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 / Summer 2009 / Issue 55(originally published by Booz & Company)


Promoting Entrepreneurship in the West Bank

How a conference of multiple stakeholders is bringing financial investment to a region marked by conflict.

Illustration by Lars Leetaru

Since 2005, the deadly conflict between Israel and the Palestinian territories has intensified. There have been attacks in the Gaza Strip,  shake-ups in the Israeli government, and continuing hostilities between Fatah and Hamas in the West Bank. At times, these tensions, along with those in Lebanon, have threatened to tear the region apart. Even in moments of relative peace, the perception persists that nothing productive can ever be accomplished.

And yet, in May 2008, we were front-row spectators at a very hopeful event in the city of Bethlehem in the West Bank: the first-ever Palestine Investment Conference. The conference brought together a wide array of stakeholders, including Palestinian entrepreneurs; potential investors from the Middle East, Europe, and the United States; and political leaders such as then U.S. Deputy Secretary of the Treasury Robert Kimmitt, French Foreign Minister Bernard Kouchner, and former U.K. Prime Minister Tony Blair (in his capacity as envoy of the Quartet on the Middle East, a peace process mediation council established by the United Nations, the U.S., Russia, and the European Union). Ostensibly a conference of investors, it was also a demonstration of the lasting benefits that a shared leadership approach might generate, even in the most strife-ridden regions.

On the first day, an observer strolling around Bethlehem’s new Convention Center (the building is still under construction, so registration took place in tents outside the front door) might have concluded that this was nothing more than a typical investors’ conference, rife with financiers and people seeking capital. And to many, the conference must have seemed quixotic or organized just for show.

But from our perspective, it was a major achievement just to bring the event together. The organizers overcame an astounding number of real and potential roadblocks and launched a series of conversations among people who needed to meet one another, but until then could not have done so. And the conference appears to have worked. It has generated a variety of investments in relatively robust enterprises. These include real estate projects such as Rawabi, a planned community of 5,000 homes near Ramallah; agricultural businesses such as the Sinokrot Global Group, which seeks to expand the export of herbs to U.S. markets; and pharmaceutical manufacturers such as Dar Al-Shifa (also known as Pharmacare), which exports pain relief medicine to the German market.

For us, the most important aspect of the conference was its underlying idea: By improving the economic life of a region in turmoil, leaders might achieve progress toward peace. We believe this principle holds true, not just for the Palestinians but in any troubled area — and not as a replacement for a sound political process, but as a necessary complement. A well-managed financial investment initiative can translate into jobs and contribute significantly to stability for the people who live there.

Design for Shared Leadership
We joined as organizers and facilitators of the conference in December 2007, when it was still in its planning stages. Our firm, Booz Allen Hamilton (which split from Booz & Company, publisher of strategy+business, in 2008), consults largely to the U.S. federal government, and the two of us consult with the U.S. Department of State, including the U.S. Agency for International Development (USAID). USAID is the primary agency that oversees American nonmilitary foreign aid, usually aimed at supporting economic growth abroad.

The idea for the conference had emerged at the Annapolis peace talks between the Israelis and Palestinians in November 2007. As part of its support for progress toward a two-state solution, the U.S. government committed to provide loan guarantees and other investment support for businesses in the West Bank. But Salam Fayyad, then the prime minister of the Palestinian Authority (he stepped down in March 2009), knew that a critical component was missing: substantial private investment. Fayyad, who is also an economist, was the most visible moderate Palestinian politician on this issue. Breaking from the prevailing wisdom, he believed that private investors could once again be persuaded to put their money into the West Bank.

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