Israel Affairs
ISSN: 1353-7121 (Print) 1743-9086 (Online) Journal homepage: http://www.tandfonline.com/loi/fisa20
Economic integration in the Middle East: Israeli‒Palestinian fresh food trade Geesche M. Dobers, Rico Ihle, Yael Kachel & Ulf Liebe To cite this article: Geesche M. Dobers, Rico Ihle, Yael Kachel & Ulf Liebe (2018): Economic integration in the Middle East: Israeli‒Palestinian fresh food trade, Israel Affairs, DOI: 10.1080/13537121.2018.1455955 To link to this article: https://doi.org/10.1080/13537121.2018.1455955
© 2018 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group Published online: 20 Apr 2018.
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Israel Affairs, 2018 https://doi.org/10.1080/13537121.2018.1455955
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Economic integration in the Middle East: Israeli‒ Palestinian fresh food trade Geesche M. Dobersa, Rico Ihleb, Yael Kachelc and Ulf Liebed a
Faculty of Agricultural Sciences, Department for Agricultural Economics and Rural Development, Georg-August-University Göttingen, Göttingen, Germany; bAgricultural Economics and Rural Policy Group, Wageningen University, Wageningen, The Netherlands; cThe Robert H. Smith Faculty of Agriculture, Food and Environment, Department of Environmental Economics and Management, The Hebrew University of Jerusalem, Rehovot, Israel; dInstitute of Sociology, University of Bern, Bern, Switzerland
ABSTRACT
Violent political conflict results in socioeconomic fragmentation and hampers economic development. In contrast, trade crucially depends on cooperation. The article empirically analyses at the micro-level whether economic interactions affect political attitudes. Trading relations between Israelis and Palestinians are found to be extensive despite the conflict. Education and personal social networks facilitate contacts. Israeli traders do not see themselves as affected by the conflict, but wish for its quick settlement. This lends support to the Rational Group Conflict Theory and the Theory of Liberal Peace. Daily contacts are found to create positive functional interdependence which may be effective in fostering reconciliation in the Middle East.
KEYWORDS Food trade; Israel; political conflict; Realistic Group Conflict Theory; Theory of Liberal Peace
The Palestinian‒Israeli conflict has been one of the Middle East’s most prominent, most sustained and longest lasting conflicts, exacting thousands of causalities on both sides and generating physical separation and societal alienation between Israelis and Palestinians. By way of reducing the substantial security threats to its population, Israel has implemented a variety of measures aimed at reducing insurgents’ success, notably the construction of a security fence along most of the West Bank‒Israel line. But while this barrier resulted in improvements in the security situation in Israel, it was accompanied by increased restrictions on the movement of people and goods between Israel and the Palestinian-controlled territories. Israelis
CONTACT Rico Ihle
[email protected]
© 2018 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercialNoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way.
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have been forbidden by law to enter the West Bank’s Area A and the Gaza Strip, both of which are under full control of the Palestinian Authority (PA),1 while Palestinians have been required to apply for a permit to enter Israel.2 Though most of these arrangements were established during the al-Aqsa Intifada, they have remained in force to date. Due to institutional arrangements agreed upon between both parties, Israel continues to be the PA’s most important trading partner. Relations between Israeli and Palestinian business persons are substantially challenged by the increasing societal and physical distance. This poses the question to what extent members of the conflicting parties continue to cooperate despite the conflict and its consequences. Even more importantly, how do economic relations relate to the perception of the other party? Can common economic interests contribute to overcome societal alienation created by violent conflict? The literature on interactions between violent political conflict and economics stresses the ‘pacific benefits of trade’.3 Commercial links can dampen political conflicts and imply willingness to engage in peaceful cooperation.4 Theoretical and empirical evidence for a negative effect of conflict on trade intensities was found too.5 Trade was found not to decrease the likelihood of violent conflict.6 The insights of these analyses are based on aggregated data. This article adds to the literature by complementing the macro-perspective studies with a microeconomic analysis. We examine the extent and the intensity of economic interactions and their relationships to the conflict between Israel and the Palestinian-controlled territories. Our micro-level analysis focuses on the trade in fresh fruit and vegetables because food is a basic necessity of human survival. We analyse the ‘invisible linkages’7 that exist between opposing parties engaged in violent political conflict for decades despite the above-mentioned diverging trajectories. We have found extensive professional networks to exist despite the conflict. The insights gained add microeconomic evidence to both the literature on the Theory of Liberal Peace8 and the Rational Group Conflict Theory.9 Business relations between traders belonging to the opposing parties in the conflict are found to create positive and functional interdependence so that the common interest supersedes the political conflict. Daily contacts between traders are found to improve the perception of the other party. The results demonstrate that the creation of ‘superordinate goals’ can offer a promising approach for reducing the level of conflict and for fostering reconciliation in the Middle East.
