On the hot afternoon of April 19, 2016, thousands of workers and unemployed took to the streets of the West Bank city of Ramallah in protest the labor policies of the Palestinian Authority (PA). As the sun beat down on their shoulders, the marchers remained defiant, shouting “Haramiyya! (Thieves!),” as they reached the rally point in front of the Council of Ministers and Ministry of Interior buildings. Organizers from independent workers’ movements, left political parties and women’s committees took turns addressing the crowd from a makeshift platform on the back of a truck. PA police and security forces were deployed, some in riot gear and armored vehicles, but they did not visibly interfere. The demonstration was the first public, collective manifestation of a campaign against Social Security Law 6, ratified by decree on March 9, 2016 by President Mahmoud ‘Abbas.
The opposition to the social security law is led by newly formed independent workers’ movements and their allies in civil society. Their campaign follows closely upon wildcat strikes by perhaps 30,000 teachers in February and March of 2016. Both efforts are emblematic of Palestinian workers’ growing rejection of the package of neoliberal economic nostrums on offer from the PA in lieu of an end to Israeli settler-colonial rule.
In 1997, after the Palestinian Legislative Council (PLC) released a report on corruption among PA ministers, President Yasser Arafat infamously quashed judicial action against the accused, telling legislators: “We will worry about our internal problems—the questions of social justice within Palestine—after we fight colonialism, our common enemy.” [1] This injunction is recited still by officials in the PA and its affiliated labor federations, as well as some outside supporters of the Palestinian cause.
But the social and colonial questions in Palestine are co-constituted. To separate the occupation from injustices in Palestinian society is to conceal the complex relations between capital accumulation and class transformation, the PA’s authoritarian practices, and Israel’s colonial project. An understanding of these relations is crucial for those committed to transnational solidarity with Palestine.
Shock Therapy
The campaigners against Social Security Law 6 criticize the measure on several grounds. First, they object to the law’s provision for depositing the retirement savings of private-sector waged employees in a new national fund to be overseen by a council jointly appointed by the PA and business interests. Private banks and companies are to manage these investments in the financial markets. The law’s opponents say that it provides no guarantee from the PA that money will actually be available to workers upon retirement and demand PA accountability in safeguarding these funds. Second, the campaigners oppose the increase in employee contributions into the fund and instead demand an increase in the contributions of employers (business owners). They call for bringing the pensions of private-sector workers into line with the retirement entitlements of workers in the public sector, and for enforcing a minimum retirement wage. [2] Third, the campaigners decry the law’s discrimination against women, families of pensioners, and the old and disabled, among other social groups. Some strands of the independent workers’ campaign call for a national program of social protection covering all workers, farmers and unemployed. [3]
Social Security Law 6 is part of a program of economic shock therapy that began in 2007. The PLC has not formally convened since late 2006, so all of these laws were drafted or amended by presidential decree with limited public disclosure. The new independent unions and workers’ committees see a multi-front attack on labor reflecting the demands of big business.
In 2014, the Investment Promotion Law of 1998 was altered to provide tax relief to large private interests in the name of a more “investment-friendly” business environment. [4] In early February 2015, the PA Ministry of Labor introduced a draft law on unions, which according to independent labor federations will suppress labor organizing by imposing strict conditions under which strikes and meetings can be called. Likewise, the federations express concern that proposed amendments to the existing labor law will ease the procedures for dismissal when workers are already subject to contracts that are increasingly short-term and irregular. In closed-door meetings later that month, the Council of Ministers and big business reached an agreement on further reductions to corporate and individual tax rates. Independent unions, who were not invited to take part in these discussions, note that the tax law is unfavorable to the poor and working classes. President ‘Abbas ratified the agreement as law nonetheless. Most recently, on January 23, 2017, the PA suspended the al-Aqsa intifada health insurance, which provided free access to medical care for the more than 400,000 unemployed Palestinians and their families. (Subsequently, the PA announced that al-Aqsa insurance is to remain available to families approved by a new oversight committee to be established. Labor organizers received the news skeptically, viewing it as a public relations move.)
Finance and Labor Discipline
The Social Security Law is central to a process of ongoing financialization in the West Bank, as private companies and banks, in particular, are given unchecked liberties to invest and profit from the retirement pensions of Palestinian workers. (Financialization refers to the ascendant role of finance and financial institutions in the economic activities of a country and the operations of capitalism globally.) For instance, the administration of Prime Minister Salam Fayyad initiated a major expansion of consumer credit from 2007 as part of a strategy of private sector-led development under the banner of economic nationalism.
