The political, security, and economic status quo that has been in place since the establishment of the Palestinian Authority in 1994 under PLO leadership closely mirrors the results of the “wars of Soviet succession” in the Eurasian former Soviet states. Although these territories, like the Palestinian Authority, are not officially recognized as sovereign governments by the countries from which they declared independence, they enjoy significant amounts of autonomy. Therefore, this article uses the term “proto-state” to describe the political standing of these regions and of the Palestinian Authority.
Significant political and economic change could threaten or destroy an existing state of affairs, one that benefits the established political elite in these proto-states. Therefore, political leaders choose to remain “frozen” in their secessionist conflicts and to delay independence, regime change, and most other political change. This case study demonstrates the many similarities between the Palestinian Authority and the regions that benefit from post-Soviet “frozen conflicts,” while clarifying how the PLO leadership profits politically and economically from maintaining this status quo with Israel.
Post-Soviet Frozen Conflicts
The cases of post-Soviet frozen conflicts are best explored by Charles King in his 2001 article “The Benefits of Ethnic War: Understanding Eurasia’s Unrecognized States.”1 King uses examples from “post-Soviet Eurasian states” to explain a phenomenon where “the chaos of war becomes transformed into networks of profit,” and in turn “these informal networks harden the institutions of states.” In the years surrounding the fall of the Soviet Union in the late 1980s and early 1990s, various regions formerly annexed by the Soviet Union engaged in the “wars of Soviet succession.”
The term “frozen conflict” has been used by scholars to apply largely to the present post-Soviet ethnic conflicts like those in South Ossetia and Abkhazia, which are recognized by a handful of nations, including Russia, as independent states. However, these ethnic enclaves are administered by Georgia. The conflict between Armenia and Azerbaijan over the ethnically-Armenian Nagorno-Karabakh, which is officially apart of Azerbaijan but operates as an autonomous proto-state, also fits this category. Transnistria, an autonomous territory administered by Moldova, can also be described as a post-Soviet frozen conflict.
The wars of Soviet succession occurred in minority ethnic enclaves with secessionist desires, or aspirations to join neighboring nations. Throughout this period, these enclaves would engage in armed conflicts with the central governments of the newly sovereign states from which they declared autonomy.
With the exception of limited outbreaks of violence, by the mid-1990s most of these conflicts, though not resolved, became relatively stable. These regions were administered largely by rebel leaders. Although these leaders have employed the language of liberation, they have largely shunned negotiating with the states from which they claimed secession. They have handed much of their administrative duties to Russia, weak local bodies, criminal elements, or the very states from which they declared independence.
In the abovementioned Eurasian ethnic enclaves, leaders prefer to protract conflict with the country from which they have been granted autonomy, instead of fully seceding from these countries or permitting full annexation of these territories.
In place of anarchy, the political elites of these regions use perpetual violence to extract natural resources while excusing themselves from governance. These elites have leveraged their near-unchecked political power and regional autonomy into a rent-seeking system of “robber barons,” benefiting from aid from outside sources, trading with neighboring states while avoiding paying taxes, and collecting taxes and bribes from local businesses and residents.
Instead of establishing governing frameworks or petitioning for increased autonomy, or outright independence, the leaders of post-Soviet separatist conflicts have instead worked to maintain a status quo that perpetuates these conflicts and allows them to preserve a symbolic status as leaders of a struggle for liberation, without embracing governance or negotiating a final status for the territories they control. The leaders of post-Soviet frozen conflicts are generally rent-seeking and kleptocratic, and benefit from conflict economies. The lines between official and criminal business ventures are often blurred.
All of the conflicts between these ethnic enclaves and Eurasian states occurred in the early 1990s, directly following the fall of the Soviet Union. The post-Soviet “frozen” conflicts initially appeared to resemble the secessionist conflicts that took place in the former Yugoslavian states in the 1990s. However, although the post-Soviet frozen conflicts appeared to be heading in a similar direction as these conflicts – toward the creation of ethnic nation-states following intense bloodshed – the ceasefires that followed frozen conflicts never resulted in outright independence. Nor, unlike the Balkan Wars, did the post-Soviet frozen conflicts ever result in protracted warfare or ethnic cleansing. Nonetheless, Nagorno-Karabakh, Transnistria, South Ossetia, and Abkhazia never became independent states like Kosovo, Montenegro, Croatia, or Slovenia. Other territories with formerly frozen separatist conflicts, such as Chechnya and Crimea, have instead been fully annexed by Russia, ending their semiautonomous statuses.
The Palestinian Authority as a “Post-Soviet” Secessionist State
Although they were not under direct Soviet influence like the former Soviet republics and their frozen ethnic enclaves, the Palestinian leadership under the PLO, and the Fatah Party, formed by PLO leaders as the governing party of the Palestinian Authority, were still heavily dependent on Soviet patronage and support.
