East Jerusalem: Promoting Private & Foreign Investment

While the focus of the international community’s aid to Palestine in the past few years has been concentrated on increasing the sustainability of its political institutions, the economic needs of Palestinians have often taken second place, not least because of the Israeli restrictions on movement and trade and the lack of a coherent economic development policy. The people of East Jerusalem are among those who have been affected the most, having been cut off by Israel’s ‘separation barrier’ from their natural hinterland in the West Bank and squeezed in by Israeli checkpoints such as the one at Qalandiya, which divides Ramallah from Jerusalem.

A view of East Jerusalem, looking toward the Damascus Gate to the Old City. Photo: Liz Tagami.

(Click on the image to see an impressive overview of the ‘Old City’.)

Now a group of Palestinian companies are organising a “Jerusalem Business Forum” to address the growing economic stagnation and rising poverty in the Arab section of the city which has been annexed by Israel against international law and which Palestinians see as the future capital of an independent state. Due to take place in mid-December, it aims to encourage private and foreign investment in the local economy by concentrating on East Jerusalem’s untapped potential, as well as the city’s unique social and cultural heritage which continues to attract some 1.5 million tourists a year.

“In my…reading, the market in East Jerusalem is virgin, and the opportunities are enormous,” maintains Mazen Sinokrot, the Chairman of Al Quds Holding, a Jerusalem-based company he has set up to promote private investment in the city. “It’s not charity, it’s not politics,” comments Samir Hulileh, the CEO of one of Palestine’s biggest companies, Padico Holdings. “We have to start first with making a profit. There are always possibilities. The opportunity from investing in Jerusalem is much higher than investing in the West Bank.”

A Brochure from QDS Consulting, East Jerusalem, announcing the Jerusalem Business Forum, which will be held on the 13th and 14th of December.

Speaking to an audience of potential investors in London during a road show in September, Sinokrot cited East Jerusalem’s population of 375,000, its industries, hotels, transport, shopping and hospitality industries that make up “40 to 45 per cent” of its GDP. He and other private sector businesses in the city have banded together to help smooth problems of obtaining permits, licenses and tax incentives from the Israeli authorities, as well as assistance in meeting zoning requirements and in speeding up bureaucratic procedures.

Board members of Al Quds Holding meeting in Jerusalem earlier this year.

It is a project that is also supported by The Quartet — the international diplomatic body which groups the US, the EU, Russia and the UN and which has been in charge of establishing peace talks between Israel and the Palestinian Authority since 2002. Its involvement in the Forum could lead to additional aid funds for private projects in the city, regional analysts say.

Shoppers in East Jerusalem would benefit from more trade with the West Bank. Photo: Stefano Amantini/Atlantide, Phototravel/Corbis.

Sinokrot, who also heads the Ramallah-based Sinokrot Global Group which invests in manufacturing, agriculture, food processing, trade, tourism and IT in the West Bank, says the Forum aims to put “social vitality and life” back into East Jerusalem after years of neglect. Finance, trade and transport, tourism, real estate and housing, private education and information technology are sectors, he feels, that should prove particularly promising over the medium-term to foreign investors.

Existing projects, such as the $7 million Addar Shopping Mall, which was started by Muhammad Nusseibeh, a member of one of Jerusalem’s most prominent families, should also benefit from the initiative. Its 40 stores, office units and hotel have suffered due to the Israeli trade restrictions and lack of foreign investment even more than its counterparts in the West Bank and Gaza, local commentators report.

The Hotel Addar in Sheikh Jarrah is part of the new private investment in East Jerusalem that is providing jobs for the Palestinian population. Photo: Venere.com.

Padico’s subsidiary, the Jerusalem Tourism Investment company (JIT), re-opened one of the city’s most famous hostelries, the St. George Hotel, in April after refurbishing it at a cost of some $10 million. First opened in 1965, the five-star, 130-room hotel will be managed by Jordan’s Landmark Hotels group. “Jerusalem is the capital of our Palestinian state,” commented Padico’s Chairman, Munib Masri, at the launch ceremony. “This investment demonstrates the will of the Palestinian people to stay in their city.”

Palestinian businessman Munib Masri listening to the difficulties facing Palestinians and Palestinian officials during a visit to East Jerusalem in January, 2011. Photo: uprootedpalestinians.blogspot.com

Padico and JIT have also renovated the Alhambra movie theatre in East Jerusalem and turned it into an attractive all-purpose meeting centre with a café and restaurant facilities. Padico is also building some 240 housing units in Beit Safafa, just south of Jerusalem, in an area that also been badly affected by Israeli restrictions on new construction projects in and around Jerusalem. “People have overcome the psychological barrier,” maintains Hulileh. “They can do something about investment in Jerusalem, and shouldn’t wait for others, neither the Palestinian Authority nor the Arab world.”

Ramallah-based Padico Holdings has invested in the Alhambra leisure complex and the five-star St. George Landmark Hotel in East Jerusalem, as well as in a modern residential housing development in Beit Safafa. Photo: Padico.

Reports that the British-based global banking conglomerate, HSBC, is considering opening a branch in Jerusalem are also adding to sense that a new approach is needed which concentrates on the private sector in the Holy City. Ramallah-based Bank of Palestine, which has pioneered state-of-the-art financial services in both the West Bank and Gaza, including ATMs, Visa, Mastercard and Palpay, is also keen to enter the market in Jerusalem, a presence which would allow it to service the Palestinian Arab population in Israel, as well as in the Palestinian territories.

“Under the [1994] Paris Protocol, we are not licensed to have any branches in Israel, though we would like to. It’s a fantastic potential market for us,” observes Hashim Shawa, the Bank’s Chairman and CEO. “The Palestinian population living inside Israel with full Israeli citizenship is significant, and there are some close trade and business ties between us.”

“We have exactly the same opportunity in East Jerusalem,” he adds, which “is home to [more than] 300,000 Palestinians. But we’re not authorised to operate there either, which is unfortunate.”

Bank of Palestine’s Chairman & CEO, Hashim Shawa, is keen to bring his advanced retail and corporate financial services to Palestinians in East Jerusalem and in Israel. Photo: Dubai News.

Efforts by The Quartet to impress on the government of Prime Minister Benyamin Netanyahu the importance of promoting prosperity in East, as well as West, Jerusalem would help to facilitate the expansion of Palestinian businesses and their ability to provide much needed jobs, both in the capital and in the territories. Such efforts are long overdue, many in the international community contend, not least because of the need for both Israel and the Palestinian Authority to rely less on the promises of cash-strapped donors such as the EU and the US.

© Pamela Ann Smith

This is a publication of investpalestine.wordpress.com and is protected by international copyright laws. This article is for the reader’s personal use only, but may be re-distributed electronically with a credit to investpalestine.com.

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