Also central to the process of deepening financialization has been the reconstitution of the functions of the PA to intervene in the construction of the free market, especially in finance and land. To support the new suburb of Rawabi (north of Ramallah), for example, the PA enacted decrees to extend the period of consumer loans from ten years to 25. In 2008, the Palestine Monetary Authority issued directives to limit bank investment abroad to 55 percent (it had been 65 percent) in order to create new sources of domestic lending. In conjunction, donors and US financiers have come up with loan guarantee schemes to boost credit supply. The World Bank is backing projects for land registration and titling, while donors support the establishment of credit registries to ease collateral requirements. The legal foundations for the free market are being cemented.
These economic and legal spheres have been important domains in which to promote the political pacification of labor in Palestine. The Oslo era’s vision of economic peace has been a cornerstone of this strategy aimed at bridging the material and political interests of Palestinian political, security and PA-tied business figures; regional capital (Israel, the Gulf Cooperation Council and Turkey, as well as Jordan); US finance capital; and the Israeli business and security establishment, through cooperation and joint venture projects. These patterns of normalization continue to the present day in PA and donor visions of economic development, through the sectors and projects given priority in the Palestinian Reform and Development Plan, and the Quartet and Kerry initiatives, to which affordable mortgage finance and new credit schemes have been key. [5] These neoliberal modalities of accumulation and pacification, enacted in the name of development, are inextricably tied to broader regional configurations of power. The inter-relationships between US geostrategic interests in the Middle East and the US-led neoliberal drive that have gone hand in hand with a push for the normalization of relations between Israel and other countries in the region have a strong bearing on the Palestinian economy. [6]
Social Security Law 6 should be situated within this broader logic, as part of a process of class restructuring and labor disciplining in Palestine through the deepening financialization of the economy. As distinct from social services for vulnerable segments of the population (covered by the Ministry of Social Affairs), social insurance refers to the individual-based retirement contribution system. In line with the neoliberal ethos, each individual worker is responsible for assuring their pensions for retirement based on monthly contributions while at work. In 2003, the PA issued the Social Insurance Law concerning retirement pensions for workers in the private sector and civil society. This legal codification of labor rights took place in the same period as the launch of President George W. Bush’s “road map to peace for Israel-Palestine,” a process during which the political struggle of the Palestinians was increasingly reframed by the language and logic of Palestinian state building. In 2005, the PA issued Public Pension Law 7 for workers in the public sector, with a subsequent amendment in 2007. In the same year, the PA cancelled the Social Insurance Law and started work on an optional non-governmental retirement scheme that was to cover employees of private-sector organizations. This new scheme pooled workers’ retirement pensions to be managed and invested in the financial markets. The major banks played a key role in the preparation of the new system. [7]
The pensions of Palestinians who have spent their lives laboring in Israel and the settlements provided a particular political impetus to pass Social Security Law 6. According to Article 7 of the Paris Protocol, concluded in 1994 as part of the Oslo agreement, Palestinian workers in Israel and the settlements automatically have their social insurance contributions deducted by their Israeli employers on a monthly basis. These funds are then held by the Israeli National Insurance Institute and are transferred to the Palestinian side only once an institution outside the control of the PA is created. [8] According to the new law, these funds are now to be part of a complementary system that will be managed by a private company and banks, but the law does not specify how these monies will be transferred to workers themselves. Retired Palestinian workers who spent their lives as laborers in Israel or the settlements are now asking, “What of my savings for old age?” [9] Should Israel make the transfer, the banks and conglomerates in Palestine would obtain a sizable fraction of $8 billion in new capital—the estimated value of fees deducted from the wages of Palestinian workers in Israel—for their own financial investments. [10]
As financial institutions pool workers’ retirement savings, they are simultaneously expanding and easing credit. As a result, the levels of indebtedness of Palestinian workers are rising dramatically. The amount of credit issued for residential real estate, automobile purchases and credit cards increased by 245 percent between 2008 and 2011. [11] While debt bondage is a global phenomenon, Palestinian workers face special constraints. Under the Paris Protocol, Palestinian workers are subject to Israel’s macroeconomic policies, such as those setting interest and exchange rates. Palestinian workers may earn salaries in Jordanian dinars, but their loan agreements will likely be in US dollars—and with fluctuating exchange rates, workers are left in chronic uncertainty. In addition, special legal provisions mandate that salaries of Palestinian workers must be directed to the banks from which they obtain loans, where banks deduct a percentage of workers’ salaries toward loan repayment. This provision leaves Palestinian workers particularly vulnerable due to the periodic Israeli impoundment of PA clearance revenues. At such times, public-sector workers may receive no salaries for months on end, but they still owe loan payments unless the Palestine Monetary Authority issues special relief measures.
