Ongoing trade war, which began with PA decision in October to bar import of Israeli livestock, enters new phase
A trade war between Israel and the Palestinian Authority has entered a new phase, with the Israelis on Sunday banning Palestinian agricultural exports from crossing into Jordan.
In a statement obtained by The Media Line, the Coordinator of Government Activities in the Territories, an Israeli Defense Ministry body, confirmed the news.
“Starting this morning [Sunday], the export of Palestinian agricultural products abroad through the Allenby Bridge crossing will not be allowed. This follows the defense minister’s directive to pause the import into Israel of agricultural products from the Palestinian Authority due to its calf boycott, which has drastically hurt Israeli cattle breeders,” the statement said.
“The moment the Palestinian Authority decides to reverse its decision to hurt the cattle trade with Israel and the free market, the situation will return to normal,” it concluded.
Palestinian Authority National Economy Minister Khaled al-Osaily said in an emergency meeting of the Export Council on Sunday that the Palestinians were mobilizing along legal, diplomatic and political fronts to confront the ban.
He called the Israeli action a “violation” of the regulations of the World Trade Organization, of which Israel is a member, adding that it also violates agreements and treaties.
“We are exercising our natural right to diversify our markets… by encouraging direct import and developing our national products in a way that enhances the chances of strengthening our national economy, pursuant to the [PA] government’s strategy to develop the national economy,” Osaily said.
Last Thursday, a Palestinian Authority ban on importing certain Israeli products into the West Bank went into effect, with the PA saying the move came in retaliation for a decision taken the previous week in which Israel began barring Palestinian produce from its own markets.
The Palestinian ban included fruits, vegetables, bottled water and soft drinks.
PA Agriculture Minister Riad al-Atari said Israel was seeking to starve the Palestinian people and threaten their food security. He noted, too, that Israeli authorities had prevented shipments of Palestinian olive oil and dates from reaching ports and border crossings for export abroad, saying these steps violated signed agreements.
“These Israeli moves against our products are in violation of the Paris Protocol, which states that Palestinian exporters have a right to use Israeli ports freely,” Atari said.
The Paris Protocol is an agreement signed in 1995 between the Palestinians and Israelis as an outgrowth of the Oslo Accords to govern economic relations in what was supposed to be an interim period prior to full peace and Palestinian statehood.
Palestinians say the ban on Israeli products is meant to boost the local agricultural sector and is part of Palestinian Prime Minister Mohammad Shtayyeh’s policy to disengage economically from Israel.
The Israeli ban on Palestinians goods was initiated by Defense Minister Naftali Bennett over a week ago in response to a PA decision taken in October to halt the purchase of calves from Israel.
Israeli cattle farmers say that decision has harmed them and led to financial losses, but Atari says Bennett’s move was motivated solely by politics.
“This issue is purely political,” he stated. “The date for the Israeli election is approaching, and therefore the Israeli minister of defense, and not the minister of agriculture, came out and announced the ban on Palestinian agricultural products. It is strange that the minister of defense interferes in such a topic.”
Arab and international mediators are working round the clock to help reach a satisfactory resolution to the trade war, according to The Media Line’s sources. A Palestinian source who asked not to be identified says a list of Palestinian “requests” was delivered to the Israelis on January 30 but was rejected.
Palestinians insist that they are not boycotting Israeli meat. They simply do not want to be limited to buying Israeli cattle, preferring the opportunity to also import freely from abroad. They rely heavily on Israeli markets to move their products, and the trade balance tilts overwhelmingly toward Israel.
While Palestinian trade with the world exceeded $7.5 billion in 2018, bilateral trade between the Palestinian Authority and Israel hovered around $4.5 billion, Mohammad Khabeisah, a Palestinian financial expert, told The Media Line. He added that Palestinian imports from Israeli markets accounted for $3.7 billion of this.
“I believe that the Palestinian economy will be more affected [by the bans] because it is a small economy,” he said, adding that if these steps continue, “their effect will appear within months if not weeks.”
Khabeisah maintains that the Palestinian economy is no match for Israel’s, adding that the agricultural sector “suffers from weak government support.”
He points out that Palestinians send $60 million in fresh produce to Israel each year while buying more than five times as much from the Israeli side, noting that an additional $100 million is spent on bottled water and soft drinks.
“There may be alternative markets such as Jordan, the Gulf states and Egypt, but this mainly depends on who controls the Palestinian borders and crossings,” he said.
“As long as Israel controls the borders and crossings, it can issue a future decision prohibiting the export of any Palestinian product, whether agricultural or manufactured,” Khabeisah stated. “As long as the Palestinian does not have control over his crossings, proposing alternative markets will be difficult.”
Jamal Hamad, secretary-general of the Palestinian Farmers Union, told The Media Line that that in the long run, “the economic disengagement will be beneficial” to the Palestinian economy, though in the short term, it will be the Palestinian farmer who suffers.
“The Palestinian farmer is under occupation and must endure this temporary pressure,” he said.
He added, however, that the PA government should intervene on the side of the farmers.
“It should have programs to encourage the purchase of local produce [and] support Palestinian farms and find new markets for the Palestinian product to replace the Israeli market,” he said.
“We have a plan and we are aggressively pursuing new markets and ways to help our farmers,” he said.
Thaer Abu Hashem, a local produce trader in Ramallah, told The Media Line that prices are already going up, and if the current situation continues, it will have a negative impact on everyone.
“It will affect me and all merchants and people here,” he said. “There are many goods that are not available to us locally. Domestic production cannot fill the void.”
Israel’s Defense Ministry says the Israeli ban will be reconsidered if the PA lifts its own restrictions.