Literature review The Theory of Liberal Peace argues that economic interdependencies foster peace.10 The classical liberal literature hypothesises that political conflict counteracts mutually beneficial economic relationships. Trade is expected to create ‘common interests and increase… the prosperity and political power of the
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peaceful, productive members of society’.11 Strong empirical evidence for this claim was found in the literature. The Realistic Group Conflict Theory approaches this question from a psychological perspective. It explains reasons for and remedies to intergroup conflict.12 The theory is based on the assumption that groups have goals which are incompatible and thus compete for resources that are scarce. In the context of the Israeli‒Palestinian conflict, the main incompatible goal is the desire of each group to live and to ensure own-group-based governance in the narrow strip of land between the south-eastern shore of the Mediterranean Sea and the Jordan Valley. Neither is willing to accept the rule of the other group over itself. The major resources competed for are land and water, governance and international political representation. The theory proven by Sherif ’s famous Robbers Cave Study13 predicts that such competition results in conflict. It was demonstrated that there needs ‘to be some positive and functional interdependence between groups, before conflict between them would abate (i.e. they must be made to cooperate). Superordinate goals, goals that neither group could attain on its own and that superseded other goals each group might have had, created this interdependence’.14 Trade represents an example of an economic mechanism par excellence of such functional interdependence since it intrinsically needs at least two parties exchanging commodities or services with each other. Several analyses are explicitly dedicated to economic aspects of the Israeli‒Palestinian conflict. A sizeable positive welfare effect for Israeli consumers due to the increased economic activity resulting from mutual peace commitments has been estimated, which is interpreted as a ‘peace dividend’.15 Various models of reconciliation-oriented contact initiatives between Israelis and Palestinians have been assessed.16 Controlled laboratory experiments examined the willingness to cooperate between the two parties by measuring cooperation levels.17 Direct personal contact between individuals belonging to the different groups was found to sharply improve the readiness for cooperation. The literature offers only limited evidence on the interdependencies of trade and violent conflict. Only a few articles examine trading relationships between Israelis and Palestinians from the Palestinian perspective.18 Palestinian exporters located in the West Bank are found to be heavily affected by Israeli security measures, in contrast to importers.
Data The data was collected in a quantitative survey among Israeli fruit and vegetable wholesale traders. From October to December 2011, 51 traders in Israel were interviewed; 44 questionnaires had complete responses. That year, 144 wholesalers were registered by the Israeli Ministry of Agriculture, but as in recent
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(4 (18)) (1 (4))
(4 (4)) (4 (4))
(4 (4)) (4 (5))
(8 (18)) (6 (12))
Figure 1. Locations of the survey. Source: Authors based on Palestinian Central Bureau of Statistics and Israeli Ministry of Agriculture (Personal communication on 2 Nov 2011, Beit Dagan: Israeli Ministry of Agriculture and Rural Development. In addition, there are twenty-three registered banana wholesalers, forty-five packing houses and 124 growers with wholesaler license who all were not considered in the survey; PCBS, Palestine in Figures 2010). Notes: The first number in parentheses is the number of interviewed wholesalers. The number in double parentheses is the total number of registered wholesalers in the town.
years licences have not been enforced, the total number is likely to be somewhat higher.19 Thus, our sample covers roughly one-third of the population. The survey was conducted in Hebrew. Initially wholesalers were asked to complete and return a take-home questionnaire, but as a result of an unsatisfactory number of returned surveys due to strong mistrust, the survey mode was changed to face-to-face interviews, and a lottery incentive for participation was introduced. Traders were informed that after finishing the survey five participants would be drawn to receive NIS500 (approximately €120) each. These two measures as well as a letter of reference from the manager of the wholesale market in Tsrifin significantly increased the willingness to participate. The AAPOR standard response rate (RR1) for the whole survey amounted to 32%.20 The survey consisted of 19 pages of questions. Sixteen questions were asked of all traders. They concentrated on traders’ socioeconomic background, the
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Table 1. Characterisation of the sample. Variable N Min Max Median Mean Stand. dev. Age 44 29 66 51.5 50.5 10.0 Years of schooling 44 5 16 12 11.9 2.0 Household size 44 1 21 5 5.0 3.0 Current financial situation* 44 1 4 2 2.3 0.8 Number of Palestinian friends 44 0 30 3.5 6.0 7.3 Personally affected by conflict 44 0 1 0 0.14 0.35 Religiosity in business** 44 1 5 2 2.7 1.5 Risk attitude*** 44 0 10 5.5 5.2 3.1 Duration of employment in the wholesale 44 1 45 23 22.5 13.1 business (years) Business size in comparison to trader 44 1 5 3 3.3 1.2 colleagues in the same wholesale market**** Employed people in the business (incl. 44 2 42 10 13.4 8.3 owner) *Likert-Scale: 1 = ‘Very good’; 3 = ‘Neither good nor bad’; 5 = ‘Very bad’; **Likert scale: 1 = ‘Very important’; 3 = ‘Neither important nor unimportant’; 5 = ‘Very unimportant’; ***Likert scale: 0 = ‘Not at all willing to take risks’; 10 = ‘Very well willing to take risks’; ****Likert-Scale: 1 = ‘Clearly below average’; 3 = ‘Average’; 5 = ‘Clearly above average’; Source: Authors’ calculations.
characteristics of their businesses and their perception of the Israeli‒Palestinian conflict. Seven questions focused on their trading network in general. Four dealt with their perceptions of past business relations with Palestinians and of potential future opportunities. Traders who did not currently trade with Palestinians were asked to answer 27 questions in total. Traders with current relationships received an additional 35 questions about these interactions. Particular attention was paid to problems and challenges they had experienced in these contacts. Selection bias is an important issue to be considered. The traders approached frequently refused to participate. Mistrust of the authorities in Israel is widespread, so the survey was also affected by this. Traders may have been suspicious of cooperation between the surveyors and governmental institutions on tax matters, etc. Some of them were unwilling to speak about Israeli‒Palestinian politics. Potential interviewees might have refused to participate due to concerns about the political exploitation of their statements. Survey participants might have been more open and cooperative with Palestinians than those traders who did not agree to participate. Figure 1 depicts the locations of the survey. It also shows the numbers of interviewees in each of the nine Israeli markets covered. Most of the wholesaler shops are located in densely populated areas of Israel: in Jerusalem, Tel Aviv, Haifa and Rehovot. In these cities, wholesale trade is concentrated in centrally organised markets while wholesalers in the remaining cities work independently. Tsrifin is the central fruit and vegetable wholesale market of Israel. It is located in the Tel Aviv Metropolitan Area and serves more than 3 million Israelis (about 40% of the population).
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Table 1 characterises the study’s sample. All wholesalers were men of an average age of 50 years and with about 12 years of schooling. Most had been working for 21 years or longer in the business. They evaluated their private financial situation as good on average. The number of members of their private households showed considerable variation, between 1 and 21 with an average of 5. Also, the number of private ties to Palestinians showed pronounced variation between 0 and 30. The mean number of individual contacts is almost twice as large as its median. This indicates that the distribution of the number of contacts per Israeli trader is highly skewed. Of the interviewed traders 14% reported that family members or close friends suffered physically from the political conflict; 40% would either not vote or invalidate their votes during the next elections; 30% would vote for left-wing parties and a quarter for Likud, which is a centre-right party. The traders tended to be religious as they evaluated the role of religion as important also in their professional life. They appeared to be risk-neutral on average. The sizes of the wholesale businesses show large variation between 2 and 42 employees. Traders themselves tended to judge the size of their business as average compared to their colleagues in the same market. Two-thirds of interviewed traders were Jewish Israelis, 26% were Muslim (implying Israeli Arab ethnicity), while 7% did not indicate their religion. The ethnic distribution in the sample closely resembles the entire Israeli population as well as its geographical concentration. Israeli Arabs mainly live in the north of the country where also mainly Israeli Arab traders were interviewed.