The credit push affects all workers, even those who are not formally in debt to banks. With two thirds of consumer lending directed to Ramallah, rents and land prices are skyrocketing in the city. Gentrification in downtown districts and the old city is rapid as banks buy up venerable limestone houses. Many white-collar workers are no longer able to afford rents, and those who can afford them are forced to choose between high rents and a mortgage. Meanwhile, migrant workers—who commute to Ramallah from Nablus, Jenin and Hebron—are often left to sleep at construction sites.
New financial instruments are also being used as tools for direct political interference. The $500 million Affordable Mortgage and Loan Scheme, for example, contains explicit provisions for vetting of participants by the PA security forces. With significant funding from the Overseas Private Investment Corporation affiliated with the US government, all implementing agencies and their employees, and loan recipients themselves, must pass the scrutiny of US Office of Foreign Asset Control regulations and US anti-terror legislation. Segments of Palestinian society considered “a threat” by the PA forces, which are dominated by the Fatah party to which President ‘Abbas belongs, thus do not qualify for these programs. As a partner in this program, the Palestine Investment Fund—the so-called sovereign wealth fund of the Palestinians—also must adhere to US anti-terror statutes. [12]
The Making of the Client-Consumer
Since the installation of the “caretaker government” in 2007, the rhetoric of the PA has increasingly framed the horizon of politics in Palestine in a developmental and consumerist idiom. The 2014-2016 PA National Development Plan, entitled State Building to Sovereignty, articulates its view of development as follows: “We are resolved to empower our citizens, helping them manage the transition from dependence to self-reliance, thereby achieving prosperity and a decent way of life.” [13] As they face the onslaught of Israeli colonization with assassinations, settlement expansion, closures, checkpoints and other types of collective punishment, Palestinians are also being squeezed to become exemplars of homo economicus—the trans-historical figure posited by neoclassical economics who makes ever rational decisions in pursuit of self-interest—and to become responsible consumers who will take advantage of expanding credit, the growth of the stock and mortgage markets, micro-finance and public-private partnerships for infrastructure projects that are part and parcel of this neoliberal vision of emancipation.
While the Palestinian Authority withdraws from its responsibilities for social protection, wage laborers are being told to trust in the financial markets for their retirement savings. This disciplining of Palestinian labor is taking place through the restructuring of the PA itself. In other words, the PA is itself being disciplined to adopt the shock-therapy economic reforms of the National Development Plan, while it works in turn to discipline its own subjects, Palestinian citizens. Donors and creditors are pressuring the PA to cut social expenditures, increase revenues and reduce the overall deficit. Facing a fiscal crisis, the government took on short-term debt from domestic commercial banks at high interest rates. According to the Ministry of Finance, by the end of 2015 total public debt reached $4.6 billion or 41 percent of nominal gross domestic product. A large portion of international aid is earmarked to service the debt, but strings are attached: The Ad Hoc Liaison Committee, a collection of foreign donors co-sponsored by the European Union and the United States, “stresses the importance of prioritizing fiscal consolidation of the Palestinian budget by reducing the deficit significantly” through limiting the wage bill, reducing subsidies and social expenditures and other structural reforms. [14]
The PA has already responded to the outside pressure. Since 2012, with unemployment at about 30 percent according to official statistics, the PA has maintained a policy of zero net hiring in the public sector. [15] In December of that year, the PA reached a first-ever minimum wage agreement with a group of workers due to a campaign led by the Union of Kindergarten Teachers; to date, however, the agreement has not been implemented. Some 33 percent of wage employees in the private sector earn less than the minimum wage of 1,450 shekels. [16] The International Monetary Fund notes that the PA has reduced its deficit—on a commitment basis—from 2.7 billion shekels in the first half of 2015 to 1.7 billion in the first half of 2016. [17]