Like the Soviet satellite nations in Eastern Europe and Central Asia, the Arab world benefited from Soviet hegemony and also faced a power vacuum in the early 1990s after the Soviet Union collapsed. Some states that had formerly received Soviet support, like Syria and Iran, aligned themselves with the newly formed Russian Federation. Others, such as Saudi Arabia and the Gulf states, strengthened their ties with the United States.
The PLO also felt the pull of the vacuum left by the Soviet Union. In addition to losing their Soviet patronage, the Palestinians lost support from Saudi Arabia and Kuwait after they backed Iraq in the First Gulf War. Lacking their largest state-sponsored benefactor, Yasser Arafat and PLO elites scrambled to find new regional and international allies. The United States saw this as a unique opportunity to initiate a two-state solution to the Israeli-Palestinian conflict, with the PLO serving as a demilitarized governing force.
The early 1990s were a time when international elites saw a potential for negotiated peace efforts that would allow former terror groups to demilitarize and enter the political arena. Many of these groups had recently lost their Soviet backing. They could now enter national politics either as official political parties or state actors. Alternatively, after negotiations, the secessionist demands made by terror groups could be voted on in national legislatures or referendums. In the cases of South Africa’s African National Congress (ANC) and the Irish Republican Army (IRA), both movements peacefully entered the political arena as either governing or opposition parties in their respective parliaments.
These successful negotiations inspired U.S. President George H. W. Bush to announce in March 1991: “The time has come to put an end to the Arab-Israeli conflict.” The U.S.-sponsored 1991 Madrid Conference followed, with Israel, the PLO, and regional players in the Israeli-Palestinian conflict as participants.2 The Madrid Conference was followed by the Israeli-Palestinian 1993 Oslo I Accord and 1995 Oslo II Accord, which were mediated by the Clinton administration. The failed 2000 Camp David II conference was also intended to produce a final-status agreement stipulating a Palestinian state and a lasting peace between Israel and the PLO.
The United Nations and the Bush and Clinton administrations believed that the PLO would follow the model set by the ANC and the IRA, and after peace negotiations with Israel would serve as an official governing party for the Palestinian people. International negotiators wanted the PLO to represent Palestinian secessionist demands in an official demilitarized capacity, without the use of terror.
The ultimate goal, sought by the international community and Israeli negotiators for the Oslo process, was for the West Bank and Gaza to formally secede from Israel and form an independent Palestinian state. However, these goals have yet to be fulfilled. What the PA leadership has created, instead of resembling a resolved secessionist conflict resulting in full political independence, is a Palestinian political economy that resembles the post-Soviet frozen conflicts.
Economic and Infrastructural Independence Derailed by the PLO and Fatah
The Oslo process was intended to lead to Palestinian economic independence. Since Israel captured the West Bank and Gaza in the 1967 Six-Day War, the PA economy has had little domestic-production capacity, instead largely relying on the import of Israeli goods. The Palestinian labor market in the West Bank also remains undeveloped, with an unemployment rate of 17.7 percent.3 Many Palestinians prefer to work in Israel because of the higher wages and the benefits and protections. Many Palestinians also choose to work for Israelis or in Israel-controlled industrial zones because they lack domestic alternatives in the West Bank.
The Palestinian Authority, with its relatively low domestic output, dependence on cottage industries, and weak labor market, resembles other developing areas in the Middle East and elsewhere. However, unlike these other areas, the Palestinian Authority has largely squandered opportunities to improve its economy by printing its own currency, taxing its populace, and building independent infrastructure.
In this regard it distinguishes itself from other developing regions in the Middle East and the world. Instead, it more closely resembles Central Asian and Eastern European post-Soviet ethnic enclaves. Similar to the Palestinian Authority, the breakaway Transnistria region depends for its energy needs on free or heavily subsidized natural gas delivered from Russia.4 Nagorno-Karabakh’s economy remains largely untaxed by its weak representative body because it is fueled by the illegal arms and drug trade. The corrupt networks spawned by these illicit means in turn contribute to political corruption in the weak proto-government.5 Likewise, large segments of the Abkhazian economy are controlled by criminal organizations, limiting normal business activities, rule of law, and equality of opportunity. In addition to controlling the economy, many criminals have obtained roles in the regional legislature, making it their own self-interest to perpetuate the Abkhazian status quo.6
The Palestinian Authority and its ruling Fatah Party were established as a civilian governing proto-state by PLO leaders and Israel during the Oslo process. They were tasked with devising an economic development model for the Palestinians. One of the provisions of the 1993 Oslo Declaration of Principles was the formation of a Palestinian development bank.7 As of 2018, this bank had yet to be established.
