‘Umar ‘Aqqad is planning to export bottled water from Saudi Arabia. Not the kind of project you might expect in a desert kingdom where water is scarce. But then, ‘Aqqad is one of the shrewdest and most successful businessmen in the region. Not coincidentally, he is also a Palestinian. For Palestinians, stateless and living by their wits, have been among the leading capitalists of the Middle East. Their number has included Beirut’s greatest banking genius, partners in the foremost contracting firms of the Gulf, Jordan’s top banker, and several of Saudi Arabia’s leading managers and industrialists.

Some of these exile bourgeois represent classic “rags to riches” stories, while others have come from bourgeois families that emerged in the colonial mandate period. Though they may not have suffered in the same way as their compatriots in the refugee camps and under occupation, their identity and existence is also at stake in the struggle to overcome statelessness. Many have been major financial supporters of the PLO and other Palestinian institutions, such as schools and universities. They have made their influence felt far beyond their numbers, both in Palestinian society and throughout the Arab world. In the West, the term “Palestinian” seldom evokes the image of a businessman or banker, but they are an important part of the Palestinian story.

Growth of the Bourgeoisie

Palestine, and its Arab population in particular, suffered severely from the worldwide recession of the 1930s. But by the end of World War II it had reached a level of prosperity that made it one of the most advanced countries in the Middle East. As a center of British communications during the war, it benefited from contracts in transport, military construction and supply as well as a big new oil refinery at Haifa. Agricultural exports, particularly of citrus fruit, also increased markedly as the Germans cut off supplies from other parts of the Mediterranean. While many of the contracts awarded by the Mandatory authorities went to the new Jewish immigrants, Arab Palestinians also benefited, for they were able to provide cheaper labor. As a result, Palestinians were employed in the railroads and in several huge military construction projects as well as in government departments such as the police. Arab citrus producers along the coast took advantage, along with their Jewish counterparts, of the huge demand for agricultural exports. So did Arab producers of grain and other crops further inland.

Wartime prosperity coincided with new forms of investment and trade that brought Palestine, and its entrepreneurs, into the world market. Profits were invested in shares, government bonds, commodity stocks and other forms of financial paper that had been introduced in the late 1930s, enabling many to recover some of their wealth after their dispersion in 1948. Some estimates of that wealth can be derived from data collected by the Mandatory government. These show that total ownership of capital in the country in 1945 amounted to 281 million Palestinian pounds. (One Palestinian pound was equal to one pound sterling or about $4.00 in 1945.) Just over 47 percent, or 132.6 million pounds, was owned by the Arab community. The bulk of this wealth — 74.8 million pounds — was invested in rural landholdings that the owners could not transfer abroad. But other assets, such as those invested in foreign stocks and shares, were in a form which they could recover in exile. Altogether, these foreign liquid assets amounted to just over 39 million pounds. In addition, another 7 million pounds was held in the form of bank deposits in Arab banks in Palestine, along with 3 million pounds deposited in the Ottoman Bank or in the local branch of the British-based Barclays Bank, some of which was recovered following international litigation in the early 1950s.

Of these deposits, approximately 10 million pounds was transferred to Jordan, where the majority of the exiles from the 1948-1949 Arab-Israeli war had taken refuge. At least 1.5 million pounds was also brought into the country in the form of banknotes prior to the abolition of the Palestinian currency. At least 1.5 million pounds was transferred to Syria in the form of banknotes, with smaller amounts sent to Egypt and Iraq as well.

Wealth in Exile

With some of their wealth available in exile, a few Palestinians were able to partially recoup their losses and, unlike the peasantry, to avoid the confinement of life in the camps. The Tuqan family of Nablus used their funds in Jordan to expand their agricultural operations on the East Bank and to start related industries, such as the Vegetable Oil Company of Jordan, whose Board of Directors by 1964 included four of the wealthiest merchants in Nablus. Yusuf Baydas, a former bank clerk and foreign exchange dealer in Mandatory Palestine, used funds obtained from the release of accounts in Barclays to start a new money exchange business in Beirut that later became a multimillion dollar bank and holding company with operations throughout the Arab world and in Europe and Africa.

