Dream of a Palestinian Tiger: Boom Times in the West Bank
With five-star hotels, booming high-tech companies and a modern, new city under construction near Ramallah, the West Bank is preparing for the future. Local entrepreneurs speculate that if the Palestinians ever gain independence, their country could become a leader in the region.
Bashar Masri is sitting behind a yellow desk in Ramallah with two Israeli newspapers open in front of him. A large photo of Masri is featured in one of the dailies and his wife Jane is pictured in the other. As he speaks, he plugs the text into Google for a translation.
"Palestinian tycoon," he reads, shaking his head. He doesn't like the word. He prefers the headline of the piece next to it: "We Need Peace, or We'll Face an Economic Catastrophe." The editorial was written by Idan Ofer, one of Israel's wealthiest businessmen. Masri smiles and then reaches for the phone and calls Ofer. "Great article," he says. They have a short conversation and then Masri hangs up. Ofer and Masri, the tycoons of Tel Aviv and Ramallah, are friends.
Masri is possibly the most unusual businessman in the Palestinian Territories. The 50-year-old is a frequent guest in the homes of Israel's wealthiest citizens, his wife runs the largest advertising agency in the Palestinian Territories and studies in Tel Aviv, and his uncle is a billionaire from Nablus. Masri went to the United States at 17 to attend college, and afterward he worked there and married an American woman, until returning home in 1994. He founded Massar International and began building a small empire. He already had dreams of building a Palestinian city in those days, but then came the second Intifada, so he built in Morocco initially instead.
But he never lost sight of his goal to establish the first modern city in the Palestinian Territories -- and he began building it in the West Bank near Ramallah more than a year ago. The new city, called Rawabi, comes at a price tag of more than $850 million (586 million). Masri's most important investor is the government of Qatar. In addition to 5,000 residential units, Masri is building a sewage treatment plant and a mosque, supermarkets and an administration complex. When the new city reaches its target population of 40,000 people, it will be larger even than Ramallah itself.
Masri has hired landscape architects, designers and event managers to invent the sort of city that has never existed here before: with green space and decorative fountains, and without uncollected garbage, potholes and unadorned concrete structures. "In Palestine, the world has an opportunity to build a new state that's efficient and modern," he says. Masri wants Rawabi to be the centerpiece.
The Palestinians hope to receive United Nations approval for an independent state in September, and the chances are good that the world will approve. In the last year and a half, Prime Minister Salam Fayyad has brought radical change to the Palestinian Autonomous Authority, at least in the West Bank. Ministries now operate much more effectively than in the past, when they were little more teahouses for the minions of former Palestinian leader Yasser Arafat. A commission is discussing a constitution, and Fayyad has had 2,250 kilometers (1,406 miles) of roads paved and connected villages to the power grid. Unemployment has declined to 17 percent in the West Bank, compared with 37.4 percent in the Gaza Strip. More than 500 new companies have been established in the last few months alone. From the UN to the World Bank, many seem convinced that Palestine is ready for independence.
Ramallah now has a five-star hotel, sushi restaurants and parking meters. A rotating, panoramic restaurant will soon open its doors on the 28th floor of the Palestine Trade Tower, floating above Ramallah like a spaceship. The economy grew by 9.3 percent last year. Samir Abdullah, the former planning minister, current president of the Rotary Club and head of an economic research institute, says: "When we finally have access to our resources and are no longer restricted by the occupation, our economy will be able to grow by 25 percent a year, and then we'll be the new tiger economy."
Bashar Masri also believes in his homeland's economic potential. "You find successful Palestinian entrepreneurs and scientists everywhere in the world," he says. "If they all come back here and invest, Palestine will become one of the most successful countries in the region." Masri has founded 15 subsidiaries, as well as the first private investment fund, Siraj, which will invest $60 million in agriculture, logistics firms and, most importantly, in technology companies.
Masri would also like to build apartment buildings on a large scale in the Gaza Strip, where he already has an office and a staff -- but because of the Israeli blockade there is no cement to be had. He recently failed in an attempt to buy an Israeli settlement in East Jerusalem after the developer had declared bankruptcy. But he already has 20 offers for building lots in East Jerusalem, and even a few Israelis are among the potential sellers. "If we didn't buy land in East Jerusalem, you can be 99.9 percent sure that radical settlers would do so instead," he says. "I don't get involved in politics, but I feel better when I've defused a dangerous situation."
