How Arafat Can Beat Hamas in Gaza: With Jobs, Not Guns

A permanent Middle East free-trade area could provide political and economic stability

FOR all the hope kindled early last year for the Middle East peace process, the final months of 1994 brought some tragic episodes of violence: In November, Yasser Arafat's Palestinian Authority police killed at least 13 and wounded some 200 of their own compatriots in Gaza, protesting the peace accord with Israel. In October, a Hamas (Islamic Resistance Movement) suicide bomber killed 22 and wounded 48 on a bus in Tel Aviv.

Israeli Prime Minister Yitzhak Rabin has told a sympathetic United States Secretary of State Warren Christopher, ``Arafat must choose between making peace with Israel and making peace with Hamas.'' Hamas has responded that if Mr. Arafat fought them, Gaza would burn.

Arafat said he would not fight Hamas but would nonetheless prevent violence. He can fight Hamas with jobs, not guns. For peace to last it should generate abundant jobs for Palestinians and be good for both Arab and Israeli business.

A credible promise of permanent peace and prosperity in an at least relatively booming Gaza could isolate the Islamic killers, whose terrorism would threaten those Palestinian jobs. Mainstream Hamas and Islamic Holy War, offering only endless struggle, would be marginalized.

A permanent international Middle East Free Trade Area (MEFTA) in the Israeli-controlled Gush Katif (Katif Bloc) of Israeli settlements in southwest Gaza could provide the long-term political and economic stability for the private investment needed for permanent full employment of the Gaza Palestinians. Temporary jobs funded by international donors will not end the widespread poverty on which Hamas thrives.

MEFTA would be a combined Hong Kong and Riviera under administration of the Multinational Force and Observers. The American-led MFO monitors the successful Egyptian-Israeli peace in the Sinai. MEFTA would have companies of many nationalities, including Arab and Israeli, doing low-labor-cost, free-trade business, with miles of hotel-lined beaches, and duty- and tax-free shopping. The MFO police force would include elite Palestinian, Israeli, and Egyptian police.

MEFTA would have business communities for tourism, manufacturing, commerce, agriculture, and research and development, each with its own executive housing. The best and the most business sites would be allocated to the Palestinian Authority, Israel, Egypt, Jordan, and the principal MFO states - US, Britain, Canada, France, Italy, the Netherlands, Uruguay, and Columbia - plus Russia and Saudi Arabia. (Russia is a joint sponsor with Washington of the peace process and cheap Saudi oil is needed for cost-effective seawater desalination.) Israeli settlements would remain as business communities but under MFO rather than Israeli administration.

The MFO would be funded by the business site rentals and the profits from its exclusive duty- and tax-free shopping concessions, plus infrastructure financing from donor countries. Site lessees would pay for their own construction.

PALESTINIAN Gaza would also be a duty- and tax-free area. Massive MEFTA construction and satellite businesses supplying MEFTA companies would help make Palestinian Gaza boom. Abundant permanent MEFTA jobs could give Gaza Palestinians full employment and thus help ensure a lasting peace free of economic domination by Israel.

Labor costs would be low because there would be no income, sales, or value-added taxes, only land taxes. And all imported goods, from food to housing materials to automobiles, would be free of duty and nontariff barriers.

Land taxes alone would support Palestinian Gaza because land values would skyrocket to provide a sufficient tax base. The big land owners in Gaza would pay much of the taxes. And the international community has pledged over $2 billion for infrastructure construction in the Gaza Strip.

In Palestinian Gaza, Palestinians would continue to control their own affairs, and they would commute to and fill most of the MEFTA jobs. They would retain their own flag, anthem, postage stamps, telephone code, border guards, customs agents, and international relations.

The final status of Palestinian Gaza would be as a prosperous, nonmilitarized, self-ruled Palestinian homeland, of the Gaza Strip, next to its neighbor MEFTA. The Palestine Liberation Organization would have to limit its struggle for a Palestinian state to the far larger West Bank.

And the international business community would be the real guarantor of peace. The Opinion/Essay Page welcomes manuscripts. Authors of articles will be notified by telephone. Authors of articles not accepted will be notified by postcard. Send manuscripts by mail to Opinions/Essays, One Norway Street, Boston, MA 02115, by fax to 617 -450-2317, or by Internet E-mail to OPED@RACHEL.CSPS.COM.

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