By smuggling out bank records, documents and safe deposit boxes as well as cash, the Shuman family of Jerusalem was able to transfer the headquarters of the Arab Bank from Jerusalem to Amman, from where it began a huge expansion program that has made it one of the largest banks in the Middle East today. Other merchants and traders found it possible to transfer their businesses abroad thanks to the development of new forms of corporate enterprise in Palestine during the 1940s. The Arabian Insurance Company, for example, along with Middle East Airlines, both reopened in Lebanon after 1948; by the end of the 1950s their shareholders included some of the wealthiest Palestinians in the Arab world.

By far the largest opportunities arose with the discovery and expansion of oil exports from Saudi Arabia and the Gulf states. Post-war demand for fuel in Europe led to a rush of exports from the Gulf states at the time of the 1948 defeat in Palestine. Three years later Iran nationalized its oil fields, leading to a huge increase in Kuwaiti output. Saudi Arabian output doubled in the decade after 1950. New fields in Qatar in 1949, in Libya in the early 1960s and in Abu Dhabi in 1963 added still more to the rapidly growing oil wealth in the region.

For Palestinian entrepreneurs, the oil boom in Saudi Arabia and the Gulf states provided new opportunities at a time when their own markets at home had been lost. Trained in modern business methods under the British, they found a ready welcome in the British protectorates of the Gulf as well as in Saudi Arabia, where their knowledge of English and of international trading made them especially useful. Middle East Airlines began shipping agricultural produce to the new Gulf markets, while firms of consultants, accountants, public relations experts and engineers set up new offices and joint ventures in the region as a whole.

As in Beirut, their knowledge of modern business methods gave them a competitive edge over their Arab rivals from other parts of the Mediterranean who also sought out new opportunities in the wake of the growth of oil revenues in the Gulf states. Emile Bustani — a Lebanese who had migrated to Palestine during World War II — founded the Contracting and Trading Company to obtain British government contracts in Jerusalem. The firm then won lucrative work constructing oil pipelines and terminals in Qatar, Iraq and South Yemen. Another company of Palestinian entrepreneurs, the Consolidated Contractors Company, was founded in 1963 and soon expanded its operations throughout several states in the region. By the early 1970s, the firm was doing business worth at least $60 million a year and its founders sat on the boards of several other huge related concerns active in textiles, food processing, finance and trade.

Still other companies, many of them founded by Palestinian professionals who had emigrated to the Gulf to find work, were doing millions of dollars worth of business in Saudi Arabia and the Gulf states by the mid-1960s, even before the fourfold rise in oil prices in the early 1970s. As a result, new communities of middle class Palestinians had grown up in the Gulf which together formed a new entrepreneurial elite within the Palestinian diaspora. By 1970 they numbered just under 200,000. Although this amounted to only 6.6 percent of the total Palestinian populations, their influence was felt throughout the diaspora and in the occupied territories as well, where their network of kin and business contacts enabled many poorer Palestinians to escape a life of stagnation and abject poverty in the refugee camps.

Confronting the Arab Bourgeoisie

By the mid-1960s, wealthy Palestinian entrepreneurs controlled a network of corporations and trading companies that had built, or was building, much of the infrastructure in the Middle East — in Lebanon, Jordan, Syria and Iraq as well as in Saudi Arabia, Kuwait, Qatar and the other Gulf states. In retrospect, this period also marked the peak of their power, for behind the scenes new factors were affecting the development of the entire region that were to limit the scope of activity open to Palestinians and finally lead to their demise as an integrated national bourgeoisie.

