Beth Shalom in Encino.

Israeli economics 101

Ofek Lavian has two passions: business and Israel, his native land.

What he felt that he was missing when he went to college at the University of Southern California was an opportunity to learn about his home country while interacting with people who shared his same interests in it.

“I found myself really struggling to find an organization on campus that was tailored to my passions,” said the 20-year-old, who moved to Silicon Valley when he was 4. “I found a lot that were related to Judaism were political, religious, and/or cultural. As a business major and an entrepreneur, I wanted to look at Israel through another lens.”

Then he heard about the TAMID Israel Investment Group, a multi-phased program on college campuses connecting American students with the Israeli economic landscape. It seemed like the perfect way to merge his interests and learn about them in a new way.

When Lavian, now a junior, helped start a chapter at USC in 2011, there were 25 members. By the end of this semester, the group expects to have 40. To set it up, Lavian received $3,500 in funding from The Jewish Federation of Greater Los Angeles; now, all the funds are solicited from private donors.

The origins of TAMID date back to 2008, when a group dedicated to providing American students with access to Israeli businesses launched at the University of Michigan. Since then, it has expanded to eight other campuses across the country, including USC and the University of California, Berkeley. In the fall, a handful of others is expected to be added, one of which may be University of California, Los Angeles, according to Max Heller, TAMID’s executive director of business development.

The goal is to “further advance and strengthen the connection between the United States and Israel,” he said. “We pioneer the next generation of American commitment to Israel by reaching out by future leaders on campuses.”

Students studying business, entrepreneurship, economics and similar subjects are eligible to join TAMID when they are undergraduates. Those selected take one semester of education in the fall on general business principles and the relationship between the United States and Israel from an economic perspective. The education component is divided among member-driven presentations and lectures from venture capitalists, professors and individuals well-versed in Israel’s economic scene. 

Students showcase their research on certain aspects of business, and in the past they’ve hosted speeches on how the nuclear threat from Iran might affect Israeli businesses, as well as what changes might occur after the discovery of oil reserves in Israel. 

TAMID also gives students the opportunity either to invest in Israeli securities using money they raise from donors or do pro-bono consulting work for Israeli startups. 

During the summer, TAMID, which is based at the University of Michigan, hosts a fellowship trip to Israel. When it was first offered in 2010, five students went. There were eight in 2011, and last summer the number grew to 17. Students partook in internships in finance, energy sustainability and technology, and worked at various startups. Next summer, 40 fellows will have the chance to go and gain real world experience.

Although most of the students are Jewish, it is becoming diversified. Heller said that the larger a certain program grows, the more non-Jewish students get involved. The largest mix of students is currently at Michigan. 

“We pride ourselves on working with talented and motivated students,” Heller said.

Lavian started his own T-shirt business with a fellow fraternity brother called Campus Ink in fall 2010. But he wanted to meet other self-starters. Through TAMID, he’s accomplished this while learning about Israel’s contributions to alternative energy, medicine and technology.

Last summer, Lavian secured a venture capital internship in Tel Aviv and lived alongside the program’s other students from around the country. He also met with the entrepreneurs behind Doweet, which coordinates meet-ups with friends and event planning, and Peer5, a startup that focuses on helping video content providers deliver the best viewing experience. 

Now, USC consultants from TAMID are working with these companies. The students assist the startups with learning about the American economy and demographics, while they, in turn, have the chance to see what it takes to build a business. 

“[Since there are] 7 million people in Israel and [more than] 300 million in the United States, for any Israeli company to be successful, they need to have their target market be global or in the U.S.,” Lavian said. “A lot of them have the technology in Israel but they need to target the U.S. market. That’s where TAMID comes in.”

Avior Ovadya, 25, who came to America from Israel to attend college four years ago, has been in TAMID for one semester at USC. Unlike his classes, which focus on the U.S. market, TAMID meetings give him the opportunity to understand what’s happening in the Israeli business world. 

“Other than being a platform for students to learn about Israel, it’s also about understanding a little bit about what Israel is like, and why it’s such a pioneer in the technology field,” he said. “The group of people we have now is swell. They make our weekly meetings fun. We share everything from how our weeks were to our opinions on Israel.” 

Jared Fleitman, co-founder of USC’s TAMID program and current president, said his time spent with the group has been the most enriching he’s had at USC.

“I’ve met more contacts through developing the curriculum than through any of my coursework,” said Fleitman, who is majoring in mechanical engineering, economics and mathematics. “It’s very useful for me. It’s very positive and I feel like I am part of a special community here.”

Like Fleitman, Lavian said that he has learned more from the practical experience gained through TAMID than he ever did in a classroom. 

“Some things are really hard to learn in a classroom setting,” he said. “You need to get your hands dirty and your feet wet and do some hands-on learning. That’s exactly what TAMID does.”