Dr. Yoav Peled of the Tel Aviv University in Israel approached the Mid-East peace process from a different angle Wednesday, focusing on the economics rather than the politics of the crisis.

In a lecture in SF119, Peled said that in 1985, the Israeli government devised an economic stabilization plan in order to stop inflation and restructure the economy more liberally.

The stabilization plan offered unlimited cheap labor from Palestinian workers who were not protected by labor laws. In addition the plan equipped the Israeli economy with a capital market.

Peled said that in December of 1987, the first Palestinian rebellion against Israeli occupation caused serious economic consequences.

Again, the need to liberalize the economy arose in order to allow Israeli capital to integrate with the rest of the world. According to Peled, “This was the prime motivation in the Oslo Peace Agreement [signed 1993].”

After Oslo, foreign economic investment flooded Israel, allowing Israeli capital to set up enterprises throughout the world. Industrial plants were moved to other countries where wages were 10 percent of what they were in Israel. Because of this peace process, the unemployment rate drastically increased among the Palestinians.

The Oslo agreement, as described by Peled, meant disaster for the Palestinians. Israel began to push out Palestinian workers because the logic of the agreement fostered the validation to separate Israelis from Palestinians.

Corruption was apparent as much on the Palestinian side as it was the Israeli side. A small group within the Palestinian Authority monopolized the economy, while the vast majority remained poor, according to Peled.
The Shas party, motivated by religion, Israeli-Jewish ethnicity, and economic grievances, claims to oppose liberalization. However, Peled said that Shas is a political party, as well as, a social movement, wanting economic liberalization and welfare cutbacks. Shas is Israel’s third largest party, mainly comprised of poor and working class Jews. Loyalty of the Shas party is vital to the retention of a Jewish majority in Israel’s government. In order to maintain that loyalty, support is required in the form of funding for the Shas network of social services offered to the Jewish community.

Peled also spoke of a plan by the Israeli government to use the potential U.S. attack on Iraq to expel the Palestinians to Jordan. “Once [the war on Iraq] begins, there is a great chance that the entire Middle East will become unstable. This could result in all kinds of horrible things.”