The Saudi government, under pressure from its own nascent middle class, began insisting that firms employ Saudi nationals in preference not only to Western expatriates but also to other Arabs, Palestinians included. By 1964 the number of Saudis employed in the oil industry had risen to 52 percent. At the same time, the huge Arab American Oil Company (Aramco) came under pressure to award contracts to Saudi entrepreneurs irrespective of other competition. This policy was encouraged further by restrictions imposed on US aid funds to the kingdom. Aramco set up a special department on Arab Industrial Development that began to farm out construction and maintenance work to new Saudi contracting companies set up by former employees. The kingdom provided subsidies and special credits for the purchase of tools, equipment and raw materials, and privileged access to import/export licenses and work permits. Palestinian entrepreneurs, lacking these special favors, found it increasingly difficult to compete.

In Kuwait, a series of laws passed in the early 1960s gave local citizens special privileges in setting up new companies in certain economic sectors. Firms owned by non-Kuwaitis, in turn, were restricted in the kinds and scope of activities they could undertake. The Industrial Law of 1965 went even further, and stipulated that all industrial companies must be controlled by Kuwaiti shareholders. Palestinian companies were forced to turn over more than half their shares or face the prospect of losing their right to operate in the country; their profits, in turn, were divided among the new Kuwaiti shareholders according to the percentage of their shareholding, thus reducing the profits which had formerly accrued to the Palestinian owners.

Elsewhere in the Gulf, the rise of new rivals from among the growing local bourgeoisie meant stiffer competition for access to influential officials, often to the detriment of Palestinian entrepreneurs who had previously had the total support of one or another member of the royal family or local merchant class. In Iraq, the fall of the pro-British monarchy in 1958 and the subsequent nationalization of whole sectors of the economy meant that privately owned firms, both Iraqi and Palestinian, found it difficult to continue operations. For Palestinian entrepreneurs the inability to repatriate their profits was a serious blow, and many transferred their activities elsewhere.

Similarly, the fall of King Idris and the installation of a republic headed by Mu‘ammar al-Qaddafi in 1969 led to the arrest of many Palestinians — businessmen, civil servants and professionals — who were regarded as sympathizers of the former monarchy. The nationalization of banks, insurance companies and manufacturing industries a year later forced many Palestinian companies to leave or face a Libyan takeover of their assets.

In Lebanon, the 1966 failure of Intra Bank, the extensive financial empire set up by Yusuf Baydas in the late 1940s, led to the loss of support for a host of smaller Palestinian firms which the Bank had provided. Baydas’ own efforts to rescue the Bank — which despite a liquidity crisis registered more assets than liabilities — were rebuffed by the Maronite leadership in the Lebanese financial community and further hindered by unexpected withdrawals made by members of certain royal families in the Gulf. By the end of the 1960s, most of the Intrabank’s prized holdings, including real estate in New York, Paris and London, had been parceled out to shareholders and creditors in Lebanon, Kuwait, Qatar and the US.

Emile Bustani’s dreams of using Arab oil revenues to finance development throughout the Arab world irrespective of national boundaries had earlier come to naught. Shortly after he announced plans to run for the Lebanese presidency, he met an untimely death in an airplane crash in 1962. Although his construction company continued to operate, his fate, and that of Baydas — which led to suspicions of foul play at the time — raised new doubts among the Palestinian bourgeoisie in Lebanon about the tolerance they would meet once their success had become visible and once they were seen to be a threat to rising local interests.

As a result, many concluded that their wealth could only be secured by ensuring the creation of a state of their own in which their companies and their profits would be free of the dangers of confiscation and of the threats posed by rival bourgeoisies. The Israeli takeover of the West Bank and Gaza in 1967 and the subsequent outbreak of civil war in both Jordan and Lebanon reinforced the desire for a state of their own among the Palestinian bourgeoisie. Unlike its counterparts in the Arab world, and its predecessors in Europe, the Palestinian bourgeoisie lacked a territorial base in which to secure both its own property rights and its legal hegemony. Moreover, it lacked a secure internal market from which to base its expansion abroad.