But Rawabi remains Masri's favorite project. He gets into a brand-new Jeep, has an ice cream brought to him and drives to the construction site. Excavators are in the process of removing the mountaintop and building terraces into the hillside. The first foundations have already been poured. Masri gets out of the Jeep and takes a deep breath. Even though the project has been underway for a year, he still behaves like the father of a newborn when he takes visitors to Rawabi. "You can see from Ashdod to Hadera from here, the ships in the harbor over there and the skyscrapers of Tel Aviv over there."
Masri climbs back into the Jeep and drives across the bumpy, newly terraced terrain. "The downtown area will be up there, with a pedestrian zone like we have in old sections of Palestinian cities, but very modern. There will also be a convention center, a five-star hotel and a shopping mall, all in high-tech buildings, surrounded by high-quality residential units for the middle class," he says. "I'm building a city for the Facebook generation."
Suddenly he steps on the brakes. "Why is there concrete here? This is supposed to look natural," he snaps at the construction supervisor. He's referring to the border along a street, which he wants done in natural stone. He calls out to a group of Italian engineers who are building a factory for stone processing: "We have to speed up the pace here." He drums his fingers against the steering wheel. "We're ready," he says. "We're ready for a big thing."
Masri doesn't just want to create a new city, but a new society, as well. He is building kindergartens so that mothers won't have to be housewives and installing high-speed Internet so that the fathers can work from home. The buildings are made of plain sandstone, and he has forbidden the architects from using the arches, small towers and columns of Palestinian Rococo.
Masri removed the prefix "al" from his name, because he thought it was old-fashioned, has placed women in senior positions and introduced a "casual Thursday" in his offices, when ties and jackets are forbidden. This particular day is such a day, and Masri is wearing jeans.
Israel, for its part, isn't quite ready for Masri's dream of a new Palestine. Although Rawabi is in Palestinian-administered territory, 2.8 kilometers of the future access road would pass through the area known as C territory, which is completely under Israeli control and constitutes 59 percent of the West Bank. Israel has not yet given its approval for the road and Masri has been waiting for the permits for three years -- which has led to ongoing construction delays. For the government in Jerusalem, the road is a negotiating tool, a concession that has a political price. Masri also feels that the Autonomous Authority hasn't given him sufficient support. "I don't understand it," he says. "Every dollar we invest here brings them 20 or 30 dollars in revenue, and still nothing happens."
Some 7,000 potential homebuyers have already signed up, but selling cannot commence until the road is approved. Without the access road, Rawabi will be dead in the water. And then? "There is no turning back," says Masri. "If we don't take any risks we'll never achieve anything."
If Rawabi fails, it will be more than the failure of Masri's dream. As a Palestinian national project, the city is meant to be a model for bold entrepreneurs and a symbol of a better future. "We are now experiencing a small boom, after so many bad years," says Masri. "But that can change quickly again." He has already noticed that his suppliers and construction companies, who were turning him down two years ago because they had more profitable contracts, are now begging for work. The World Bank is also warning that if the Israeli occupation continues and there is no further relief, growth will decline again.
Mohammed Mustafa is the man responsible for the boom. No one has moved more money in the Palestinian Territories than he has: $2 billion in the last five years, and with plans to move $4 billion in the next five years. Mustafa, 67, wearing a blue suit, is the managing director of the Palestine Investment Fund, which makes him the public version of Bashar Masri. He was working for the World Bank six years ago. Today he is charged with laying the concrete foundation for a future Palestine. His work involves planning new developments from Jenin to Hebron, business centers and hotels on the Dead Sea and in East Jerusalem. Mustafa plans to build 30,000 affordable residential units within the next decade and to facilitate borrowing opportunities for potential buyers.
On this day, he is standing inside one half of a duplex on a hill near Jenin. Once a breeding ground for suicide bombers, the Jenin region is now trying to market itself as a tourist destination. Mustafa says: "I would move in here immediately." The house, with a small yard, four rooms and a guest bathroom, is available for $110,000. The residents of a refugee camp a few kilometers away can only dream of such houses. Some 86 have already been built on the hill, and the plans call for another 1,000 to go up in the next three years. "This ought to show the world that we Palestinians are not just poor, incompetent and violent, but are also perfectly normal people. I'm sure that this here will lead to more political and economic stability."
