Next month, the Organization for Economic Cooperation and Development (OECD) is expected to invite Israel to join its 30-strong club of rich, mostly Western countries pursuing a “stronger, cleaner, fairer world economy.” Accession would conclude three years of formal negotiations and almost two decades of lobbying from successive Israeli governments, with Foreign Minister Avigdor Lieberman especially keen to align his country with the world’s advanced democratic nations. OECD status will accelerate investment, raise Israel’s credit rating, and strengthen its voice in international affairs.

Israel’s economic readiness is not in doubt. It is the most technologically advanced, pro-market economy in the Middle East, adept in IT and military equipment, of which it is one of the world’s leading suppliers. With a per-capita GDP of $28,400 and literacy of around 97 percent, Israel’s development status is higher than the likes of Turkey and Mexico, both members.

But politically, Israel is not truly in compliance with the OECD’s overall charter, which includes a commitment to a pluralist democracy based on the rule of law and a respect of human rights.

Is Israel a Democracy?

Israel itself — that is to say, the country according to the 1967 borders — has universal suffrage, and all citizens, whether Jewish or otherwise, have the vote. But the UN Committee on Economic, Social and Cultural Rights is voicing concerns that a growing emphasis on Israel as a Jewish state accords second-class status to non-Jewish citizens, leading to fears that Israel is slipping into apartheid. This is no mere semantic quibble. Ninety-three percent of Israel’s land is held for the “exclusive use and benefit of the Jewish people.” So as populations grow, not being Jewish will become more materially significant.

Of greater concern, Israel occupies swathes of East Jerusalem, the West Bank, and the Golan Heights, and exerts physical and bureaucratic control over these regions, without granting any political representation to the inhabitants. By governing de facto, without giving voice to those governed, Israel cannot be described as a democracy: not technically and not in spirit.

Israel exerts physical control through its military checkpoints in the West Bank, which hinder movement. These barriers weaken the Palestinian economy by hampering the speed and reliability at which companies can deliver goods. Since construction began, the security wall that zigzags over much fertile Palestinian land has effectively destroyed several hundred small businesses. And Israel frequently and illegally demolishes Palestinian property. In the first quarter of 2008 alone, Israel demolished over 120 Palestinian-owned structures in the Jordan Valley and South Hebron, including 61 homes, leading to the displacement of over 400 Palestinians, according to the UN Office for the Coordination of Humanitarian Affairs (OCHA).

Through bureaucratic control, Israel for instance restricts what Palestinian companies can import. Infrastructure development — from new roads to mobile network towers — is subject to Israel’s approval too, even on land that is not directly occupied. Basher Masri, an entrepreneur building a new town called Rawabi, cannot start building until Israel grants permission for the construction of roads connecting the town to nearby towns like Ramallah, which it has so far declined to do. Finally, restrictions on visas are proving a major obstacle to foreign investment in the West Bank and Gaza, according to a report by the Palestine Trade Centre in March.

All of this leaves aside Gaza, of course, which is cleanly delineated from Israel and controlled by Hamas — and therefore not subject to the gray issue of settlements and representation in the same way. The threat to Israel from Gaza is more real, with increasing rocket-fire over recent weeks. As such, it’s not at all clear how Israel can dismantle its blockade. But on the subject of human rights observance and rule of law, the doubtful legality and operational controversy of the Gaza conflict can’t be ignored.

OECD Concerns

The dissonance between Israel’s economy and its polity has not escaped the OECD bureaucrats. A leaked February document from the institution queried Israel’s economic self-assessment, which included the economic activity of nearly 400,000 Jewish settlers — about 187,000 in the West Bank, 20,000 in the Golan Heights, and nearly 177,000 in East Jerusalem.

The OECD requested a revised assessment that wouldn’t include the settlements as part of Israel’s economy. But those revisions could take up to a year, and the issue has not delayed accession. If Israel joins in May, with the statistical oddity of settler activity to be ironed out after the fact, the OECD will look as though it considers the settlements illegal but not terribly relevant. That will not go unnoticed.

Indeed, the National Committee of the Palestinian Boycott, Divestment and Sanctions movement (BDS), a Palestinian civil society coalition, recently released a statement arguing: “A vote for Israel’s accession to the OECD will be regarded by an overwhelming majority of Palestinians, Arabs, and people of conscience around the world as a decisive and far-reaching act of complicity in rewarding and perpetuating Israel’s occupation.”

Obama’s Move

After a flurry of hope following Barack Obama’s speech in Cairo last year on U.S.-Islamic relations, the Palestinians are skeptical about the rich world’s commitment to their cause. The United States, whom many Palestinians view as the key actor capable of intervention, looks weak. Special Envoy George Mitchell has yet to replicate his success in Northern Ireland, and neither strongly worded statements from Hillary Clinton nor Obama’s snub of Binyamin Netanyahu at the White House have prodded Israel into action. With the exception of aid and the expulsion of the odd diplomat, EU members are playing no tangible role beyond shrill condemnation.

The United Nations, generally supportive of the Palestinian cause, has long looked powerless. That is precisely why the Palestinian Authority (PA) wants to penetrate the institutions of the rich world. It sought membership to the World Trade Organization last year, for example, only to be blocked by Israel and the United States. Trying to build the institutions of statehood, alongside the BDS movement and instances of civil disobedience in the Palestinian territories, is part of a strategy now dubbed the “white intifada,” a peaceful uprising through diplomatic and economic channels. But this effort has so far yielded no concrete results.

Mahmoud Abbas, a leader of considerable diplomatic patience, has already threatened to stand down as the Israeli settlements proliferate. His prime minister, U.S.-educated economist Salam Fayyad, released a compelling vision for Palestine’s open economy in his August Plan last year. Israel roundly condemned Fayyad for unilaterally publishing a document without first seeking permission.

Hamas and more extreme Islamist groups emerging in Gaza say diplomatic efforts are futile. If Israel joins the OECD next month, with the legality of the Gaza war in grave doubt and the settlements growing daily, this club of the rich and powerful would be guilty of double standards, and the move would undermine the PA months before elections are due. If and when those polls open, OECD members should not be surprised if many exasperated Palestinians throw in the towel on the white intifada and revert to less dovish colors, as many did in 2006.

Adam Green is editor of Exploration and Production: Oil and Gas Review and a contributor to Foreign Policy In Focus. His articles on politics, development, and energy have been published by the Financial Times, the Middle East Institute, The China Post, and the New Internationalist, among others.

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