To this extent, the Palestinian bourgeoisie differed significantly from its counterparts elsewhere: although it espoused free enterprise and the development of Western-style capitalism, it did so along with support for the Palestine Liberation Organization and for armed struggle and guerrilla war. The middle class communities in Kuwait, Qatar and other parts of the Gulf contributed heavily to PLO funds, and their entrepreneurs provided a haven for PLO activists and access to the royal families of the Gulf whose diplomatic support was crucial, particularly in the case of Fatah. In Beirut, PLO-owned companies provided the expertise needed to set up the PLO’s extensive network of social welfare organizations. In Amman and elsewhere a new generation of Palestinian bankers and financial experts helped to channel PLO funds into lucrative investments both within the Arab world and abroad.

The Palestinian bourgeoisie’s commitment to nationalist struggle, however, has been severely tested since the early 1980s. The Israeli invasion of Lebanon in 1982 resulted in the loss of Beirut as an effective center of both financial and social power. The decline of oil revenues in Saudi Arabia and the Gulf states has adversely affected their economic activities, and coincided with a rising resentment on the part of the local citizens. They feared that Palestinian radicalism would ignite discontent among the indigenous population in the Gulf states, particularly among the Shi‘i minorities who had found one new source of inspiration with the rise of the Khomeini regime in Iran. Faced with restrictions on their economic activity, the Palestinian communities in the Gulf began also to encounter political restrictions that affected their ability to travel, to play host to their dispersed kin, and to raise funds for their compatriots living in circumstances far more difficult than their own.

The civil war in Lebanon and the Israeli invasion led to the emigration of substantial numbers of the Palestinian middle class, to Cyprus, Amman, Paris and London. As the war dragged on, many began to build more permanent ties in their new places of refuge. Today Palestinian firms play a leading role within the Arab community in London and, to a lesser extent, in Paris as well, where the access to good communications and easy air travel to the Middle East has made possible the building of new long-distance networks specializing in financial services, publishing, advertising and commerce.

Behind these developments, there exist differences within the Palestinian bourgeoisie over the role that nationalism, both Palestinian and Arab, should play in the future. Most had supported Fatah, but their commitment has been tested by the split within the PLO and by their own worsening economic situation. The argument made by certain members of the old Palestinian ruling class and by pro-Jordanian sympathizers in the West Bank — that autonomy under Hashemite rule is preferable to still more years of seemingly fruitless struggle — seems to have gained ground.

Moreover, Palestinian entrepreneurs abroad have found their interests tied to that of the world market in a way that was not the case in the 1960s and the early 1970s. Today their economic security may be dependent on a network of contacts with their counterparts all over the world rather than with their national compatriots. Palestinian entrepreneurs in the Gulf find that their economic future is now tied to the future of the Gulf itself, and to the joint ventures they have established with local partners. The interplay between the diaspora bourgeoisie, the old and new leading families in the occupied territories and the fractured Palestinian resistance movement is growing more complex. What is certain is that the wealthy Palestinian class that has grown up over the last four decades will continue to carry weight beyond its numbers in determining the Palestinian future.


‘Umar ‘Aqqad was born in Jaffa, Palestine, in 1928, and graduated from a British university in 1951. Unable to return to Jaffa, which had been taken over by Israel, he went to Jidda, Saudi Arabia. There he began working for E. A. Juffali and Brothers, one of the country’s oldest and largest trading companies. Over the years, he rose to the top of the Juffali company and established a reputation as one of the country’s top managers. Eventually Aggad became a naturalized Saudi citizen. In 1972, he left Juffali to start his own polyvinyl-chloride pipe manufacturing business. He founded the Saudi Plastic Products Company in partnership with various investors, including Sulayman ‘Ulayan. He then went on into manufacturing insulation, bottled water and other products. In the mid-1970s, as the oil boom got under way, he started up a variety of new companies in aluminum products, steel-wire mesh and plastic fittings. He also started the Manufacturing and Building Company, or Mabco, to produce precast concrete and other building materials. He set up a holding company, ‘Aqqad Investment, to manage this empire. Today ‘Aqqad is one of Saudi Arabia’s most successful businessmen. He owns 23 manufacturing plants throughout the country making products ranging from tissue paper to precast concrete mosques and employing over 5,000 workers. With oil income down, ‘Aqqad’s business is off by more than half the level it was two years ago. Plants are running far below capacity, and employment in the company has been slashed from a peak of nearly 8,000. To take up the slack, ‘Aqqad’s companies are looking to export markets as well as new opportunities in Saudi Arabia itself. They are exporting plastic pipe to Egypt and North Yemen, looking into exporting bottled water to Kenya, considering moving some production lines abroad to Egypt or Iraq, and starting up ventures in Saudi in such promising new lines as cookies, packaging and hospital management. So effective was ‘Aqqad’s repositioning of his company that profits rose in 1985. His continuing prosperity, the scale of his riches and his support for the Palestinian cause were recently demonstrated by his gift of $6 million to Birzeit University in the West Bank.