Mustafa has ambitious plans to restructure Ramallah. As a realist, he isn't waiting for East Jerusalem to become the capital of Palestine one day. He is building a business center only a few hundred meters from Arafat's grave and has plans to build 10 new high-rise buildings on the site. The development will also include a shopping center, a hotel and apartments for the "representative residential experience." One of the goals is "to solidify the commitment to Palestine."
His message is that Palestine is ready for independence. Of course, he is also familiar with the numbers. No one receives as much per-capita foreign aid as the West Bank and the Gaza Strip, about $500 a year for each resident, or a third of the gross domestic product. Prime Minister Fayyad has just applied for more aid: $5 billion over the next three years. "But you have to look at where we're coming from," says Mustafa. "The situation was much worse in the past." In the past, during the Intifada, the economy was shrinking by 10 percent a year while unemployment was doubling.
"Although this is all true," says Sam Bahour, "unfortunately the current growth is not sustainable." The construction industry, he adds, makes up more than half of all investments, while the main exports are still fruit, olives and stone. "I don't see economic independence. In my view, it's economic survival," says Bahour. He works as a consultant, has built a supermarket chain and established a shopping center.
Bahour has found a table at the Pesto Café, one of Ramallah's new restaurants, where men sit at the dark tables with their laptops, eating $8 sandwiches. "The whole world is reporting that there are now sushi restaurants and cocktail bars in Ramallah," he says heatedly. "Hotels and restaurants are important, but they don't bring us a step closer to statehood." The new Mövenpick Hotel? "A single five-star hotel for 4.6 million Palestinians. There are 15 in Amman." Instead, says Bahour, people should focus on all the things that don't exist. "The firm I established only opened 10 supermarkets in five years. The question ought to be: Where would they be without the occupation? I'm sure they would already have 40 branches."
Although Israel has removed some checkpoints in recent months, thereby improving freedom of movement, many barriers remain. The official explanation is that they are meant to protect Israel from attacks. But as long as Israel blocks access to streets, water and resources, says Bahour, no development will be possible.
Bahour lists a host of obstacles the Palestinians face. The business owners in the West Bank cannot reach the 1.7 million people in the Gaza Strip. The Palestinians are unable to drill for natural gas off the coast, worth about $4 billion. Exporting products to other countries is still complicated, if not impossible. Palestinian businesses and universities rarely manage to recruit foreign experts. And then there is the risk of political uncertainty. And, Bahour adds, completing his list, it is highly unlikely that any of this will change in September, all hopes of independence aside. "Israel prevents real growth because it wants to prevent a viable Palestinian state from taking shape," he alleges.
But there is one thing Bahour, the pessimist, has in common with Bashar Masri: He too believes in Palestine's high-tech future. Software, IT outsourcing, applications for mobile phones -- Palestinians can produce all of these things at a low cost while providing high quality, says Bahour. Investors are already coming to the region from the Gulf countries, and even from Israel. The Israeli computer company Mellanox has announced plans to open an office in the Palestinian Territories. And Masri has already bought shares in an Israeli software company that will employ Palestinians in the future. A number of such projects could follow. Engineers are working for $1,000 to $2,000 a month, there are many well-trained college graduates and Palestinians live in the same time zone and use the same currency as Israelis.
An Israeli and a Palestinian founded Sadara, the first venture capital fund in Palestine. With $29 million in seed capital, they plan to support startups. The two partners are both well qualified. Yadin Kaufmann, the Israeli, is an IT entrepreneur, while Said Nashif, the Palestinian, is a software developer. Their investors include Google, Cisco and AOL founder Steve Case.
Although these are still small sums, they represent more money than has ever been in high-tech in the West Bank. Sadara is just as big, says Kaufmann, as the first Israeli venture capital fund was when it was launched in the late 1980s. After that, Israel became a pioneer in the field of Internet telephony. Now Palestine could very well become the next startup nation.
Translated from the German by Christopher Sultan
© SPIEGEL ONLINE 2011
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH