Michael Freedman

Repairing the neighbourhood

Let’s talk about Gaza again. The dust has settled, and Egypt will shortly play host to the usual conference about handing the Palestinians millions of dollars without sensible checks and balances. Nothing much will be built, and funds will be siphoned off to line pockets with cash and tunnels with concrete. In a year or two, Hamas or some unchecked offshoot of theirs or Fatah’s will trigger another war, Israel will go back in, more destruction will follow, for which we will receive all the international opprobrium, and there will be another reconstruction conference.

Apparently they need a deep water seaport, an airport, better fishing rights, more open borders with Israel, and reliable access to clean water and electricity.

Now let’s talk about Israel. The dust has settled, and we have gone back to worrying about our domestic issues, such as African migrants, house prices, low earnings and internecine party politics. Nothing much will be done, and funds will be frittered away on fringe causes without dealing with underlying socio-economic problems. In a year or less, Lieberman, Bennet, Lapid or some unchecked rogue MK or ex-MK will trigger another election, Israel will go back to a coalition that looks much like the current one, stability might follow, for which we will receive few tangible benefits, and there will be another futile attempt to fix the major problems facing the state.

Apparently we need cheaper imports, a new or expanded international airport, more affordable food, open trade with our neighbours, and lower utility bills.

Is anyone spotting a parallel between what Israelis and Palestinians need? Now let’s talk about pragmatic solutions for both.

Israel needs more Mediterranean deepwater seaport capacity to help reduce import costs and break the union monopoly which is a major factor in increased import-export costs in Israel. This will become more vital with the long-term prospect of a freight rail line from a new deepwater port in Eilat (to be built on the current Eilat airport site and accessed via a canal along the Jordanian border, freeing up the west coastline for tourism), all of which will, incidentally, likely be funded and built by the Chinese as their own strategic play to avoid reliance on the Suez Canal.

The Palestinians unfortunately cannot be trusted, at least in the short term, with operating their own port, as even the EU admit (hence the current creative solution of Gaza-bound ships docking in Cyprus for inspection). But the coast abutting the Gaza border would be an ideal place to put a “free port” which could also serve as Jordan’s access to the Med (via railway), be non-unionised, and run in collaboration between Israel and the PA, with substantial external involvement. This free port would also be a logical point for landing natural gas from the large finds off the coast of Gaza which have never been properly exploited. Israel has enough existing port capacity to cope if this free port had to be shut down due to a recommencement of hostilities, so the security threat can be minimised.

A similar model could be applied to an airport which would resolve the Palestinians’ need for one and handle Israel’s increasing capacity shortage, and run in the same way as the very successful Basel-Mulhouse Euro-Airport and others. In conjunction with rail links that could serve to securely link Gaza and the West Bank, this would allow air links for all Palestinians, without threatening Israeli security. The logical existing sites for this are probably the existing air base at Hatzerim, near Beersheva, allowing the IAF to consolidate southern operations at Nevatim and Ovda, or an area on the Egypt-Gaza-Israel border, incorporating the original Gaza airport site. Again, an area of Gaza and Israel, and perhaps Egypt too (in line with their existing – and bizarrely rejected – offer to grant land to Gaza), could be come a free trade zone.

Incidentally, Israel missed the opportunity to do something similar at Aqaba airport. With the Eilat passenger train line mooted to take 3 hours to Tel Aviv (in the end it won’t be a high-speed line and doesn’t need to be), and the closure of Sde Dov airport in a few years, domestic flights to Eilat will be largely redundant. Aqaba has a massively under-used runway, and sits 1km away from the existing Rabin border crossing across open desert. International passengers landing at Aqaba for Eilat could transfer directly to an upgraded border facility on Israeli soil. This concept was actually agreed as part of the 1994 Israel-Jordan peace treaty, and never carried out. Again, in the event of a security crisis with Jordan, nearby Ovda airport remains mothballed and available in emergencies. Instead, $600m is being spent building what may well be a white elephant airport at Timna.

The Gazans are clamouring for an extended fishing limit zone off the coast, which has security implications as well as playing into continued concerns about over-fishing in the Mediterranean. Demand for fish as a preferred source of protein is increasing worldwide, and prices are commensurately high. As ever, Israeli consumers suffer from particular supply constraints that force prices even higher, and for often mediocre produce. Israel has some of the world’s most modern onshore aquaculture technologies, and could build substantial facilities that negate the need to extend the Gaza fishing zone, whilst providing jobs and lower-cost produce. (Disclosure: Asquith Israel invested in Aquaera, which allows fresh-water and salt-water fish to be grown onshore, with 100% closed-loop recycling and recirculation of water.)

A free trade area encompassing an area along the whole northern border of Gaza and the existing Erez Industrial Zone could include such enterprises, providing jobs and food sources to Palestinians and marginalised residents of Israel’s south. It would also allow for better trade with Israel via a secure neutral zone. The same territory might also include desalination and electricity generation capabilities, supplying water and power to both Israelis and Palestinians, and potentially to compete with the Israeli state-run monopolies.


In turn, a free trade area (potentially incorporating a wider swathe of Israeli land around Gaza, as part of an economic development scheme for Israel’s south-west) would bring Jordan, Egypt and Gaza economically closer to Israel. The likely knock-on effect would be normalisation with other Middle Eastern countries, and perhaps rehabilitation with Turkey, using commercial drivers. They were already supposed to have been involved in a rehabilitated Erez Industrial Zone project, for example.

So it turns out that the economic interests of ordinary Gazans and Israelis may be surprisingly closely aligned. It probably requires external incentives and pressures to materialise, in the form of substantial US, EU and potentially Chinese, Turkish and Gulf financial backing for particular projects, and the support of the same parties and the UN on the ground on a long-term basis.

Most critically, it needs brave leadership on both sides – avoiding narrow political interests and potential for corruption. That future Israeli-Palestinian airstrip had better make room for flying kosher-halal pigs.

About the Author
Michael is Executive Director of Asquith Israel Merchant Bank, which seeks to go "Beyond the Start-Up Nation" by investing long-term in Israeli growth companies.
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