Investors eye Palestinians’ $2bn projects

Investors eye Palestinians’ $2bn projects

By Tobias Buck in Bethlehem

Published: May 22 2008 18:28 | Last updated: May 22 2008 18:28

Bethlehem appears an apt choice of location for the miracle the organisers of the first Palestine Investment Conference hope to pull off.

In a gleaming new convention centre just a short drive from where Jesus is said to have been born, they are trying to hammer home a seemingly impossible message: despite the Israeli occupation and fighting between rival Palestinian groups, despite the violence and poverty, “Palestine is open for business”.

The phrase is repeated over and over by the Palestinian officials and business leaders at the conference and there are signs the message is getting across. More than 1,000 investors, business people and officials – many from the Gulf and other Arab countries, but also from the US, Britain, France, Germany and Russia – have attended. Companies represented range from Coca-Cola and Intel to Goldman Sachs, Merrill Lynch and McKinsey.

Palestinian businesses are presenting investment proj­ects worth almost $2bn (€1.3bn, £1bn) and several have attracted close interest from overseas investors. The organisers expect about 10 deals, including on housing and telecoms, to be signed before the three-day meeting closes on Friday, though most were pre-cooked and are not a direct result of the Bethlehem gathering.

But the buzz is unmistakable as the small, tight-knit Palestinian business community uses its highest-profile platform in years to interact with investors from abroad.

“Look at the people who are right here,” says Mustafa Mohammed, chief executive of the Palestine Investment Fund, pointing to a group of Saudi construction executives. Together they will finance a sprawling $200m city north of the West Bank town of Ramallah. “This is a statement of their interest and of our potential.”

Mr Mohammed stresses the conference is less about doing deals and more about changing perceptions: “Having people here in the room talking about business is so much better than talking about violence and hatred. Hopefully we are showing here a different side.”

Across the room, Samir Hulileh is also feeling optimistic. The chief executive of Padico, the second-largest Palestinian company by value, taps his briefcase. Inside are details of several projects he spotted at the conference in which his group is keen to invest. “We have arranged for a lot of meetings after this conference,” he says.

Robert Kimmitt, deputy secretary of the US treasury, heads a US delegation of officials and businessmen. He notes “a significantly accelerating number of contacts from US business people asking about investment opportunities in the West Bank.

“What we have here is a very positive business climate. There are businesses here that are very successful and now there are hundreds of new business people at the conference, including smart financiers from the US who are sensing that something is happening here.”

Despite the determined show of optimism, it is hard to overlook the deep problems affecting the Palestinian economy. In the West Bank, an influx of foreign donor money and a new reform-minded government have allowed the economy to start growing again, albeit modestly. But Palestinians are still on average 40 per cent poorer today than nine years ago, according to World Bank figures. Heavy Israeli security restrictions make it hard for Palestinians in the West Bank to move themselves and their products between cities, putting a brake on business.

In the Hamas-controlled Gaza Strip, home to 1.5m, the economy has collapsed due to an Israeli blockade started last year. Poverty has soared and even basic goods such as fuel are almost impossible to obtain.

One discussion session in Bethlehem dealt with reviving the Gaza economy. For the time being, however, the coastal strip will play no part in the international effort to kick-start a Palestinian economic miracle.