Results Table 2 shows the Spearman rank correlations between the variables of Table 1 characterising the sample. Traders’ age shows the most significant correlations to the eight remaining variables at the 5% level of significance. Risk behaviour, personal financial situation and experience in the wholesale business have the second-highest number of significant correlations. Duration of schooling and religiosity do not play any role. This implies that there is no financial or professional return to education among the wholesalers. The effects of the political conflict at the personal level are not associated with wealth, business or household characteristics. At the 10% level, the better the personal financial situation (a smaller numerical value), the more Palestinian friends a trader has. Also, the more employees a trader has, the greater is his willingness to take risks. The older a trader is, the fewer members of his household there are, the better is his financial situation and the fewer Palestinian friends he has. The same holds for a trader’s experience since it is strongly correlated with age.21
−0.001 0.121 −0.050 −0.492c 0.335a 0.101 0.041 −0.071 0.322b
Risk
0.087 −0.434c −0.442c −0.342a −0.079 0.188 0.661c 0.116
Age
−0.063 −0.039 −0.176 −0.016 0.137 0.087 0.104
School
0.077 −0.110 0.077 −0.214 −0.179 −0.009
Hh size
Notes: Superscripts a, b and c denote significance at the 10%, 5% and 1% level, respectively. Source: Authors’ calculations.
Risk Age School Hh size Fin. sit. Friends Conflict Religion Experience Employees
Table 2. Spearman rank correlation matrix of traders’ characteristics.
0.030 −0.203 0.143 −0.300a −0.179
Fin. sit.
−0.083 0.099 −0.465c −0.015
Friends
−0.039 0.008 −0.079
Conflict
0.247 −0.006
Religion
0.227
Experience
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Figure 2. Israeli traders’ perception of the effects of the political conflict. Source: Authors’ calculations. Notes: Likert-Scale: 5 = ‘Strongly agree’; 3 = ‘Neither agree nor disagree’; 1 = ‘Strongly disagree’.
Figure 3. Evaluation of trade relationships with Palestinian partners. Source: Authors’ calculations. Notes: Likert-Scale: 5 = ‘Strongly agree’; 3 = ‘Neither agree nor disagree’; 1 = ‘Strongly disagree’. The bold line in the box plots denotes the median; the half-transparent circles mark the observations and the√ small black circles mark outliers outside beyond the rough 95 percent interval for the median of 1.58 * IQR/ N (Wickham, ggplot2). Item descriptions are shown in Table A2 in the Appendix.
Perception of the role of the conflict Figure 2 shows how Israeli traders assess the role of the Israeli‒Palestinian conflict for their business activities (see Table A1 in the Appendix for the exact wording of the statements). Israeli wholesalers are concerned about the conflict (item ‘indifferent’); and while they do not feel that their businesses suffer or profit as a result of the conflict (first two items) they nevertheless expect to benefit from its resolution (item ‘business benefits’). Traders strongly support a speedy resolution of the conflict because they think that Israelis and Palestinians in general suffer from it (item ‘both suffer’). Trade with Palestinians Two-thirds of the Israeli traders stated that they are currently doing business with Palestinian partners.22 Of the 16 wholesalers, 12 without current contacts used to trade with Palestinians at some point in the past. All Israeli Arab traders and 48% of the Jewish Israeli traders have Palestinian partners. The majority (particularly Jewish Israelis) only sells to Palestinian traders. A minority (only Arab Israelis) also buys from Palestinian colleagues in the West Bank.
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Table 3. P-values of difference tests on the perceptions of trade relations. Item 1
Item 2
unreliable 43
administrative effort 43
Item 3 dangerous 43
Item 4
Item 5
too risky 43
principal refusal 42
Item 6
Item 7
Item 8
no contacts 42
bad experiences 44
bad quality 38
N Test 0.30 0.13 0.03b 0.80 Median 0.43 0.93 0.33