To curb its deficit, the PA also targeted the category of net lending. This seemingly innocuous line in the PA budget refers to funds that are used to cover electricity bills owed by municipalities and refugee camps to the private Israeli companies that have a monopoly on supply. The actual amount of this debt is a source of controversy, but Israel has various means by which to collect. In the midwinter of 2015, the Israel Electric Corporation cut off the power to the West Bank cities of Jenin and Nablus for 45 minutes as a warning over unpaid bills. [18] Another key lever is the customs clearance money that Israel collects on the Palestinians’ behalf, by the terms of the Paris Protocol. By these accords, this revenue is to be transferred monthly to the PA, which depends upon these transfers to pay salaries. But Israel regularly impounds these funds to punish or coerce the Palestinians. In early 2015, Israel withheld the clearance revenues for three months until the PA agreed to the electricity debt amount of 500 million shekels stipulated by Israel. The US and the European Union exerted pressure as well. [19] To reduce the electricity bill, the PA has introduced a system of pre-paid cards and legal penalties and fines for non-payment, as well as shifting bill collection from municipalities to private electricity distribution companies. The electricity debt is but one example of processes of commodification, in which working people and the unemployed in Palestine are ever more bound in the contractual dream worlds of liberalism.
The levers of colonial control and neoliberal restructuring have led to a deep fragmentation of the Palestinian collective body. Atomistic understandings of the self and social conditions are legitimated in the battlefield of neoliberal shock therapy, which seeks to transform the social relations between human subjects and with state power. New forms of citizenship based on individual choice, rights and contractual relations produce a redefinition of emancipation as consumer choice. In this context, labor confronts huge challenges as social and political responsibility are redefined in a manner that weakens collective action.
Inequality and Political Polarization
While debt-based consumption and mortgages create a sense of upward mobility for some, the bulk of the Palestinian population is dealing with mounting household debt, falling real wages and rising prices; unemployment and poverty; hiring and wage freezes in the public sector; underfunded public services; pressure to eliminate PA subsidies for fuel, electricity and water; and displacement from land to make way for private developers. The GDP growth rate in the Occupied Territories dropped from 5.3 percent in 2014 to 2.5 percent in 2015; during the same period, the Arab Palestine Investment Company, a major holding company, posted net profits after tax of $12.4 million in 2015—an increase of 9.4 percent from 2014. The company may well be on its way to achieving its “one billion dollar strategy” by 2020. [20]
In the face of such exacerbated inequality, the PA has become more authoritarian. As documented by the Independent Commission for Human Rights in Palestine, the PA has cracked down much harder on dissent since 2007, after Hamas won the previous year’s PLC elections and the administrations of Gaza and the West Bank split apart. The PA security forces in the West Bank, trained in counterinsurgency tactics by US Gen. Keith Dayton, have cooperated closely with the Israeli army in the interrogation and arrest of Hamas members, journalists and activists supporting the boycott, divestment and sanctions campaign. Nearly 30 percent of the PA budget is directed to the security forces, while funding for social sectors has been systematically reduced.
Workers’ organizing is also facing heavy repression. In November 2014, the Palestinian Council of Ministers issued a decision to illegalize the Public Servants’ Trade Union. The union was subsequently shut down by the police, with unionists arrested and dismissed from their work. [21] Leaders of unions who attempt to organize on a mass level are charged with corruption and entrenched in legal cases for years; workers’ committees organizing against neoliberal and normalization policies in NGOs are arbitrarily dismissed from their work and blacklisted. The PA’s attempts to suppress the springtime 2016 teachers’ strikes set a dangerous precedent: The security forces threatened teachers; confiscated identity cards; arrested organizers, dissenting journalists and social media users; erected checkpoints across the West Bank to prevent collective mobilization; and imposed fines on taxi drivers who transported teachers from place to place. Organizers of the teachers’ movement have been forced to go underground.
Labor Fights Back
Over the last decade, independent labor federations and unions, as well as informal associations and workers’ committees, have emerged nonetheless to struggle against impoverishing conditions of life for Palestinian labor. The public-sector workers’ strikes in late 2014, the teachers’ movement in March 2016 and the April 2016 protest against Social Security Law 6 are the most visible manifestations of a broader mobilization around the theme of insaf, meaning equity or justice.
