Marketplace Middle East - Blog
6/26/08
Building Blocks to Growth


What could turn out to be a pivotal meeting in Berlin was overlooked in a world dominated this week by $130 plus oil, a man who does not want to let go in Zimbabwe and 3-D renderings of space-age rotating skyscrapers in Dubai.

German Chancellor Angela Merkel hosted the Berlin Conference in Support of Palestinian Civil Security and pulled in some favors it seems to bring the likes of Condoleezza Rice, Tony Blair, the European Union's Javier Solana, the Arab League's Amr Moussa, plus two key players from the region -- Palestinian Prime Minister Salam Fayyad and Israel's Foreign Minister Tzipi Livni.

This was dubbed a working session designed to produce concrete results. While the subject of setting up structures for the police and judiciary in the Palestinian Territories may not be headline grabbing; the results illustrate there is commitment, if not a Palestinian state to hang it on. The effort again attracted a handsome sum, $242 million in pledges. This follows the $7.7 billion pledged at the Paris Donors conference last December. Chancellor Merkel described the meeting as a “small mosaic piece” in the larger picture being constructed in the region.

Having travelled to Bethlehem for the Palestinian Investment Conference a month ago, it is abundantly clear that there is no shortage of goodwill and funds being offered to prod peace efforts along. Beyond the political heavyweights noted above, there are some sizable discreet players from the business community who are putting their money and know-how behind these efforts.

Sir Ronald Cohen, chairman of the Portland Trust, is one of them. Sir Ronald made his name as co-founder of Apax Partners, a leading private equity house in London. He remains a “go to” fundraiser for the Labor Party in Britain and active on the arts scene in the capital as well. But you are more likely to find him setting up a new financial structure in the West Bank than near the Bank of England these days.

In an interview for Marketplace Middle East, the Oxford and Harvard graduate puts the conflict in no uncertain terms, “Stalemate could perpetuate conflict for years and it’s dangerous for the region and the world.”

Sir Ronald draws parallels to Northern Ireland on what economic opportunity can offer. In 1978, the U.K. government began increasing investment, twenty years before the Good Friday agreement. The money lead to job opportunities and when peace did arrive, an economic boom followed.

“If you can manage to have an improving economic climate … then it will have a beneficial impact on the security situation and also the receptivity of the population to go for a peace agreement.”

Opportunity at this juncture is in short supply. Unemployment is 22 percent overall; 30 percent in Gaza. Palestinian businessmen complain of being suffocated by roadblocks and security checkpoints in the West Bank. Sir Ronald reinforces what they also point out, that Jewish settlements are a “major hurdle”, but he says the Israeli Defense Ministry is allowing for more movement because economic development needs to be a priority.

Asked to weigh what he knows best, the risk-reward ratio in the territories, Sir Ronald is optimistic. He describes it as “an opportunity not to be missed” and points to a recent real estate investment by Qatari Diar as evidence this view is shared throughout the region.

The economy at -- $4 billion -- is tiny by global standards. There has been a 40 percent drop in five years, but with a literacy rate of 97 percent, the potential is there. Like neighboring Israel, engineers and entrepreneurs are not in short supply and Sir Ronald says when it comes to business the two sides have many traits in common.

Like the very active Palestinian diaspora which has been willing to put their money and skills to work, the Egyptian Jew says his first eleven years of life in Cairo have shaped his views and pulled him into this effort.

“Having lived in Egypt which was a very liberal society where Jews, Christians and Muslims got on extremely well … showed me that co-existence is possible.”

Let’s see if the money and know-how from within the region and from other financial capitals around the world can deliver both prosperity and co-existence.

ABOUT THIS BLOG
John Defterios’ blog accompanies the weekly business program, Marketplace Middle East (MME) that is dedicated to the latest financial news from the Middle East. As MME anchor, John Defterios talks to the people in the know, finding out their opinions on the big business moves in the region, he provides his views via this weekly blog. We hope you will join the discussion around the issues raised.
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