Even when offered foreign aid for development purposes, in the absence of a Palestinian development bank the Palestinian Authority has done little to promote economic growth, industry, or the domestic labor market. Instead, development and infrastructural initiatives have been relegated to the private sector, foreign NGOS and development banks, and Israel.
In 1998, when the estimated Palestinian unemployment rate was 22 percent, PA Chairman Arafat partnered with Casino Austria to open the Jericho Oasis Casino, the first casino in the region and one of the largest development projects initiated by the Palestinian Authority. The casino hired a staff largely composed of foreign laborers from Europe, and about 95 percent of its clientele was Israeli. After two years of operation, the casino was closed with the outbreak of the Second Intifada. Similar to many of the economic projects found in the former Soviet frozen-conflict zones, Arafat and the PLO chose to invest in the Oasis Casino not out of a desire to develop the local economy, which had a burgeoning tourism sector. Instead this project was developed as a vehicle for money laundering; indeed, much of the funding for the Second Intifada was laundered via the casino.
Since the failed Oasis Casino project, the Palestinian Authority has launched few other economic initiatives. In 2014 the Palestinian Authority received approximately $1.5 billion in foreign aid.8 Much of this aid, which was unaccounted for in the Palestinian Authority’s annual budget for that year, was pocketed by Palestinian leaders, funding lavish villas, expensive cars, and vacations abroad.9 Aid was also diverted to proposed projects that never came to fruition, or were undertaken by foreign aid agencies and NGOs instead of the Palestinian Authority itself; or it is unaccounted for. Roughly 20 percent of the Palestinian Authority’s 2014 foreign aid, around $300 million, went to salaries of convicted Palestinian terrorists who were either in or released from Israeli prisons, or to families of dead terrorists and others who died as “martyrs” fighting Israel.10
The 1993 Declaration of Principles and 1995 Oslo II Accord also called for the creation of a Palestinian water authority.11 Although such a body was established in 1995, it has not provided a sustainable source of water for Palestinian agriculture, industry, and personal use. Israel has offered to help the Palestinian Authority connect to Israel’s advanced water and sewage systems, and even independently create its own wastewater treatment and desalination plants, as well as water pumping stations.
Israel and international corporations have offered technology that would allow the PA water supply to be separate from Israel’s, and would enable the Palestinian Authority’s water infrastructure to be managed independently if independence is negotiated. Yet the Palestinian Authority has rejected these offers, at the expense of its own population. Since its establishment in 1994, the Palestinian Authority has refused to adequately manage its population’s water needs, instead choosing to “weaponize” this particular issue against Israel.
In 2011, construction began on Rawabi, which is advertised as “the first Palestinian planned city” and “the largest private sector project ever carried out in Palestine.”12 Much of the $1.2 billion in funding was provided by Palestinian-American entrepreneur Bashar al-Masri and by the Gulf states.
Masri described the Palestinian Authority as an impediment to the construction of Rawabi. The PLO leadership of the Palestinian Authority boycotted all meetings with Israel under the auspices of the Oslo-created Israeli-Palestinian Joint Water Committee, preventing Rawabi from receiving water – and new residents – for five years.13 Masri also charged the Palestinian Authority with failing to provide many promised services to Rawabi, citing this as a reason why the schools, health clinics, and sewage and water systems were all privately built and funded. Rawabi was constructed with the intention of encouraging the Palestinians’ economic development and expanding their middle class. Yet the Palestinian Authority squandered this attempt at state-building, and instead the private sector is pursuing this endeavor.14
The PLO Leadership’s Role in Perpetuating the Israeli-Palestinian “Frozen Conflict”
The primary reason for the Fatah leadership’s reluctance to transition to independent statehood is that its own governance is at risk. Although the PLO is the governing party of the Palestinian Authority, Mahmoud Abbas’ legitimacy as PLO chairman has been compromised numerous times since his rule began in 2004. The most significant threat to his rule and to PLO control of the Palestinian Authority was the 2006 Palestinian legislative election. The Hamas terror organization joined the elections as a political party and won 74 of the 132 seats in the Palestinian Legislative Council (PLC), whereas Abbas’ Fatah party won only 45 seats.15
The two parties attempted to form a unity government, but within months it collapsed into violent conflict. The fighting culminated in Hamas’ seizure of the Gaza Strip in June 2007, causing the Palestinian Authority to lose a large portion of its territory and its sole Mediterranean port.
