Romney’s Comments on Palestinian Economy Stir Controversy

Voters in the U.S. will likely not notice, but comments made by the Republican candidate for president while on tour in Israel have led to charges of racism

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Uriel Sinai / Getty Images

Republican presidential candidate Mitt Romney visits the Western Wall in Jerusalem's Old City on July 29, 2012

Mitt Romney almost escaped the Holy Land without a significant controversy. And the one he kicked up likely won’t hurt him with the U.S. voters his visit to Israel aimed to impress — Protestant evangelicals who want to oust President Obama and who love Israel but whose enthusiasm for Romney is restrained by questions about his conservative credentials and his Mormon faith.

Still, his observations on the Palestinian economy and why it pales beside the success story of Israel’s has the look of a self-inflicted wound. Whether it amounts to racism, as Palestinian Authority negotiator Saeb Erekat framed it, is a subjective question. What’s empirically clear is that the former turnaround artist did not have his facts in front of him early Monday, July 30, at a breakfast fundraiser with American titans of industry at the King David Hotel:

“As you come here and you see the GDP per capita, for instance, in Israel, which is about $21,000, and compare that with the GDP per capita just across the areas managed by the Palestinian Authority, which is more like $10,000 per capita, you notice such a dramatically stark difference in economic vitality,” he said. “And that exists also between other countries that are near or next to each other. Chile and Ecuador. Mexico and the United States. And I noted that part of my interest when I used to be in the world of business, as I would travel to different countries, was to understand why there was such enormous disparities between the economic success of various countries.”

“I recognize power of culture,” Romney said, hailing Israel’s strides in its 64 years as a nation. He allowed that a person would “have a hard time suggesting natural resources and land account for it all.”

Start with the numbers, which were more than a bit off: The World Bank puts Israel’s gross domestic product at closer to $31,000 per capita, while residents of the West Bank and Gaza struggle to get by on just $1,500. The bigger problem, however, is the parallel: Mexico is not occupied by the United States, nor Ecuador by Chile. But since 1967, Israel has controlled the economy of the Palestinian territories, restricting movement of people and goods in and out of the territories, collecting excise taxes — and withholding them from the Palestinian Authority to punish its leaders when they are perceived as being out of line. The disadvantages of Israel’s situation — the high cost of living, partly because it imports so much from so far away — are passed on to Palestinians, but few of the advantages are.

It’s on the combustible question of “culture,” however, that Romney is playing with fire. And not only because it attributes unflattering characteristics to the Palestinians. The fact is, when Palestinians are not living under occupation, they tend to write business success stories. In neighboring Jordan, Palestinians utterly dominate the economy, so much so that their success as onetime refugees has fueled resentment among so-called East Bank Jordanians. In El Salvador, Palestinian businessmen and -women amount to an oligarchy, so thoroughly do they hold the Establishment in their hands. The Palestinian community there and in other Latin American nations, including Brazil, has been in place for nearly a century, having fled during World War I to avoid becoming cannon fodder for the Ottoman Empire as it threw in its lot with the Kaiser. The Palestinians have done very well for themselves.

“Palestinians have the highest productivity in the Arab world,” economist Omar Shaban of the Gaza think tank Palthink boasted in an interview last year.  He didn’t have the figures at his fingertips to prove it, but he at least seemed to know what he was talking about.