‘Abd al-Muhsin al-Qattan’s father, one of the first Palestinians to arrive in Kuwait, played a key role in the development of the Kuwaiti educational system. He established close connections with the royal family and with many prominent merchant families. ‘Abd al-Muhsin became deputy undersecretary at the Ministry of Public Works and in 1959 founded the al-Hani Contracting Company, which built the Sheraton Hotel and the Kuwait Airways office complex. By the late 1960s the firm had begun to reap large contracts in Saudi Arabia and Jordan as well, and to import building materials and machinery. Qattan invested in a number of ventures and sat on the boards of firms in manufacturing, finance and trade. Al-Hani prospered enormously during the oil boom years, but today its contracting work has been cut back sharply. Al-Qattan has since developed widespread holdings in the Arab world, Europe and America which are administered from headquarters in London.

Hassib Sabbagh’s family originally owned an extensive textile and dyeing business in Safad, Palestine. In 1963, he started Consolidated Contractors Company with two other Palestinians, Muhammad Kamal ‘Abd al-Rahman and Said Tawfiq Khouri with an initial capital of $3 million. This firm became enormously successful and by the late 1960s it had overtaken the giant Lebanese Contracting and Trading Company. Later, during the Gulf oil boom of the 1970s, its turnover measured in the hundreds of millions. Sabbagh’s growing wealth was invested in real estate in Beirut, London and elsewhere, as well as in foreign securities and an extensive art collection. Like al-Qattan, Sabbagh faces a shrinking construction market. However, his holdings are by now quite diverse. Headquartered in Athens, his companies today may well be the most extensive Palestinian financial empire.

‘Abd al-Majid Shuman’s father, ‘Abd al-Hamid, was a Palestinian peasant who left school at the age of seven, worked as a laborer in a quarry, and migrated in 1911, at the age of 20, to the United States. He worked as a salesman, and eventually opened a large department store in New York. He was a rich man when he returned to Palestine in 1929. He opened the Arab Bank in Jerusalem in 1930 with his own funds, unable to attract other investors. In 1948, he smuggled documents, safe deposit boxes, cash and accounts out of Israel and set up headquarters in Amman. He then bought an interest in the Development Bank of Jordan, which in turn helped set up the Jordan Petroleum Refinery Company in 1956. By 1967, the Arab Bank had more than a dozen branches in the Arab world, of which the branch in Beirut was the most important, as well as affiliates in Western Europe and elsewhere. ‘Abd al-Hamid, along with his son and another relative, Khalid, worked on developing a network of other companies tied to the bank, including the Commercial Buildings Company of Beirut. ‘Abd al-Majid Shuman, the son, grew up in Brooklyn and attended university in the US before returning to Jordan. He is now chairman of the bank, and his wealth, influence and holdings are reflected in his board seats with UBAF Arab American Bank, Union de Banques Arabes et Franchises of Paris, Arab Bank Investment Co. of London, and the Central Bank of Jordan.

Sources: Pamela Ann Smith, Palestine and the Palestinians (New York: St. Martin’s, 1984), pp. 121, 126-27. 130-132, 136; Institutional Investor, June 1983. p. 138; Wall Street Journal, April 28, 1986.

How to cite this article:

Pamela Ann Smith "The Exile Bourgeoisie of Palestine," Middle East Report 142 (September/October 1986).

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