Following the 2007 Hamas takeover of Gaza, the PLC unofficially disbanded. With Ramallah no longer considered the de facto capital of the Palestinian people, Hamas legislators migrated to Gaza and PLO supporters to the West Bank – thereby entrenching both ideological and geographic divisions between the Palestinians, who had been united under PLO rule from the founding of the Palestinian Authority in 1994 until 2007. This also resulted in a weakening of the Palestinian Authority and the PLO, as the Palestinian Authority lost about a third of its former constituents16 and 16 percent of the territory under its control prior to the dissolution of the unity government.
The Hamas-Fatah split has also given the PLO a reason to reject new PA legislative elections until a new unity deal with Hamas is reached. This has resulted in Abbas overstaying his term as PA president by 12 years.17 Abbas has also dismissed many high-ranking PA officials whom he perceives as potential successors or challengers to his rule, such as PLO Secretary-General Yasser Abed Rabbo and former Fatah leader in Gaza Mohammad Dahlan.
Although the PLC has not held a session since January 2006, Palestinian parliamentarians still receive salaries. Furthermore, the 2015 parliamentary budget came to an estimated $15 million, funded predominantly by foreign aid.18 Much of this money goes to salaries for PLC members. They receive $3,000 a month, a vehicle paid for by the PLC, and $2,100 to cover office expenses, also on a monthly basis, even though the PLC headquarters in Ramallah is nearly empty most days and rarely used for official purposes.19
In a struggling proto-state like the Palestinian Authority, the maintenance of the political status quo, while deleterious to economic development, ensures the continued high salaries of Palestinian parliamentarians and the uninterrupted rent-seeking practices of Abbas and his elite associates. Hence, to the detriment of the Palestinian people, there is little impetus among Palestinian elites for elections, regime change, or any changes that would “unfreeze” the Israeli-Palestinian impasse.
PLO elites behave similarly to the political leaders of post-Soviet frozen-conflict zones. One of the largest factors distinguishing the Palestinian Authority from these regions is the absence of Russia, or any regional hegemon that exerts direct economic and political influence on the PA leadership. However, like its political adversary Hamas, the PLO has been aligning itself with Iran and Qatar while distancing itself from Saudi Arabia and other Gulf allies, which in turn have been moving closer to Israel.
Although the rent-seeking practices of the PLO leadership in the Palestinian Authority resemble the behaviors of corrupt leaders in other undeveloped regions, the specific behaviors of these leaders are most similar to those of the leaders of the post-Soviet frozen-conflict regions. On a rhetorical level, the PLO signals to Israel and the international community that it is ready to negotiate a long-term peace agreement, and that the Palestinians desire an independent state that coexists peacefully beside the Jewish state.
Yet when one observes the Palestinian political economy, it becomes apparent that the PLO and the Fatah Party are preventing full Palestinian economic and political autonomy with their own actions. The PLO and Fatah leaderships concurrently argue that external factors, such as Israeli military rule in the West Bank, settlement construction, and Hamas’ control of Gaza are an impediment to peace negotiations and independent statehood.
Although the Palestinian Authority’s language of liberation still appeals to its populace, its popularity is quickly waning. In an October 2017 poll by the Palestinian Center for Policy and Survey Research, 50 percent of Palestinians responded that the Palestinian Authority is a burden on Palestinians.20 Additionally, as Abbas ages and fails to choose a political successor, its tenuous stability as a frozen state is at risk.
The Israeli government should acknowledge that, though the rhetoric the PLO uses in the international media and in interactions with the NGO community and Israelis indicates otherwise, the creation of a Palestinian state with a robust economy, independent infrastructure, and low unemployment may not be in the PA leadership’s best interest. If negotiations do resume between the Israeli government and the PLO, Israel, the United States, and any other mediating nations should take into account that the Palestinian Authority is a proto-state managed by a corrupt regime benefiting from the current state of affairs. In this regard, the Palestinian Authority should not be seen as a viable, developing proto-state on the path to independence but, instead, as a frozen-conflict zone akin to those found in the former Soviet states.
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1 Charles King, “The Benefits of Ethnic War: Understanding Eurasia’s Unrecognized States,” World Politics 53, 4 (July 2001).
3 “The Situation of Workers of the Occupied Arab Territories,” International Labour Organization, Geneva, 2015.
4 Dr. Ceslav Ciobanu, “Political Economy of ‘Frozen Conflicts’ in ex-Soviet States: Challenges and Prospects for the U.S. and Russia,” 2007.
16 “Population, Housing and Establishment Census – 2007,” Palestinian Bureau of Statistics, February 2008.
17 “Israel and Palestine,” Carter Center.
18 Ahmad Melhmen, “How Palestine’s parliament is squandering millions of dollars,” Al-Monitor, February 10, 2016.
19 Diaa Hadid, “A Legislature Where Palestinian Lawmakers Go to Hide,” New York Times, March 17, 2016.