Monday, September 05, 2005

Managing Gaza's greenhouses

As disengagement approached, we started to hear concerns about the economic impact on the Palestinians of the uprooting of the settlements. Even recently, many Palestinians were employed in the settlements or the nearby industrial zones; all that has now come to an end.

Some proposed mitigating the harm by selling at least the highly profitable Gush Katif greenhouses to the Palestinians, allowing them to operate them after the Jews vacated. This ran into some obstacles, as the Palestinians refused to pay the settlers for property they believed to be rightly theirs in the first place. Then, days before Disengagement-Day, a deal was reached.

A private foundation founded by Israeli arch-dove Yossi Beilin agreed to purchase the greenhouses with privately-raised funds, and hand them over to the Palestinians:
The deal, reached just days before the Israeli evacuation of the 21 settlements in Gaza is to begin, is aimed at preserving the settlements' primary agricultural asset for Palestinian use. That could provide the impoverished territory with a much-needed economic boost after the hand-over.

The greenhouses use sophisticated techniques that were developed especially for Gaza's desert-like conditions. Many Palestinians are familiar with the growing methods used in the greenhouses from years spent working in them....

Win-win, right? The settlers are compensated for their businesses, while the Palestinians keep their jobs.

Except that this reflects flawed economic thinking. It assumes that it doesn't matter who owns a business. That assets which are profitable under one owner will continue to reap profits under another. That all that matters is having skilled employees. That anyone can run a business if the market is right.

So you can just hand the greenhouses to new owners, and expect them to continue churning out revenues.

The falsehood of this assumption is so obvious to me it's hard for me to make the argument. Business management is a skill, involving talent and experience. The managers with those skills have left Gaza, presumably for good. The former workers may know how to grow plants, but they don't know how to nurture relationships with suppliers and customers, how to assess market conditions, how to motivate employees. And, having received someone else's business readymade, they will never have the same devotion to maintaining and growing it as would those who built it in the first place.

Industrial capital is not an abstract mush which can flow arbitrarily from hand to hand. Its value depends on the talents of its owners and managers.

I bring this up today because the Washington Post discusses the Palestinians' current plans for the greenhouses:
Ziad Abu Amr, an independent member of the Palestinian parliament who often serves as a mediator between factions, said debate inside the government over how to manage the land was "quite a fight. It's very, very tempting to many interests."

The land and assets, including 4,000 greenhouses that make up the heart of the strip's agricultural industry, are being managed initially by the Palestinian Economic Development Corp., created by the cabinet in July with a budget of $100 million. The head of the agency, Bassil Jabir, is a Fatah member who previously ran the reform unit inside the prime minister's office.

In other words, the greenhouses will be transferred to a government company run by a politician. From there, they may or may not be privatized. More likely, they'll be used as patronage to reward political supporters.

Don't expect Palestinian laborers to receive much benefit from them. If they even stay in business for long.

Update (Sep. 13): Looks like I was overoptimistic.

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