The social security reforms were a central site of contestation for more than three years, involving, among others, the International Labor Organization, the PA Ministry of Labor, the private sector and research institutes such as Muwatin and al-Marsad, as well as labor unions. Of the unions, the PGFTU (headed by Shahir Sa’id), the Palestinian Trade Union Federation (PTUF, headed by Haidar Ibrahim) and the General Federation of Independent Unions (GFIU) were the key actors involved in the direct negotiations. The talks exposed deep divides in the labor movement. Political factions of the Palestinian Liberation Organization (PLO) appoint the representatives of the PGFTU and PTUF. The PGFTU has a long-standing relationship with the Histradrut, the Israeli labor federation, by which the Histradrut passes on to PGFTU 50 percent of the dues it collects from Palestinian workers in Israel (even though it does not represent these workers). In public debates, both the PGFTU and PTUF backed many of the proposed reforms in favor of business interests and worked hard to muffle the GFIU’s dissent. Following the public debates and popular protests organized by the National Campaign for Social Security, President ‘Abbas approved amendments to the law reflecting several of the demands of the campaign. [22]
In a meeting with a delegation of Canadian unionists in the West Bank, the head of the GFIU was asked, “And what is your position regarding final status—two-state or one-state?” He replied, “This is a question only you can afford to ask. We are at this point just struggling to live.” He continued,
It is clear for us that the struggle against colonialism cannot be separated from the social injustices within Palestinian society. What does it mean to end my subjugation by Moshe for it to be replaced by Munir? What kind of liberation are we seeking? What kind of a society are we trying to build?
These questions cut to the deepest contradictions of the Oslo era. The Oslo agreement sold the promise of a Palestinian homeland and called on the masses to adopt a Palestinian national consciousness as defined by the PA political order. Yet the words of Frantz Fanon remain prescient for Palestine today:
This national consciousness, instead of being the all-embracing crystallization of the innermost hopes of the whole people, instead of being the immediate and most obvious result of the mobilization of the people, will be in any case only an empty shell, a crude and fragile travesty of what it might have been. [23]
Endnotes
[1] Interview with members of the Palestinian Legislative Council, Ramallah, 2009.[2] Firas Jaber, “The Social Security Law in Palestine: A Seek [sic] for Justice,” Rosa Luxemburg Stiftung Regional Office Palestine, January 2017.
[3] Interviews with GFIU members, Ramallah, 2016.
[4] The text of the law is available here.
[5] Office of the Quartet; Palestine Economic Policy Research Institute (MAS), Abundance of Development Plans and Initiatives for Palestine: “Points of Convergence and Divergence” (April 2014).
[6] See Adam Hanieh, “The Oslo Illusion,” Jacobin, April 21, 2013, and “Palestine in the Middle East: Opposing Neoliberalism and US Power,” MRZine, July 19, 2008.
[7] Jaber, op cit.
[8] Ibid.
[9] Interview with head of the Union of Unemployed, southern West Bank, March 2017.
[10] Ahmed Milhem, “Will the New Social Security Law Protect Palestinian Workers?” al-Monitor, October 5, 2016.
[11] Hanieh, “Oslo Illusion.”
[12] See the June 2010 press release of the Overseas Private Investment Corporation.
[13] See the National Plan, p. 14.
[14] See the Ad Hoc Liasion Committee meeting notes here.
[15] UN Conference on Trade and Development, Report on UNCTAD Assistance to the Palestinian People: Developments in the Economy of the Occupied Palestinian Territory (July 2015).
[16] Palestinian Central Bureau of Statistics, Labor Force Survey (Ramallah, 2016).
[17] International Monetary Fund, “West Bank and Gaza: Report to the Ad Hoc Liaison Committee,” August 26, 2016.
[18] Jerusalem Post, February 23, 2015.
[19] Haaretz, April 18, 2015.
[20] Arab Palestine Investment Company, Annual Report (2015).
[21] Independent Commission for Human Rights, The Status of Human Rights in Palestine (2014). See also International Labor Organization, The Situation of Workers of the Occupied Arab Territories (2015).
[22] Milhem, “Will the New Social Security Law Protect Palestinian Workers?”
[23] Frantz Fanon, Wretched of the Earth (New York: Grove Press, 1963).
