When smoke clears, money may be made in Mideast

JERUSALEM — Throughout the tumultuous peace process, the business community always agreed that only economics can solve the impasse between Israel and the Palestinians.

But with the current conflict more than two years old, will it be business as usual once the fighting is all over? At one time, it was thought that economic cooperation would enable Israeli-Palestinian coexistence, bolstering both emerging economies. High-tech companies shared engineers, cheaper Palestinian labor provided a solution to Israel's lack of blue-collar workers and the two economies provided portals to new markets.

Before the violence, Israel sold about $25 million in goods to the Palestinian Authority on an annual basis, while some 25 percent, or $2 billion, of the Palestinian gross domestic product, came from its trade with Israel. Palestinian exports to Israel accounted for 60 percent of all Palestinian sales.

It has worried some that the de facto economic separation has sent waves through the entire cooperative structure. What took years to create has been nearly destroyed in a matter of months. Yet for some, it has been business as usual, or at least, as much as possible.

"When the dust settles, we'll be happy to go back to where we were," said Elisha Yanay, general manager of Motorola Communications Israel Ltd. "We'll return to normal economic life and that is the only life that can promise peace and prosperity."

When the conflict began, Yanay was in the process of hiring Palestinian engineers for the new Khadoury technology park being constructed in Tulkarm. He also has a Motorola plant in Jordan, where 100 Jordanians engineers and technicians manufacture Motorola products. Other than a few extra hours transporting goods at the Jordan-Israel border crossing, there haven't been problems working with the neighbors.

"We have to encourage their economy; we have to offer financing, education and training, all the models that are familiar to us," Yanay added.

Work on Khadoury has stopped for the meantime, but he's sure it will get built. It's just a matter of when.

"We're talking months," he said. "I believe that most people want to make money and put food on the table and drive a nice car. That's true throughout the world. There are always fanatics, but if most want a normal life, why can't we help make it happen?"

Yanay isn't the only optimist. Entrepreneur Jacob Ner-David, who founded long-distance company Delta Three with his partner Eli Wurtman, has also worked closely with several Arab neighbors. Among them is Omar Salah, a Jordanian entrepreneur who founded the Internet start-up TaskMail, an e-mail filing system initially funded with $3.5 million from Jerusalem venture capital firm Israel Seed Partners.

When all this is over, said Ner-David, he "would bite" at any new business ventures with Palestinians.

"I do believe we have the moral high ground, but that doesn't mean we have to analyze and examine this," he said. "At the end of the day, neither of us are going away and we will have to have some kind of relationship, so I prefer to have a business relationship."

Israelis and Palestinians realize that "we're in each other's face," said Ner-David bluntly. For now, that in-your-face attitude has become significantly more heated.

Last fall the government considered economic separation as a method of securing its borders and population.

It didn't happen, but many industrialists and proponents of economic cooperation considered it a defeatist, close-minded measure and vowed to keep building and expanding their connections.

The current economic relations are based on the 1994 Protocol on Economic Relations, which was a type of customs agreement. The protocol created a free-trade zone with the Palestinian Authority.

The zone made it easier for manufacturers like Motorola to use less expensive Jordanian labor. It provided Israeli knitting mill Lodzia Rotex Enterprises Ltd. with access to Palestinian labor over the Green Line and several hundred workers in Jordan.

The Lodzia plants in Jordan are still open, but manager Yair Rotlevy doesn't employ Palestinians for the time being. If there's a political and security solution to the current situation, he is prepared to employ them again. But only if there's a settlement for both sides.

"If there's a political and security solution, it will be tough mentally, but we'll get over it," Rotlevy said.

For many, though, there is no option but to keep the lines of communication open, even under trying circumstances.

In Nablus, Paltel, the Palestine Telecommunications Co., still routes phone traffic through Bezeq, Barak and Golden Lines.

"We always seek to do what's best for the company," said Ahmad Aweidah, Paltel's chief commercial officer. "For the time being, we have no choice but to go to Israel for international phone traffic."

The first time around, after the 1993 Oslo accords, there was political opposition to economic cooperation. This time, she hopes the players won't be reverting back to 1992.

"Business is business," said Paltel's Aweidah. "I truly believe that it's through business relations that people can actually get somewhere."